Virgin Money Pensions - a warning

guestjim

I wanted to use the tax-free 25% of my Virgin Pension Fund and contacted them about it. I was told the only way to withdraw money was as a lump sum; that is all of it at once. That would mean paying high rates of tax on the withdrawal, up to 45%.  

There is a workaround that you can transfer the money to a SIPP that allows you to take a proportion of the money out.  That is troublesome and takes six weeks.  If you needed the money urgently your only option is to pay the tax.

As a tactic, I take money out from my pensions to just below the higher tax rates each year (and invest any surplus in ISAs, etc,).  You can't do this with the Virgin offering.  If I had known that I could not withdraw piecemeal I would never have joined the scheme.  There should be a warning about that clearly highlighted before you join.

It is also expensive and not an impressive service.  Cool music and 'hip' messages while queuing on the phone is no substitute for solid service. 

Linton

When did you join the Virgin Pension?

This is a general problem with old pension schemes.  To implement the 2015 pension drawdown changes would require changes to computer systems and procedures, perhaps new staff, certainly extra training and no doubt many other expensive things.  If the costs cannot be justified the pension provider cannot be forced to support drawdown.  So your choce is as you have been told to move your pension to a provider who can support what you want.

Notepad_Phil

When did you take this pension out?

Mrs Notepad opened one up several years ago and I well remember the warnings that it had at the time about only being able to access the money via a single lump payment - not a problem for us as she's always planned to transfer it several months before she needs access to the money.

dunstonh

  You can't do this with the Virgin offering.  If I had known that I could not withdraw piecemeal I would never have joined the scheme.  There should be a warning about that clearly highlighted before you join.

If you bought a 4:3 black and white TV would you expect it to be highlighted to you that it was not a ultra HD widescreen TV with Dolby Atmos.   Or if you bought a shovel, you would expect it to say it was not a fork?

Most, legacy schemes do not support income drawdown.   

When did you join the Virgin pension?   Virgin hasn't retailed a pension product for a number of years.  They used to offer a stakeholder pension and a personal pension.   No stakeholder pension offers income drawdown.  Most personal pensions didn't offer income drawdown either (only the more advanced ones).  

At no point did Virgin tell you that they supported income drawdown.  So, why did you think it would?

That said, Virgin did clearly highlight it. Here it is from their key features document:

There is a workaround that you can transfer the money to a SIPP that allows you to take a proportion of the money out.  That is troublesome and takes six weeks.  If you needed the money urgently your only option is to pay the tax.

That isn't a workaround. It is the solution.   This is why people are encouraged to get their pensions in order 6-24 months before they start drawing benefits.

sheslookinhot

This is what can happen when people take out pensions without understanding all the terms and conditions, even just the headline bullets.