Standard Life - no option for partial crystallising?

MrBobbins

I'm 55 later this year and just have one pension - a DC group one via my employer. As I'm approaching LTA, and not planning to retire just yet, I thought it would be a good idea to (as suggested here too) start crystallising a chunk each year to just give me enough tax free cash to use my (and hopefully partner's) ISA allowance. 

I sent a message to my pension provider (Standard Life) to check this would be possible, and was rather disappointed by the reply:

Here's the relevant bit of my message to them:

Hi, I'm 55 later this year and I'd like to understand better what options I will have at this time. I have some specific questions relating to (partially) crystallising my pension to move it into Flexi Access Drawdown:
Can I (for instance) crystallise £80K of my pension (taking £20K tax free and moving £60K into Flexi Access Drawdown) soon after turning 55 later this year, and then do the same thing the following year, etc? Is there a limit to how frequently/often I can do this?

.. and here's the relevant bit of their reply:

If you were looking to make a partial transfer to take your benefits and to continue contributing, this can be done but only with the criteria that you are definitely taking some kind of benefits from your pension upon transfer being completed, and that you only leave £100 behind to keep this plan open to future contributions. 

So, this looks like my only option is to crystallise almost all of my pot early, then I guess a final crystallisation at actual retirement. I guess this will work in terms of avoiding/minimising LTA (forgetting the 75 BCE situation for now), but I'd probably swap the LTA tax for income/capital gains tax from wherever I invest the large tax free lump sum. I realise there are some options (VCTs etc.) to minimise that but I was really hoping to keep things simple!

The "definitely taking some kind of benefits from your pension upon transfer being completed" seems problematic too! I guess this means if I do this, I'd have to start doing drawdown and therefore lose my annual allowance?

Is this a normal limitation with company schemes? Any other options that people can suggest?

QrizB

I might be mis-reading this, bit it sounds to me as though you'll be able to transfer out all bar £100 to another pension scheme. Once in that scheme you should then have the option of partial crystallisation.

Of course I could be wrong!

MrBobbins

QrizB said:

I might be mis-reading this, bit it sounds to me as though you'll be able to transfer out all bar £100 to another pension scheme. Once in that scheme you should then have the option of partial crystallisation.

Of course I could be wrong!

Hmm. You may be right! Sounds like a good thing to ask for clarification on with a followup question!

Albermarle

It is possible if your SL scheme is a bit old , then it does not support drawdown at all  ( many older pension schemes do not )
I have an older SL scheme ( 30 years old ) and if I want to start drawdown , I will have to transfer it to a new SL pension ( or transfer it to a new provider ) .
A new SL scheme should be OK to do what you want . Maybe try giving them a call . If you are a 'Priority Plus' customer, which you should be if you have a big enough pot to have LTA issues, SL tend to be quick at responding/answering the phone. 

Marcon

MrBobbins said:

I'm 55 later this year and just have one pension - a DC group one via my employer. As I'm approaching LTA, and not planning to retire just yet, I thought it would be a good idea to (as suggested here too) start crystallising a chunk each year to just give me enough tax free cash to use my (and hopefully partner's) ISA allowance. 

I sent a message to my pension provider (Standard Life) to check this would be possible, and was rather disappointed by the reply:

Here's the relevant bit of my message to them:

Hi, I'm 55 later this year and I'd like to understand better what options I will have at this time. I have some specific questions relating to (partially) crystallising my pension to move it into Flexi Access Drawdown:
Can I (for instance) crystallise £80K of my pension (taking £20K tax free and moving £60K into Flexi Access Drawdown) soon after turning 55 later this year, and then do the same thing the following year, etc? Is there a limit to how frequently/often I can do this?

.. and here's the relevant bit of their reply:

If you were looking to make a partial transfer to take your benefits and to continue contributing, this can be done but only with the criteria that you are definitely taking some kind of benefits from your pension upon transfer being completed, and that you only leave £100 behind to keep this plan open to future contributions. 

So, this looks like my only option is to crystallise almost all of my pot early, then I guess a final crystallisation at actual retirement. I guess this will work in terms of avoiding/minimising LTA (forgetting the 75 BCE situation for now), but I'd probably swap the LTA tax for income/capital gains tax from wherever I invest the large tax free lump sum. I realise there are some options (VCTs etc.) to minimise that but I was really hoping to keep things simple!

The "definitely taking some kind of benefits from your pension upon transfer being completed" seems problematic too! I guess this means if I do this, I'd have to start doing drawdown and therefore lose my annual allowance?

Is this a normal limitation with company schemes? Any other options that people can suggest?

As suggested above, I think there may be a crossed wire here. You've asked one question (crystallising) and SL have answered a slightly different one (transferring)! Give them a ring and see if you can sort things out that way, albeit with a follow up e-mail to confirm.

Is it possible this is actually an occupational DC arrangement (one with trustees), rather than a group personal pension?

MrBobbins

Thanks for the help everyone. Just got off the phone to Standard Life. I'm still a little confused, but the main upshot is that they confirmed my pension (it is a group personal pension) is a "drawdown enabled plan" , and that I can do repeated small crystallisations exactly as I asked. As suggested, it does seem like the person who replied to my message had misunderstood my question.

They're sending me some documents through which will hopefully explain this more. I'll do another update here if there's useful stuff to add from it.

DreZZ

I had a Scottish Widows DC group pension when I was working.  The investment choices were very limited so I did partial transfers out in cash to a Standard Life Wrap SIPP, added some carryover, and had a small DB transfer to the SIPP (overseen by my IFA).  I continued to make £40k per annum pension contributions for a few years whilst still working.  When I finished work I transferred the remainder of the Scottish Widows account over to the SL SIPP.  Then disengaged the services of the IFA and transferred the SIPP to Interactive Investor where it now sits.  I finished work at age 55 and then started flexi access drawdown.
If you're continuing to work and make pension contributions you need to be careful not to take any SIPP income if you wish to contribute above the MPAA £4k.  In your situation, continuing working and making pension contributions, approaching LTA and for general retirement cashflow planning you could consider getting financial planning help from an IFA and then moving to self directed later if you are confident to do so.