unlocking pension funds

beechnuts

I have a CIS pension which I stopped paying into in 2002 I am 54 years of age now and want to unlock some of the funds in this pension. Is it possible? The fund value at this time is approx £22,000 - Phil

EdInvestor

You can take benefits from a pension after the age of 50. If you want to take just the 25% tax free cash and no income at present, then you need to put the pension into "income drawdown" which will involve moving it to a SIPP, as it's quite small.

Two things to check: does the pension have a guaranteed annuity rate attached which would mean you would lose out if you transferred now, rather than waiting to maturity?

Does the pension fund contain any "protected rights" (contracted out) money? At the moment this money can't be moved to a SIPP, which means you would need to wait until regulations change, planned for next October. You can convert the remaining 75% of the money into an annuity (taxable income for life) now if you want but it would be better to wait as annuity rates are very poor at your age.

Retired_I.F.A.

EdInvestor wrote: »

You can take benefits from a pension after the age of 50. If you want to take just the 25% tax free cash and no income at present, then you need to put the pension into "income drawdown" which will involve moving it to a SIPP, as it's quite small.

Why do you repeatedly say it has to go into a SIPP when you know full well it does not Ed?

EdInvestor

Because most insurance companies won't offer drawdown for pension funds worth 22k.There are one or two which claim to offer it, but they appear to have very narrow investment options (funds only) and very high charges.

You couldn't recommend that because high charges escalate the risk of drawdown.

Retired_I.F.A.

Oh I see, so just because only a few will do it you reckon its ok to dismiss them and assume that they have a lmited fund choice, high minimum premiums, and high charges. hmmmmmm Does that include the one you named in the thread when I looked to doing it for myself, the one with 960 odd investment funds and a minimum premium of £3600.?

edit... oh and charges comparable to anyones.

dunstonh

There are one or two which claim to offer it, but they appear to have very narrow investment options (funds only) and very high charges.

Apart from the ones that have large investment options (1000 odd funds for example) and lower charges than the SIPPs you promote so much.

You couldn't recommend that because high charges escalate the risk of drawdown.

Bad investment decisions can do far more damage. In reality, income drawdown on maximum commission using a fund supermarket only hits the reduction in yield by about 0.1% p.a. over 15 years compared to going with HL.

EdInvestor

Righto, let's have the list of the competitive non-SIPP providers of income drawdown for small funds (no recommendations involved, just the list).

Retired_I.F.A.

You pair crack me up you really do.:rotfl:

Ed methinks has SIPP tatooed on her bum courtesy of the resident tatooist at HL and Dunston who sits on his most of the day and night mon-sun screaming the virtues of Independent Financial Advice louder than Mel Gibson crying "FREEDOM" is so hooked on this forum he ignores buisness offered to him on a plate.

averageguy11

I'm waiting for the list ..i asked on a thread the othr day...had no reply though..surprise surprise

dunstonh

I'm waiting for the list

Have you paid for it? I'm not here to give free advice. I'm not posting a list. I dont have the inclination to run the research software (which costs money) and run off the list of names. There are 4 providers that that come to mind but I know one provider will win virtually every time and that provider has been named although I am not going to keep saying it because it can only be purchased via an IFA and then I will get accused of touting for business. The provider does not deal with the public direct (although they will when its set up).

averageguy11

Ouch...thats a bit harsh..erm..list...well try one....u know one name over coffee like...maybe 2 if u feel gererous...seeing as u hav four 'that come to mind' u wont hav to run that expensive software will u..cough cough.

Only purchsed via IFA...so i hav to pay them money for a list?..or even one name...money for old rope!