Pru wont allow pension to be taken in 2 chunks

alinkliter

My wife is 63, not working and has a small pension of about £18,000 that she would like to gain access to before she reaches the state retirement age.  She requested the money to be paid in 2 chunks in separate tax years to minimise any tax to be paid but the company state it has to be all or nothing for such a small amount, although they will allow her to move the pension to a company that will allow this. How difficult is it to allow a loyal customer to gain access to their pension in 2 stages? She would even be willing to pay a small fee for the privilege. If this isn't possible how do you find a company that will allow this and not charge you excessively?
Any help will be much appreciated.

Preacher64

Just do as the Pru suggest and transfer the pension to another provider who will allow you to draw down as you wish.

Albermarle

There are many modern pension providers that are much more flexible . Open up a new pension ( takes about 5 minutes online ) and request transfer of the Pru pension in cash . Will take one to four weeks .
When it arrives set up drawdown account . Take out what you want and leave the rest invested .
The only caveat is that the Pru pension should have no guaranteed benefits associated with it , as then it gets more complicated.
Remember that 25% will be tax free. You could take all this first or take a payment that included tax free and taxable income.
Have a look at Hargreaves Landsdown website for opening a SIPP . Not the cheapest but for this small amount the cost will be small anyway .

comeandgo

It's not a case of how difficult can it be to allow a customer to do what she wants, Prudential do not allow it, full stop.  You need to find a company who does allow it.  You possibly need to use a company like My Pension Expert who can arrange this. They will tell you how much it will cost you and you can decide whether to take their advice and pay them or if the costs are more than the income tax would be just pay the tax or look at moving the money yourself by phoning around other pension companies.

xylophone

The only caveat is that the Pru pension should have no guaranteed benefits associated with it , as then it gets more complicated.

The value of the pension is said to be only £18,000.

https://www.gov.uk/government/publications/pension-benefits-with-a-guarantee-and-the-advice-requirement/pension-benefits-with-a-guarantee-and-the-advice-requirement

2.1 Circumstances in which advice is required

Section 48 of the Pension Schemes Act 2015 and regulations made under it require pension scheme members who have subsisting rights in respect of safeguarded benefits worth more than £30,000 under the scheme to take appropriate independent advice from an Financial Conduct Authority (FCA) authorised adviser before:

• converting safeguarded benefits into flexible benefits (or in the case of benefits which are both safeguarded and flexible, into different flexible benefits)

• using a transfer payment in respect of safeguarded benefits to acquire flexible benefits under another scheme

• being paid an “uncrystallised funds pension lump sum” (UFPLS) in respect of their safeguarded benefits

xylophone

If this isn't possible how do you find a company that will allow this and not charge you excessively?
Any help will be much appreciated.

She might want to consider Hargreaves Lansdown.

No charge to transfer in, hold in cash, or drawdown.

She can then take what she require in this tax year and the balance as required  in subsequent tax years.https://www.hl.co.uk/partners/search/sipp?theSource=PCHLS&Override=1&adg=G+HLBS+HLS+OLP&gclid=EAIaIQobChMI36vR7Y_Z6gIVCbrtCh0M_AAJEAAYASAAEgJOpvD_BwE

squirrelpie

alinkliter said:

My wife is 63, not working and has a small pension of about £18,000

Is it a defined benefit pension or a defined contribution pension?

Some of the comments above assume one type whilst others assume the other.

dunstonh

How difficult is it to allow a loyal customer to gain access to their pension in 2 stages?

Not at all difficult unless you want to make it difficult.

She would even be willing to pay a small fee for the privilege.

She doesnt need to.

If this isn't possible how do you find a company that will allow this and not charge you excessively?

Just transfer it to a modern plan that allows drawdown functionality.   Drawdown has been around a couple of decades.  However, before 2015, it was only available on more advanced pensions or drawdown specific plans.  Since 2015, most new pensions offered it.     So, you just move it to one that does.

alinkliter

Thanks for the replies.
Is there much difference between having a Drawdown SIPP and having a UFPLS one? And what are the pros and cons of one over the other?

Marcon

alinkliter said:

Thanks for the replies.
Is there much difference between having a Drawdown SIPP and having a UFPLS one? And what are the pros and cons of one over the other?

Why complicate your life so much if all she wants to do is take the cash in two lumps in two different tax years?

Albermarle

alinkliter said:

Thanks for the replies.
Is there much difference between having a Drawdown SIPP and having a UFPLS one? And what are the pros and cons of one over the other?

With the drawdown you could take all the tax free cash first and then the ( taxable ) rest later.
With UFPLS you take some of the tax free and some of the taxable at the same time .
So whatever suits your situation best .