Timline to draw tax free cash after 55

Pat38493

I have a question around drawing out the tax free cash from my DC schemes after I reach 55.

If at some point after 55 I decide I want to take out all the tax free cash and crystallise the amount, what is the normal rough timeline to do this from when I decide I want to do it, to actually having the money in my bank account?

I have two DC schemes - one is with Aviva and one with Aegon.

I am not looking for exact number of days - just to get an idea of whether we are talking just a few days, or several weeks, or several or many months to get the money out?

Albermarle

With most providers you have to contact them to say you want to start the process. Then will follow some questions basically making sure you understand what you are doing, and if you take the money out too quick it might run out. It is something they have to do, and it covers them from any comeback later. This can take the form of simply some on line questions, or filling in forms, or in some cases booking a telephone discussion.
From other threads it seems to take between a week and a month for the cash to arrive, if you are doing it yourself. Quicker if you have an advisor I believe.
All the above assumes that the pensions you have allow drawdown. It maybe if they were set up some years ago that you may need first to transfer to a more modern pension. This can take a week to months, if you transfer in specie ( means transfer the actual funds over rather than in cash, although it is often not possible to transfer in specie)) 

dunstonh

If at some point after 55 I decide I want to take out all the tax free cash and crystallise the amount, what is the normal rough timeline to do this from when I decide I want to do it, to actually having the money in my bank account?

It depends on your provider.  Some can you have 25% TFC in your bank account in about 20 minutes.  Some could be three weeks. 

I have two DC schemes - one is with Aviva and one with Aegon.

Both providers have pensions that do not offer drawdown as well as pensions that do.  So, if you need to move your pensions, you need to factor that in your timeline.  A transfer from Aviva is probably about 3 days. Aegon, could be up to 4 weeks (some Aegon plans are quicker than others).

msallen

I took (some not the full 25%) tax free cash a few weeks ago from Fidelity. It took about a week and a half.

Pat38493

dunstonh said:

If at some point after 55 I decide I want to take out all the tax free cash and crystallise the amount, what is the normal rough timeline to do this from when I decide I want to do it, to actually having the money in my bank account?

It depends on your provider.  Some can you have 25% TFC in your bank account in about 20 minutes.  Some could be three weeks. 

I have two DC schemes - one is with Aviva and one with Aegon.

Both providers have pensions that do not offer drawdown as well as pensions that do.  So, if you need to move your pensions, you need to factor that in your timeline.  A transfer from Aviva is probably about 3 days. Aegon, could be up to 4 weeks (some Aegon plans are quicker than others).

The Aegon for sure has flexibility because that was the reason my company gave for moving to them, so I'm sure it has drawdown possibilities.  It's basically a SIPP with company contributions.

For the Aviva one, I seem to recall that the trustees moved our old DC fund into this Aviva fund mainly because they wanted to move out of the old one where there was no drawdown. If I click through from the Aviva website where I see my pension value into the options for how to take the benefits it takes me to a page that sates out all of the modern flexible access options.

gm0

Don't do this ahead of a fixed deadline.  Many process steps and possible points for a delay to happen.
2-4 weeks.  Double if a transfer is needed.

I did a couple with a life company and a consumer SIPP DIY and that was my experience. One (life company) was send emails and letters, fill out and upload PDF forms style.  The other (consumer SIPP) sent a few formal documents but was more phone centric in the processing.  Both happened across several teams within the company.  And neither felt particularly "joined up".

Albermarle

Aviva mainly work via financial advisors nowadays . I would just check that they will not insist that you go through an advisor to start drawdown. Maybe as an existing customer that might not be necessary., their policies seem not totally clear.
For example The Pru insist you go through one of their advisors, and charge you 3% for the privilege.

dunstonh

Albermarle said:

Aviva mainly work via financial advisors nowadays . I would just check that they will not insist that you go through an advisor to start drawdown. Maybe as an existing customer that might not be necessary., their policies seem not totally clear.
For example The Pru insist you go through one of their advisors, and charge you 3% for the privilege.

Aviva also has an in-house sales team now.    Many old life companies do this now as it is easy money for them, and in each of the cases I have seen, the in-house sales team cost more, and the product charges were higher.

Pat38493

Albermarle said:

Aviva mainly work via financial advisors nowadays . I would just check that they will not insist that you go through an advisor to start drawdown. Maybe as an existing customer that might not be necessary., their policies seem not totally clear.
For example The Pru insist you go through one of their advisors, and charge you 3% for the privilege.

3% of what for doing what?

They charge you 3% of the entire balance for moving the fund into drawdown?  That cannot be right can it?  That is complete daylight robbery?

dunstonh

Pat38493 said:

Albermarle said:

Aviva mainly work via financial advisors nowadays . I would just check that they will not insist that you go through an advisor to start drawdown. Maybe as an existing customer that might not be necessary., their policies seem not totally clear.
For example The Pru insist you go through one of their advisors, and charge you 3% for the privilege.

3% of what for doing what?

They charge you 3% of the entire balance for moving the fund into drawdown?  That cannot be right can it?  That is complete daylight robbery?

If you choose to use them to provide advice and service (even though the advice is very limited and usually restricted that they can only move their own branded products and not those of others) then that is your choice.  You don't have to use them.    

And no, they are not charging 3% for moving the fund into drawdown.  They are charging 3% for setting up a new pension that will allow drawdown.  

Pat38493

dunstonh said:

Pat38493 said:

Albermarle said:

Aviva mainly work via financial advisors nowadays . I would just check that they will not insist that you go through an advisor to start drawdown. Maybe as an existing customer that might not be necessary., their policies seem not totally clear.
For example The Pru insist you go through one of their advisors, and charge you 3% for the privilege.

3% of what for doing what?

They charge you 3% of the entire balance for moving the fund into drawdown?  That cannot be right can it?  That is complete daylight robbery?

If you choose to use them to provide advice and service (even though the advice is very limited and usually restricted that they can only move their own branded products and not those of others) then that is your choice.  You don't have to use them.    

And no, they are not charging 3% for moving the fund into drawdown.  They are charging 3% for setting up a new pension that will allow drawdown.  

OK understood but I am pretty sure this fund already allows move into drawdown - I will go back to the documents to check.

In any case 3% seems like an awful lot - it was stated by Alermarle above that Pru also insists that you have to do it this way (which I would surely think must be against some kind of anti competition laws).  That would be a 30K charge on a 1M pot.