Need help to transfer DC Pension to access drawdown?

sgm61

Hi

I am now 60 (Sept) and intending to retire from paid employment 31 Dec 2021 - Currently working part time as admin in local NHS hospital.  Have worked in various organisations since I was 16 and feel that with 44 years work behind me it is time that I took a well earned rest.  My youngest had a baby in 2021 (first grandchild) and the plan is that when my daughter returns to work next year (end March 22) that I (and hubby) will help out with childcare 3 days max each week - probably me 2 days and hubby 1 day.  
Hubby retired from NHS Oct 18 (VER) and returned to work during Covid to "help out" and is now back working fulltime until at least March 2023.  Hubby is totally enjoying being back in his old field and using all his skills and experience but also finds it exhausting + 2 hr daily commute doesn't help.

So financial situation at 31.12.21:  Aiming for £3k net combined income per month.
Hubby: DB Pension (ex NHS) in payment £1730 net (£22.8k approx gross) (+ current NHS earnings which are being used to boost savings at this time and not relied on for income)
New State Pension due Oct 26:  Hubby was long time contracted out - but when he finishes full time work we will check online and pay any missing NICs post 2016 yrs to get his best amount.
Me:  DB Pension (ex Bank) in payment Sep 21 - £10200 pa gross.    HL SIPP (cash) at 31.12.21 will be £18k from which I intend to draw £4.5k (25% tax free) and £3600 each tax year thereafter to supplement my personal income 
NHS (2015 scheme NRA 67)  Just got my 20/21 statement £1125 pa accrued at 31.3.21.   Will have another 9 months to add onto this until 31.12.21 i.e. £12000/54 say £185 to add - approx £1300 pa accrued at end of service?   Am I correct in thinking this?  Am contemplating taking this say on 61st birthday (next Sept) 6 years early approx 30% reduction say £900 pa.  What do you think of this?
Full New State Pension secured for me (have checked online) due Sep 28. 
2nd ex Bank DC Pension NRA 65 (finally managed to get online access to this) current value (24.9.21) £28k (previous available statement was Mar 2020 with value of £20k) - I would like to be able to drawdown this as and when required over the coming years and this is where I have my query....

Reading the information online re the pension options available to me - it looks like that the Bank pension can either offer me at NRA 65 (or earlier but reduced amount)
a) annuity of £628 pa (Mar 20) with 50% death benefit to spouse (Hubby not interested as feels he is well enough provided for with own DB pension)
b) tax free cash 25% with reduced annuity & death benefit to spouse
c) cash withdrawals - but only if still in bank employ (NOT APPLICABLE TO ME) and if I have that wrong there is a charge of £300 for each withdrawal made in cash
d) flexible drawdown - THIS IS WHAT I WANT BUT - to access flexible drawdown I have to transfer the pension to another provider!!!

So my dilemma - yes I have already managed to open a HL SIPP for cash to supplement my DB Bank pension - am I able (and will I understand how to) transfer the  Bank DC Pension into my existing HL SIPP/another HL SIPP in cash?   Is this easy to do?  If yes, then I would like to do so sooner rather than later as I am delighted with the current value of the pension and fully understand the value can fluctuate greatly depending on the investments made and I do not wish to tarry too long and risk any great loss.  

I know our finances are pretty good given that neither of us really "planned" for retirement - thanks to this forum I was able to open a HL SIPP and build additional pension funds whilst working to help with the gap between leaving paid employment and SPA.  I feel my 3 children will not be as fortunate however - 1 Civil Service & 1 NHS CARE pensions and the 1 who has DC is more financially astute than the other 2 so they may all be okay in the future.  

Many thanks for reading and I would really appreciate your explanations as to how I can/what I can/cannot do when considering/completing the transfer out of the Bank DC Pension.

Grace

Albermarle

So my dilemma - yes I have already managed to open a HL SIPP for cash to supplement my DB Bank pension - am I able (and will I understand how to) transfer the  Bank DC Pension into my existing HL SIPP/another HL SIPP in cash?   Is this easy to do?  If yes, then I would like to do so sooner rather than later as I am delighted with the current value of the pension and fully understand the value can fluctuate greatly depending on the investments made and I do not wish to tarry too long and risk any great loss.  

Should be no problem for you to transfer this bank pension to HL SIPP . In fact HL positively encourage you to do so .

Transfer your Pension | Hargreaves Lansdown (hl.co.uk)

You need to organise it via HL and usually no need to inform the scheme you are transferring from .

In cash it can take anything from a few days to a couple of months , although it should not take that long .

Marcon

sgm61 said:

Reading the information online re the pension options available to me - it looks like that the Bank pension can either offer me at NRA 65 (or earlier but reduced amount)
a) annuity of £628 pa (Mar 20) with 50% death benefit to spouse (Hubby not interested as feels he is well enough provided for with own DB pension)
b) tax free cash 25% with reduced annuity & death benefit to spouse
c) cash withdrawals - but only if still in bank employ (NOT APPLICABLE TO ME) and if I have that wrong there is a charge of £300 for each withdrawal made in cash
d) flexible drawdown - THIS IS WHAT I WANT BUT - to access flexible drawdown I have to transfer the pension to another provider!!!

