Learn something new every day.....

cfw1994

Morning all 
Today's lesson: putting the 'fun' into fund transfers 
With a countdown clock on the dashboard (with only 2 digits, hurrah!), & with a chunk of our future 'income' coming from a DC pot, my thoughts turn to the detail of future drawdowns.

My original plan was to move a chunk (around 15% of the funds) to a smaller more flexible provider, where changes might be quicker than with the behemoth that is Aviva, my main DC pot.    I also feel that the more flexible one has some better 'defensive' funds, hence moving some funds there.

The funds have already almost all been crystallised ("luxury" LTA avoidance measures....these have since been justified by the fact that that drawdown pot has grown by over £150k since taking those actions!), and I wanted to just move some of the drawdown amount to this smaller provider.

Turns out one is not allowed to move just part of a drawdown pot.  Booo!
From the HMRC documents here, with my bold emphasis:

It is possible to transfer of sums and assets held under a

• drawdown pension fund

• flexi-access drawdown fund

• dependant’s drawdown pension fund

• dependant’s flexi-access drawdown fund

• nominee’s flexi-access drawdown fund, or

• successor’s flexi-access drawdown fund

to another pension scheme.
However in addition to meeting the normal rules for a recognised transfer (see PTM100010) the transfer will only be a recognised transfer if all the sums and assets of the relevant drawdown fund are transferred as part of the transfer. A transfer of only part of one of the types of drawdown funds listed above cannot be a recognised transfer.

Bah!
Clearly I could move ALL the drawdown amount....but I feel I have managed the funds well with Aviva, & only wanted to "test the waters" of drawdown by taking this action.

Hey ho. Live & learn: maybe this small snippet might help someone else here.   
On the bright side, I have learned that the HMRC Pensions Manual is pretty straightforward to read 

Albermarle

cfw1994 said:

Morning all 
Today's lesson: putting the 'fun' into fund transfers 
With a countdown clock on the dashboard (with only 2 digits, hurrah!), & with a chunk of our future 'income' coming from a DC pot, my thoughts turn to the detail of future drawdowns.

My original plan was to move a chunk (around 15% of the funds) to a smaller more flexible provider, where changes might be quicker than with the behemoth that is Aviva, my main DC pot.    I also feel that the more flexible one has some better 'defensive' funds, hence moving some funds there.

The funds have already almost all been crystallised ("luxury" LTA avoidance measures....these have since been justified by the fact that that drawdown pot has grown by over £150k since taking those actions!), and I wanted to just move some of the drawdown amount to this smaller provider.

Turns out one is not allowed to move just part of a drawdown pot.  Booo!
From the HMRC documents here, with my bold emphasis:

It is possible to transfer of sums and assets held under a

• drawdown pension fund

• flexi-access drawdown fund

• dependant’s drawdown pension fund

• dependant’s flexi-access drawdown fund

• nominee’s flexi-access drawdown fund, or

• successor’s flexi-access drawdown fund

to another pension scheme.
However in addition to meeting the normal rules for a recognised transfer (see PTM100010) the transfer will only be a recognised transfer if all the sums and assets of the relevant drawdown fund are transferred as part of the transfer. A transfer of only part of one of the types of drawdown funds listed above cannot be a recognised transfer.

Bah!
Clearly I could move ALL the drawdown amount....but I feel I have managed the funds well with Aviva, & only wanted to "test the waters" of drawdown by taking this action.

Hey ho. Live & learn: maybe this small snippet might help someone else here.   
On the bright side, I have learned that the HMRC Pensions Manual is pretty straightforward to read 

Have you any idea what the reasoning behind that is ?

cfw1994

Albermarle said:

cfw1994 said:

Morning all 
Today's lesson: putting the 'fun' into fund transfers 
With a countdown clock on the dashboard (with only 2 digits, hurrah!), & with a chunk of our future 'income' coming from a DC pot, my thoughts turn to the detail of future drawdowns.

My original plan was to move a chunk (around 15% of the funds) to a smaller more flexible provider, where changes might be quicker than with the behemoth that is Aviva, my main DC pot.    I also feel that the more flexible one has some better 'defensive' funds, hence moving some funds there.

The funds have already almost all been crystallised ("luxury" LTA avoidance measures....these have since been justified by the fact that that drawdown pot has grown by over £150k since taking those actions!), and I wanted to just move some of the drawdown amount to this smaller provider.

Turns out one is not allowed to move just part of a drawdown pot.  Booo!
From the HMRC documents here, with my bold emphasis:

It is possible to transfer of sums and assets held under a

• drawdown pension fund

• flexi-access drawdown fund

• dependant’s drawdown pension fund

• dependant’s flexi-access drawdown fund

• nominee’s flexi-access drawdown fund, or

• successor’s flexi-access drawdown fund

to another pension scheme.
However in addition to meeting the normal rules for a recognised transfer (see PTM100010) the transfer will only be a recognised transfer if all the sums and assets of the relevant drawdown fund are transferred as part of the transfer. A transfer of only part of one of the types of drawdown funds listed above cannot be a recognised transfer.

Bah!
Clearly I could move ALL the drawdown amount....but I feel I have managed the funds well with Aviva, & only wanted to "test the waters" of drawdown by taking this action.

