Cashing in a section 226 pension nightmere

topfmine

I rang pension wise and TPAS, who said to query the GAR just incase the GAR projection exceeded the 30k limit when the annuity matures when i turned 65. They also said that i should get a copy of the original document to check the age limit to draw out if there are any clauses. So i rang Aviva again, it worked out that the GAR didn't even come near any 30k mark and the GAR was pretty low, they said that i could take out a SIPPS with another company after talking about the other option which is similar or is a flexi access draw down pension and transfer the 226 and cash out.Apparently they can't sell or advise their own products to a client as they had been rapped on the knuckles by the FCA recently, so it looks like they are playing by the rules. Can anyone explain to me if i would encounter any pitfalls and what to look out for with a SIPP pension converting from a 226. Not sure how long it would take to do the change over, what the fees would be, if all the money can be drawn out in one go or any other fees and penalties that could incur and how quick the process would be.

atush

xylophone wrote: »

OP appears to have had this information.

but we dont, and it is pointless to hide it- and would be something to consider if replying.

xylophone

You might approach Hargreaves Lansdown and explain that you want to transfer in a S226 in order to take it as a "small pot".

https://www.hl.co.uk/pensions/retirement-options/taking-pension-lump-sum-tax

https://www.pensionsadvisoryservice.org.uk/about-pensions/retirement-choices/the-right-choice-for-me/taking-a-small-pension-as-a-cash-lump-sum

They would not charge to arrange the transfer in but might well charge the £295+ VAT early closure fee if you took the "small pot" within a year of transfer.

25% of the pot would be tax free with the balance taxed as income in the year of receipt.

The tax taken by HL might not be correct for your circumstances - you would have to check and claim a refund/pay any additional tax due by contacting HMRC.

The advantage of taking a "small pot" rather than drawdown is that it would not trigger the MPAA - this may or may not be of relevance to your situation.

https://www.moneyadviceservice.org.uk/en/articles/money-purchase-annual-allowance

dunstonh

I would be more inclined to use a stakeholder via virgin. Stakeholder pensions have no charges on entry/exit. So, you get the money moved to them at no cost and immediatly use small pots cash in and all the can charge is their AMC pro-rata for the period they have it with them.

topfmine

Sounds like stakeholder pensions look a viable option. Anything to watch out for pursuing this option.