Small pension pot with Pru advice

kerrybelle

My father has just over £27k in a private pension with prudential.

He wants to take his 25% tax free cash just now and leave the rest for the time being in case of a rainy day. (He has a form of blood cancer and works on and off part time as his health dictates but may need to give up altogether soon and would need to start withdrawing that money to live). He is only 57 so not entitled to his state pension for a while.

Pru have advised him to move the money to a pry retirement account. They want to charge 3% of total fund value tondo this so just over £800. Then they’ve quoted the AMC is 0.14% more than his current AMC (I’m not sure what that is). And he can withdraw the funds as he needs subject to the normal income tax rules.

I’ve read on a thread here, if I’ve understood correctly, that Hargreaves Lansdown might be able to do what he needs without the 3% charge.

Can anyone give me some advice as to what would be the best way for him to take his pension in this way? He is in with profits with pru just now so the fund looks to have been performing quite well for him and I’m wondering if once he takes his 25% where he might get the best return on the rest and the least amount of charges.

I really know very little so apologies if the pru advice is all good and I’m just being over cautious. Many thanks in advance.

dunstonh

Pru have advised him to move the money to a pry retirement account. They want to charge 3% of total fund value tondo this so just over £800.

In the normal scheme of things, 3% is high. However, with such a small fund value, £800 is reasonable.

Then they’ve quoted the AMC is 0.14% more than his current AMC (I’m not sure what that is).

If its picking the pru fund then the old protections of the with profits fund were priced when they were cheaper to run. Today, there are more costs.

I’ve read on a thread here, if I’ve understood correctly, that Hargreaves Lansdown might be able to do what he needs without the 3% charge.

That is because HL do not give advice. You have to type in what fund you want and do the work. HL offer a much more complicated pension. That level of complication needs to be taken into account if neither you or your father know what you are doing. There are simpler options as well.

I really know very little so apologies if the pru advice is all good and I’m just being over cautious.

Normally, we would say not to use a tied agent but an IFA. However, with just £27k, it really doesnt matter.

xylophone

It would be possible to transfer the pension to a HL SIPP - your father could then take the PCLS of approx £5,500 and leave the balance undrawn.

HL would not charge for the withdrawal.

A modest £21,500 would be left in the SIPP.

Would your father wish to leave this uninvested?

If so, HL would make no charge.

Or would he wish to invest it in a fund/investment trust etc.

Hl would make a charge of 0.45% but on this modest pot the amount in question is not huge.

You can read more about the HL SIPP here

https://www.hl.co.uk/partners/search/sipp?theSource=PCHLS&Override=0&adg=G+HLBS+HLS&gclid=EAIaIQobChMImM-gwJnr4AIVjrXtCh0UbwefEAAYASAAEgK1W_D_BwE

https://www.hl.co.uk/pensions/sipp/charges-and-interest-rates

If he is happy with the investments in his current pension, perhaps he could replicate them?

And does anything here help at all?

https://www.money.co.uk/pensions/income-drawdown-pensions.htm

kerrybelle

dunstonh wrote: »

In the normal scheme of things, 3% is high. However, with such a small fund value, £800 is reasonable.


If its picking the pru fund then the old protections of the with profits fund were priced when they were cheaper to run. Today, there are more costs.



That is because HL do not give advice. You have to type in what fund you want and do the work. HL offer a much more complicated pension. That level of complication needs to be taken into account if neither you or your father know what you are doing. There are simpler options as well.

I see, that makes sense.

Normally, we would say not to use a tied agent but an IFA. However, with just £27k, it really doesnt matter.

Thank you very much for the reply.

kerrybelle

Thanks very much for the reply, I'll look into all of that. I think invested to get some return would be better and I think his current ROI is good so i'll have a look at if I could replicate it for him. Another poster has mentioned, rightly, the HL it may be too comp option may be too complicated for me but I'll try to make sense of everything you've sent then take it from there.