Not quite sure why this seems to be a major cause of surprise/concern to you - it really doesn't need to be and is both straightforward and entirely to be expected where your 'original' scheme doesn't offer this sort of flexibility. A lot of DC pensions don't support drawdown (especially older contracts/larger occupational schemes), so don't worry about a giant leap into unknown territory! Just follow Albermarle's helpful link and you'll be on the way to accomplishing what you'd like to do.

squirrelpie

Two additional points:

(1) as it says on the HL page, do check to make sure that your existing DC pension doesn't have some guarantee that you care about, because you will lose the guarantee if you transfer

(2) HL frequently run incentives to transfer pensions to them. I didn't spot any mention on that HL page, so maybe wait a while and see if an offer comes up - as an existing customer they will probably let you know directly. Alternatively I suppose you could call them and ask when the next offer will be, but whether they will tell you I have no idea!

sgm61

Thank you Albermarle, Macron & Squirrelpie for your prompt and informative replies - I didn't notice that my existing DC pension had any other guarantee other than 50% annuity payment to spouse on my death and as we are talking about £300 odd pa - my hubby does not consider this enough to not transfer out.
I guess I'm worried that being not able to talk in an indepth or knowledgeable manner about pensions that I may not know the right questions to ask and miss something essential.  

One question I do have - the existing DC Pension is currently invested in stock/bonds/equities which are automatically moved to less risk options within 5 years of NRA 65 (i.e. from now onwards) - do I need to have these converted into cash before I request transfer or would HL SIPP convert this into cash for me.  Would it be added to my existing cash SIPP or would it be transferred into a new SIPP?   I would prefer to have everything held as cash (yes I am aware that cash is vulnerable to inflation loss however I would intend to take the 25% tax free cash element and then drawdown annually over the next 10-15 years at variable amounts until the pot was cleared.  

gm0

When you request a transfer there are two ways this can be done - in cash - the old scheme liquidate the holdings, settle the trades, then transfer the money - which arrives at the new scheme as cash.  They will do this for you when the request is processed. 

You will need to decide what to do with the funds in the target scheme whether cash and/or other investments mixed in. 
If the actual plan is remaining invested then you are "out of the market" for a short while and it can move with you or against you if you then buy back in.  You will need to tell HL what you want to do on the transfer forms if moving to there.

The 2nd method is called "in specie" where your investments (if they are in funds that exist both ends) remain invested and are moved across and the custody records updates by the schemes behind the scenes.  Advantage - not out of the market which may not matter in this case.  Not all source funds/schemes are suitable for this.

Both transfer types can be quick or slow (many schemes are automated, but some still use paper).  Cash transfer can have hiccups - e.g. a frozen property fund can't be sold.   Specie transfers can get stuck when funds and share classes were thought to but turn out not to actually exist at both ends.  There are solutions to all this stuff but customer service is highly variable once it goes adrift and delays can stack to a few months with a level of hassle and chasing.

Transfer instructions to pull via cash transfer to the SIPP you already have setup is likely to be the simplest route once you have checked carefully that this is what you want to do.
.

Albermarle

do I need to have these converted into cash before I request transfer or would HL SIPP convert this into cash for me.  Would it be added to my existing cash SIPP or would it be transferred into a new SIPP?

When you ask HL to start the transfer process, they will ask you if you want to do it as a cash transfer . Say yes .

When they contact your current scheme provider , they will request the transfer in cash . Your current provider will sell the current investments to cash before transferring.

The cash transfer will go into your existing SIPP, unless you say otherwise.

sgm61

Brilliant gm0 and Albermarle - your explanations have given me confidence that I will be able to negotiate the transfer process.  Thank you so much.

Grace

MX5huggy

If you and husband have savings, you should both make maximum (all your earnings) pension contributions this year and next for him. Minimum benefit of doing this 6.25% due to the tax relief on the way in and the 25% tax free on the way out. 

This presumes neither of you have triggered MPAA by taking any DC (DB don’t count) pension in excess of the 25% tax free. 

Once you have no earnings you continue to contribute £2880 each per year till 75. (Even if MPAA triggered). Which will receive tax relief to turn it to £3600 in your pensions. 

sgm61

Thank you MX5huggy - I have been so focused on my pension building I forgot that my hubby could open his own SIPP and put this year's income in (max £40k) and get tax relief on same.  He could then withdraw 25% tax free and enough each year to keep him under the 40% tax threshold.  Free money!  I am saving £6k pa (max) into a regular saver and it would be very beneficial to then withdraw same each January and contribute £2880 into both our SIPPS on a yearly basis.  More free money!!  Thank you again.