Advisor refusing to allow drawdown?

PinkUnicorn8

Hi there, I'm 58 and wish to withdraw 25% of my private pension pot to reduce mortgage. Pension advisor tells me that there are legislation requirements across range of points which may not support this, but IFA friend tells me that whilst I should take advice and consider the repercussions etc that the final decision is mine and that I am entitled to withdraw the 25% but pension advisor seems to be telling me that if he advises against it then the funds can't be released, I can't find any legislation that supports me being prevented from withdrawing, anyone come across this please?

Albermarle

What do you mean by 'Pension Advisor' ? Are you locked into some kind of relationship with them ? Maybe you will have just transfer the pension out if they are being awkward,
Otherwise normally you can take out the 25% tax free, as your IFA friend says.

PinkUnicorn8

Albermarle said:

What do you mean by 'Pension Advisor' ? Are you locked into some kind of relationship with them ? Maybe you will have just transfer the pension out if they are being awkward,
Otherwise normally you can take out the 25% tax free, as your IFA friend says.

Thank you for replying, they are the advisor we saw a few years ago who amalgamated our existing pension pots into one fund, when I contacted them they told me if they didn't support the reason for withdrawal it couldn't be released, I've recontact them to say I wish to go ahead with it, their reply is "to remind you legislation requires an advice process to confirm viability on a range of points, I don't think that's certain to support" are you aware of any legislation that they may be referencing? I can't find anything, thank you for your help 

Albermarle

If you are paying a financial advisor and request to start the withdrawal process, then I presume they have to go through their standard procedures to advise on whether they think it is a good idea or not. They are highly regulated and have to make sure that you are advised appropriately.
Even if you do not have an advisor, and want to start the withdrawal process, you have to go through a warning type process with the pension provider, to make sure you know what you are doing and do not come back later bleating that your pension has run out etc .
AFAIK though, whatever they advise, you can go against this and insist to take the money.
Suggest to wait for other comments though.

xylophone

 I've recontact them to say I wish to go ahead with it, their reply is "to remind you legislation requires an advice process to confirm viability on a range of points, I don't think that's certain to support" 

You have a standard defined contribution pension with no guarantees/safeguarded benefits?

If so, I do not understand your adviser's reply.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/495377/pension-benefits-with-a-guarantee-factsheet-jan-2016.pdf

Is the case simply that your pension provider will not deal with you but only through an intermediary?

Who is the pension provider?

dunstonh

 when I contacted them they told me if they didn't support the reason for withdrawal it couldn't be released,

This would suggest the adviser is an FA and not an IFA.   Tied reps of the provider (FAs) will have restrictions on them that can prevent them from carrying out a transaction that does not pass their company requirements.

I've recontact them to say I wish to go ahead with it, their reply is "to remind you legislation requires an advice process to confirm viability on a range of points, I don't think that's certain to support" are you aware of any legislation that they may be referencing?

There is no legislation, but FCA rules require a process to be in place that issues the risk warnings where non-advised drawdown is requested.  However, where the provider only offers drawdown via their own advice process, then they are allowed to refuse if they feel the transaction you are doing is unsuitable.    This is one of those risks of using a sales rep FA instead of an IFA or going DIY.

And in most cases, using your pension to pay reduce the mortgage is not considered a sensible thing to do.   It can be in some cases but not in most.

IFAs can also refuse to carry out transactions that they feel are unsuitable but most providers that IFAs use have processes in place to allow the consumer to carry it out without advice which protects the IFA from being sued/complained about later when the person realises it was the wrong thing to do.

IFA friend tells me that whilst I should take advice and consider the repercussions etc that the final decision is mine and that I am entitled to withdraw the 25% but pension advisor seems to be telling me that if he advises against it then the funds can't be released,

They are both right.    All you need to do is transfer the pension to a DIY provider and do it via them.   

PinkUnicorn8

I've not gone to provider directly as dealt with intermediary, it's with SJP

cloud_dog

PinkUnicorn8 said:

I've not gone to provider directly as dealt with intermediary, it's with SJP

Ah, light bulb moment. 

MallyGirl

PinkUnicorn8 said:

I've not gone to provider directly as dealt with intermediary, it's with SJP

That is not a surprise. As stated earlier, you may need to transfer to a different provider in order to do what you want. Note that SJP have some pretty punitive charges for transferring if you are in the early years of the product.
Mortgage rates are still pretty low - I would hope that your pension investments (in the longer term) are out performing your mortgage rate.

dunstonh

I've not gone to provider directly as dealt with intermediary, it's with SJP

And that is your reason.  I thought it would be them.  SJP operate their own salesforce.  It's all integrated.   SJP are both the intermediary and the provider.

So, I refer you back to my earlier post.

Linton

dunstonh said:

 when I contacted them they told me if they didn't support the reason for withdrawal it couldn't be released,

This would suggest the adviser is an FA and not an IFA.   Tied reps of the provider (FAs) will have restrictions on them that can prevent them from carrying out a transaction that does not pass their company requirements.

I've recontact them to say I wish to go ahead with it, their reply is "to remind you legislation requires an advice process to confirm viability on a range of points, I don't think that's certain to support" are you aware of any legislation that they may be referencing?

There is no legislation, but FCA rules require a process to be in place that issues the risk warnings where non-advised drawdown is requested.  However, where the provider only offers drawdown via their own advice process, then they are allowed to refuse if they feel the transaction you are doing is unsuitable.    This is one of those risks of using a sales rep FA instead of an IFA or going DIY.

And in most cases, using your pension to pay reduce the mortgage is not considered a sensible thing to do.   It can be in some cases but not in most.

IFAs can also refuse to carry out transactions that they feel are unsuitable but most providers that IFAs use have processes in place to allow the consumer to carry it out without advice which protects the IFA from being sued/complained about later when the person realises it was the wrong thing to do.

IFA friend tells me that whilst I should take advice and consider the repercussions etc that the final decision is mine and that I am entitled to withdraw the 25% but pension advisor seems to be telling me that if he advises against it then the funds can't be released,

They are both right.    All you need to do is transfer the pension to a DIY provider and do it via them.   

Could there be a GAR or similar where Advice is required?  If so could the OP have the same problems as those wanting to transfer a DB pension?