SIPP withdrawal at 55

Underconstruction

Are there any circumstances in which a SIPP provider can deny ‘flexible drawdown’ access to funds at 55?
I have no home/equity approaching 55, but I do have a SIPP which is sizeable enough to make an outright property purchase from all or even part of the 25% tax free element.
I have other former workplace pensions kicking in at 60 and OAP 67.
What is the ‘secured pension income’ I have read/heard about which prevents withdrawals. ‘If you do not have sufficient secured pension income in place the income drawdown is capped at 100% of the relevant government actuary’s department’s amount???! What does this mean please. Help.

AnotherJoe

Some providers just dont do drawdown and you'll have to transfer though Id think that would be rare with a SIPP. less so with other pensions.

The text you quoted, is that from your SIPP provider to a request from you, or something else you looked up that may have no applicability to you?


p.s. are you by any chance reading a Wikipedia article which seems to be years out of date and irrelevant? Thast where I found that text.

Malthusian

Underconstruction wrote: »

‘If you do not have sufficient secured pension income in place the income drawdown is capped at 100% of the relevant government actuary’s department’s amount???!

I agree with AnotherJoe. This sounds like a moth-eaten description of capped drawdown which has not been relevant since April 2015. "If you do not have sufficient secured pension income" is a reference to flexible drawdown (not to be confused with flexi-access drawdown) which existed from April 2011 to April 2015.

shinytop

They make you answer all sorts of questions and give you warnings about investments failing, running out of money, etc, but if they offer drawdown I don't think they can stop you taking it.

Underconstruction

Part of a terms document, but I don't understand and am not familiar with the terms used. A figure of £20,000 is mentioned as the 'secured pension income'. What does that actually mean?

Underconstruction

because the document references changes made from April 2011 and is probably something I was given shortly after the SiPP was taken out in 2011.

AnotherJoe

There you go then, its quoting the law at the time, which was swept away 4 + years ago.
Who is the SIPP provider ?

Underconstruction

Transact SIPP

AnotherJoe

OK a quick search seems to imply your SIPP is held via an IFA?

If so you should be able to confirm with them that you are home clear to take your 25%.

Malthusian

Transact offers flexi-access drawdown. So you can do what you want to do with them.

gm0

Not an advisor. Just a consumer. But from my reading....here are some pointers

Prior to the pensions freedoms being introduced flexible access drawdown (FAD) there was an earlier regimen called a variety of names in the media such as "capped drawdown". Under this prior "limited flexibility" regimen there were more rules about "how much" - annuity equivalent guaranteed income - limits to the amount of drawdown possible against calculated annuity. Lots of complexity and unintended consequences as bond and annuity rates continued to fall. This was part of the reason with taxation that it got changed and redesigned again. The impact of the old rules lingers for people already using it who haven't restructured their affairs since but it should not be an issue for a new pensioner now. Don't know more about it as I was too young to be part of that and therefore haven't made a study of it.

The issue on flexibility now is that "what the legislation now allows" is NOT the same thing as "what have all old schemes added to their support". Not all options in the HMRC rules may be offered by a given existing pension provider. Pretty much all offer commencement cash and open market annuity, transfer out but then there is a long tail of "flexibility" and a lot of jargon - small pot rules, single UFPLS, multiple UFPLS, FAD, phased FAD. As a personal example my own scheme only does commencement cash and a (possibly deferred) annuity purchase or transfer out. The sole "freedoms" flexibility offered today is the frankly useless (for tax reasons) whole fund single UFPLS.

So people often have to move their pension pot to a SIPP provider (Hargreaves, AJ Bell, II etc. etc.). This is apparently fairly easy to do (but could take a few weeks/months and forms/proof of identity etc. don't set your expectations at hours/days or tie in timing to a house completion). You need to consider it carefully - costs, protection of funds, what the funds will now be invested in on the new scheme etc. or hire an IFA to arrange all this for an additional 0.5% of funds per year for ever which is cheap or expensive based on how you feel about DIY and whether they will make more money for you to cover their fees by being better at it.

Be aware that there can be a world of added complexity if you have any "guaranteed" benefits" beyond a cash pot (Guaranteed annuity rates, minimum pensions etc. any defined benefit/final salary element alongside fund cash values etc.). Such schemes have a way or sometimes limited options to pay your pension. Transfer out of these is then "gated" by a legal obligation for you to take specialist advice due to the irreversible loss of often genuinely valuable guarantees. It comes up on here a lot. The advice is expensive due to lifelong liability for the advisor against mis-selling (telling people they can and getting called out on it later when their investments don't work out vs the lost guarantee) and the cost of indemnity insurance. There has also been scandalous behaviour by a minority of predators harvesting fees from financially naive people making innappropriate DB to DC moves and then vanishing (going bust, rinse and repeat). Steel scheme and other examples. So be wary especially of unsolicited help offered if you find yourself in this situation.

I would be very surprised if an old occupational/employer scheme was doing the pre-freedom limited flexibility stuff for any new pensioner now. That's gone. Poorly trained call centre staff however .......could misidentify your situation and could mislead you .... it happens. So it sounds like you have read or been told something incorrect.

Scheme admin is both regulated and bounded by "what they do" not by the full range of options. They try to tread carefully and are not your advisor. You have to read between the lines to get to the right path forward or get someone experienced i.e. a proper IFA who does loads of these rather than just the one to help you.

Good luck.