Transferring to a drawdown pension

dunstonh

Arkwright9772 wrote: »

I know it isn't currently drawdown, which is why I'm looking for advice on how to use it to buy a drawdown pension without incurring costs if at all possible.

If your intention is to draw the pension in full then you dont need to put it into drawdown first. Most Pru plans support full fund withdrawal or UFPLS ad hoc lump sums. Only some of the very old ones do not.

Arkwright9772

.If your intention is to draw the pension in full then you dont need to put it into drawdown first. Most Pru plans support full fund withdrawal or UFPLS ad hoc lump sums. Only some of the very old ones do not

Must be a very old one then, as they have told me I need to buy a drawdown plan.

dunstonh

Arkwright9772 wrote: »

Must be a very old one then, as they have told me I need to buy a drawdown plan.

Seems strange you would need a drawdown plan when you are not actually utilising drawdown.

you may want to check again and do not refer to it as drawdown but say you want to draw the pension in full as a lump sum. That may give a different response.

The only ones I have found didnt do it with Pru had guaranteed basic annuities which are classed as a safeguarded benefit. (although they have had hundreds of pension versions over the years).

Arkwright9772

I'll ask the question, but I don't ideally want to take it in one lump sum because of the tax implications. I've been looking at the drawdown option as I believe I can take 25% tax free and then the remainder in amounts that keep me under the 40% tax threshold. If the fund remains at £55,000 or less, then I should be able to take the tax free amount before April, along with half of the remainder and the other half after April, which should only incur the basic rate tax.

dunstonh

That description swings it back to drawdown then. Whenever you draw the 25% TFC at an uneven rate to the 75%, you more often than not need drawdown. (uneven as in each withdrawal not being made up of the 25/75 tax split).

Alternatively, you could use UFPLS if you don't need all the 25% TFC up straight away. Lots of legacy pru plans allow UFPLS.

AlanP_2

Arkwright9772 wrote: »

I discovered this pension by chance approximately 18 months ago and it has never been part of my retirement planning. I have another private pension and a final salary pension as a public sector employee.

So the plan is this.... My wife has just been made redundant and my employer has agreed to my taking a twelve month unpaid sabbatical. We therefore intend to cash in the SERPS pension, rent out our house and travel around Europe in a camper van reliving our youth of sex, drugs and rock n roll.

All I need now is to get this damn pension into a drawdown plan with as little hassle and cost as possible 😄👍

Which pension are you currently contributing to? If its the DB / FS public sector scheme then fine, no problem with your plan. If it's the private pension you will trigger the MPAA limit of £4k per year contributions cap going forwards (assuming you will resume work and pension contributions after your 12 months of "freedom").


Enjoy yourselves :beer: