Tax free 25%

john-306

Some info required please.
DB pension transfer.
If a request for the tax free 25%, upon transferring it out of the DB pension, when is the 25% paid, pre transfer or post transfer?
The reason I ask we've had a 3% quote for transfer out, if the 25% is taken the quote is just on the 75% remainder.
Another quoted 2.5% on the whole 100% transfer amount even if 25%
tax free requested which works out dearer than the 3% figure.
I suppose it also affects the fund fees if the 25% is taken pre?
Thanks for any info.

p00hsticks

The '25% tax free' rule is only for DC pensions, not DB ones.
The DB pension may offer a tax free lump sum at the point of taking the pension, but it might not be 25%, and in taking it you'd be starting the pension, at which point you could no longer transfer it.



So I think the answer to your question is that you have to transfer and then take the 25%.

john-306

p00hsticks wrote: »

The '25% tax free' rule is only for DC pensions, not DB ones.
The DB pension may offer a tax free lump sum at the point of taking the pension, but it might not be 25%, and in taking it you'd be starting the pension, at which point you could no longer transfer it.



So I think the answer to your question is that you have to transfer and then take the 25%.

Makes sense thank you.
Just strange 1 firm charges on full amount transferred even if requesting 25% tax free, the other only charges on the 75% with the tax free 25% withdrawn.

SonOf

The reason I ask we've had a 3% quote for transfer out, if the 25% is taken the quote is just on the 75% remainder.

Was that an exit charge of 3% or an entry charge into the alternative?

If the legacy plan does not support drawdown (which many legacy plans do not) then you need to move it to a plan that does.

Who is making these charges as most providers have no entry charges nowadays?

john-306

SonOf wrote: »

Was that an exit charge of 3% or an entry charge into the alternative?

If the legacy plan does not support drawdown (which many legacy plans do not) then you need to move it to a plan that does.

Who is making these charges as most providers have no entry charges nowadays?

No, that is the transfer specialists costs.

zagfles

SonOf wrote: »

Was that an exit charge of 3% or an entry charge into the alternative?

If the legacy plan does not support drawdown (which many legacy plans do not) then you need to move it to a plan that does.

Who is making these charges as most providers have no entry charges nowadays?

It's a DB transfer. DB means Defined Benefit, eg a final salary or career average scheme. These require advice to transfer unless they're very low value. That'll be what the charge is, not the provider(s).

Novice_investor101

It will be paid post transfer.
You will transfer your full (100%) CETV from a DB to a DC pension. You can flexibly take your 25% as soon as it arrives in the DC.

Some pension advisers will take their fee after you've taken your tax free cash out (that way you get the full 25% of the CETV) & some will ask for their fee to be deducted before you take your tax free cash (you get a little less tax free cash as you get 25% of what is left after their fee). Or you could pay their fee directly from your bank account instead of your pension.

Albermarle

You can flexibly take your 25% as soon as it arrives in the DC.

Assuming the OP is over 55 of course .

Dox

Albermarle wrote: »

Assuming the OP is over 55 of course .

Or younger if they have a protected pension age (and assuming they are in normal health).

john-306

Novice_investor101 wrote: »

It will be paid post transfer.
You will transfer your full (100%) CETV from a DB to a DC pension. You can flexibly take your 25% as soon as it arrives in the DC.

Some pension advisers will take their fee after you've taken your tax free cash out (that way you get the full 25% of the CETV) & some will ask for their fee to be deducted before you take your tax free cash (you get a little less tax free cash as you get 25% of what is left after their fee). Or you could pay their fee directly from your bank account instead of your pension.

Thank you, yes we were told advisor and other charges would come out of the pension itself, they didn't state whether it would be before or after the 25% tax free, and we didn't even think about it too be honest.

tetrarch

3% seems a bit steep.

I have seen tideway mentioned a few times on this forum, and they charge 1%

No experience but it might be worthwhile to shop around, even if it only serves as a negotiation point

Regards

tet