Hey ho. Live & learn: maybe this small snippet might help someone else here.   
On the bright side, I have learned that the HMRC Pensions Manual is pretty straightforward to read 

Have you any idea what the reasoning behind that is ?

Not really!  If anyone does, please share!

It is slightly irritating, but only because I know Aviva will not be as responsive as Intelligent Money could for future drawdown scenarios (plus IM have a pretty decent ‘safe’ defensive fund I would feel good about having 2-3 years funds in).

When markets dropped last Feb, had I been drawing down, I believe I would have wanted to press pause on payments for a month or three: quite happy to trim expenses (easily done for the past year, eh!) & leave funds alone.   I know I could do that with IM within 1 or 2 days max....I suspect it will take at least a week with Aviva.  Need to speak with them to find out more.   I know they suggested lowering the number did not require paperwork (eg, email or call should suffice)....raising it would.

Maybe the answer will be shifting the lot, but the Aviva funds *are* broader and pretty low cost (0.34% for many funds, no extra costs).  No obvious equivalent to IM Optimum Defensive, mind.
One to ponder!

Notepad_Phil

I've always thought it must be something to do with LTA tests and the various BCEs perhaps especially the test at 75.

Only allowing 100% of a drawdown pot to be transferred reduces the accuracy that figures have to be kept at so maybe HMRC decided to do this to reduce the burden on pension schemes or they figured out a way that people could rig things though aggressively splitting up and then remerging a drawdown pot.

cfw1994

Yes, I can imagine that.....it is the growth of those drawdown pots that need the tracking, of course.

That said, the maths needed to track it would be pretty elementary 

Malthusian

At the time the rules were drawn up, it would not just be a question of tracking the growth in the drawdown pension fund for LTA purposes but also the capped drawdown limit and the amount used to date.

That's still elementary maths, of course. However, you also need to bear in mind that when the rules were drawn up in the 90s, income drawdown was seen as a niche product that would be mainly used by members of the Plymouth Brethren who thought annuities were satanic. The day that George Osborne broke the chains and invented pension freedoms, the FCA still believed that income drawdown was only suitable for high-risk investors with at least £100,000 in their pension fund and enough guaranteed income to meet their needs.

And it is quite rare for people to partially transfer any pension fund. Most people in your situation would just transfer the whole lot.

So it was thought that the number of people who would want to partially transfer a pension fund - a minority of a minority - wasn't worth the effort of allowing for all those calculations, and the possibility of errors if it went wrong. (It's easy to imagine an insurer messing the sums up or sending the wrong information to the new scheme, resulting in your limits being higher than they should be.)

All that is now ancient history, but the rules are still the same, and the number of people who want to partially transfer an already-crystallised pension is still thought to be too small to be worth changing the rules for.

dunstonh

My original plan was to move a chunk (around 15% of the funds) to a smaller more flexible provider, where changes might be quicker than with the behemoth that is Aviva, my main DC pot.

Not that it will make any difference but Aviva are pretty quick on their modern plan.  Legacy plans can be pretty sluggish but they use FNZ as their platform which is also used by Standard Life and Vanguard amongst a number of others.   

If you are going to DIY then use a provider that focuses on DIY and not a fudge onto the advice product.  However, if you were using an adviser, then Aviva have retention deals for existing customers that see the platform charge around 0.15% to 0.25% typically (usually in the teens with retention details under age 70)..  Their internal funds are 0.1%.  So a retention deal from Aviva Life to Aviva platform may be an option.

cfw1994

dunstonh said:

My original plan was to move a chunk (around 15% of the funds) to a smaller more flexible provider, where changes might be quicker than with the behemoth that is Aviva, my main DC pot.

Not that it will make any difference but Aviva are pretty quick on their modern plan.  Legacy plans can be pretty sluggish but they use FNZ as their platform which is also used by Standard Life and Vanguard amongst a number of others.   

If you are going to DIY then use a provider that focuses on DIY and not a fudge onto the advice product.  However, if you were using an adviser, then Aviva have retention deals for existing customers that see the platform charge around 0.15% to 0.25% typically (usually in the teens with retention details under age 70)..  Their internal funds are 0.1%.  So a retention deal from Aviva Life to Aviva platform may be an option.

I will dig deeper into the response timeframes for the Group Personal Pension plan we have.   Have been very happy with the platform/choices/costs in general for over 15 years, it is the drawdown phase I need to examine in detail now.

Not sure I understand what you mean when you say "usually in the teens with retention details under age 70"!
Which providers would you suggest focus on DIY?   Are you thinking of HL, AJBell, those kind of platforms?
cheers

dunstonh

Not sure I understand what you mean when you say "usually in the teens with retention details under age 70"!

The retention deals Aviva offer have age as a cost influencer.  The younger you are, the better the terms they will give.  Its basically longevity that they are after.

Which providers would you suggest focus on DIY?   Are you thinking of HL, AJBell, those kind of platforms?
cheers

I will leave the DIY platforms to others but they are the ones that focus on the DIY market exclusively.  HL is the largest of those and probably amongst the most expensive but there are others which will get mentioned by some of the DIY investors here.