Best low cost drawdown providers

kerfootuk

Looking to transfer wife's Pru with profits pension to a drawdown to release the 25% tfls in order to help our son with a house deposit. Any recommendations for a low cost provider?

[Deleted User]

https://www.thetimes.co.uk/money-mentor/article/best-pension-drawdown-providers/?amp=1#:~:text=The%20best%20pension%20drawdown%20provider,well%2C%20each%20receiving%20four%20stars.

…but raiding pensions to pay for kids’ house is a bad idea. 

Albermarle

Not everybody is so happy with Vanguard....

Has anyone any experience of the drawdown process with Vanguard? — MoneySavingExpert Forum

kerfootuk

We intend taking the tfls and leaving the rest in a managed fund as we're not investment savvy. £2880 put into the pension each year to maximise tax benefits. She is 67 in April and I will be 66 in April so we can live off our state pensions without the need to use our personal pensions.

kerfootuk

Deleted_User said:

https://www.thetimes.co.uk/money-mentor/article/best-pension-drawdown-providers/?amp=1#:~:text=The%20best%20pension%20drawdown%20provider,well%2C%20each%20receiving%20four%20stars.

…but raiding pensions to pay for kids’ house is a bad idea. 

Better to help them whilst still alive than for them to wait until you die.

dunstonh

As you dont intend to draw on the pensions again (i.e. not for income) then using the 25% upfront it not going to impact you.  It stops you using phased drawdown but that only matters if you were going to draw an income from it later.

Albermarle

kerfootuk said:

We intend taking the tfls and leaving the rest in a managed fund as we're not investment savvy. £2880 put into the pension each year to maximise tax benefits. She is 67 in April and I will be 66 in April so we can live off our state pensions without the need to use our personal pensions.

Most people leave their money in some kind managed funds , even some of the  the investments savvy ! , although generally they look for low cost ones.
However even if you only have one managed fund you still have to pick which one . The drawdown provider will only offer you generalised guidance , not any specific advice .

squirrelpie

dunstonh said:

As you dont intend to draw on the pensions again (i.e. not for income) then using the 25% upfront it not going to impact you.  It stops you using phased drawdown but that only matters if you were going to draw an income from it later.

I don't quite understand this. What is it that it stops you doing? (in simpler mechanistic terms, please). You can still take income payments from a crystallised pot after having taken the TFLS. Is it not simply the start of a phase drawdown process?

dunstonh

squirrelpie said:

dunstonh said:

As you dont intend to draw on the pensions again (i.e. not for income) then using the 25% upfront it not going to impact you.  It stops you using phased drawdown but that only matters if you were going to draw an income from it later.

I don't quite understand this. What is it that it stops you doing? (in simpler mechanistic terms, please). You can still take income payments from a crystallised pot after having taken the TFLS. Is it not simply the start of a phase drawdown process?

If you draw the 25% up front, that is it.  You don't have any access to tax free money again in the future in respect of that fund.    So, it eliminates phased UFPLS as an income method.      Over the long term, that method would be expected to generate the largest tax free amount.   You would only be able to use flexi-access drawdown where everything you draw is taxable.

Phasing can really describe many methods.   So, don't pay too much attention to the terminology.   Taking the 25% up front upfront stops it from being used with each future withdrawal.     

gm0

@squirellpie

Our friendly forum IFA has explained that deferring the use of 25% TFC lets you use it later in other tax years a bit at a time so UFPLS is a better approach than 25% of all of it up front.  And as the untouched pot "grows" you get 25% of more until you hit the buffers at Lifetime Allowance where tax free cash stops.

So for many people - unless they need the money for something = UFPLS nibbles. Or small sections of total benefits each taken as a FAD (a phased chunk at a time) which are effectively the same thing if the income is taken - the marked for income piece is optional via the second route and can be taken as wanted.  What you do depends on who you use to hold your pension and what they readily support on their IT and processes without generating an excess of compliance paperwork for you at each event.  So a mix of the principles of pension freedoms and the practical. 

Different vendors have more or less painful processes to achieve what their internal risk people view as "adequate" code of practice compliance for when the FCA could come knocking or a complaint goes to FOS

There is also a clear advantage that money inside a pension is not counted for inheritance taxes.
Whereas a TFLS is inside your estate once it is taken and so counts.  That could be relevant to a lot of people who own a chunk of a house in the south.

If you become entangled with Life Time Allowance calculations - via DB income x20 or the value of DC pots towards £1m+ this situation alters again due to the more complicated tax rules that then apply to pension growth during retirement.  

So for a minority it is one for careful research and/or advice to work out a holistic approach for your specific situation

kerfootuk

Any additional contributions after taking the 25% tfls would also qualify for the 25% tfls wouldn't they?