CETV and SIPP

borneoboy

I have approx 185k BT deferred pension CETV. Im obliged by law to seek financial advice as relevant release paperwork has to be signed. Am i right in thinking i dont have to go down that route and invest in a SIPP. I require relatively quick access to 20 to 25% tax free sum and want to invest the rest. Can i do this myself? I understand SIPPs have annual charges but do they offer interest too to offset these. Thankyou in anticipation.

xylophone

You have a deferred DB pension - the benefits of this pension are "safeguarded rights". The value of your benefits is greater than £30,000.

If you wish to transfer to any kind of DC pension, you are required to obtain the advice of a pension transfer specialist.

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/pension-transfers-conversions/

A SIPP is a DC pension.

After transfer, provided that you are age 55 or over, you would be able to access the tax free pension commencement lump sum.

https://adviserbook.co.uk/ You would tick "confirmed independent" and "pension transfer".

borneoboy

So am i right in saying that i can set up a sipp but just need initial financial advice?

MallyGirl

borneoboy wrote: »

I have approx 185k BT deferred pension CETV. Im obliged by law to seek financial advice as relevant release paperwork has to be signed. Am i right in thinking i dont have to go down that route and invest in a SIPP. I require relatively quick access to 20 to 25% tax free sum and want to invest the rest. Can i do this myself? I understand SIPPs have annual charges but do they offer interest too to offset these. Thankyou in anticipation.

A SIPP is a self-invested personal pension - a pension 'wrapper' that holds investments until you retire and start to draw a retirement income. It is a type of personal pension and works in a similar way to a standard personal pension. There is no 'interest'. You choose the investments and hope that they grow.
If you are not comfortable with making the choice of investment then you could opt for a personal pension instead, or use an IFA to choose for you.

SonOf

Am i right in thinking i dont have to go down that route and invest in a SIPP.

No. You still require financial advice on the suitability of doing it. It doesn't matter if its a stakeholder, personal pension or SIPP that it is going into.

I require relatively quick access to 20 to 25% tax free sum and want to invest the rest. Can i do this myself?

You can but there is little point in doing so as it would form part of the advice process.

I understand SIPPs have annual charges but do they offer interest too to offset these.

SIPPs are a tax wrapper. Whilst most will have a cash option that pays a tiny amount of interest, it is not the purpose of a cash account.

It would also make a recommendation to transfer virtually impossible.

So am i right in saying that i can set up a sipp but just need initial financial advice?

Are you experienced and knowledgeable enough to set up and run the most advanced pension option?
If you are paying the adviser for the advice, why wouldnt you let them do it?
By you choosing to do it, you reduce the chances of a positive recommendation.

xylophone

Before transfer to the SIPP, you would need the advice of a PTS.

That advice may or may not be positive and will not be cheap.

If it is not positive, you may find that the SIPP provider of your choice will not accept a DB transfer.

Fidelity and Hargreaves Lansdown take this stance.

Anecdotally, AJ Bell don't but you would need to check with them.

https://www.youinvest.co.uk/faq/do-you-accept-final-salary-transfers

https://www.royallondon.com/media/good-with-your-money-guides/five-good-reasons-to-transfer-out-of-your-company-pension-and-five-good-reasons-not-to/