Transferring Prudential AVC to SIPP

thebigun

Thank you very much for taking the time to reply VXman.

Albermarle

Note, your first withdrawal from your drawdown account after your initial 25% lump sum will be taxed at 40% no matter what your normal tax rate is.

Not necessarily, a lot depends on at what point in the tax year you make the first withdrawal.

VXman

Albermarle said:

Note, your first withdrawal from your drawdown account after your initial 25% lump sum will be taxed at 40% no matter what your normal tax rate is.

Not necessarily, a lot depends on at what point in the tax year you make the first withdrawal.

Well, it did for me. What time of the year would be better and why?

Dazed_and_C0nfused

VXman said:

thebigun said:

VXman said:

Just to update this thread.

We transferred my wife's AVC's to Vanguard before cashing them in. The transfer process was simple - all done on line via Vanguard website and took less than a week. Went through around my wifes 60th birthday and no MVR was applied.

We could have cashed them in, converted to a drawdown with Prudential (which interestingly would have required independent financial advice (I assume paid) according to the Pru?) Then we could have transferred out. Going direct to Vanguard was a lot simpler. I was just worried that the Pru could have added a MVR if it had not gone through on my wife's 60th birthday. However, in practice they allow a 30 day window and in the current economic climate it was unlikely to happen anyway.

We are now in the process of withdrawing the 25% tax free sum and putting the remainder into a drawdown account. We also need to choose what fund to invest the remaining 75%. A difficult one as we really don't know when or how much we are likely to withdraw anything as we don't really need it at the mo. I know - a nice position to be in.

On the plus side the money is still getting 3.25% interest while sitting in our Vanguard as cash - which is not bad for an instant access account. Pretty much the same as it has been growing at Prudential for the last few months!

Impressed with Vanguard, Even though it is low cost and website based they have excellent customer service on the phone. Knowledgeable and quick to answer the call.

Thank you so much for this very useful. I am now in a similar position and wish to do the same with a pot of around £66,500 before any potential MVR. I will be 60 at the end of May this year. Can I clarify.....
1) When did your wife apply for the transfer i.e how many weeks/months before in the end? 
2) Also how long did it take for you to then arrange to withdraw the 25% tax free amount and was that easy enough?
3) Did the prudential or vanguard charge a transfer fee?

1. My wife's birthday was on 11th. Looking at her Vanguard documents she instigated the transfer on the 10th Jan and it was completed on the 17th. 

2. Once your money is in the Vanguard pension account you have to go through the steps of having talked to Pension wise (or other financial advisor) or at least say you have. You will then need to go through some questions on the phone with a Vanguard advisor to create your drawdown account. She requested the 25% on 30th and it arrived in my bank account on 6th Feb. (Vanguard withdrawals seem to take 5 working days) So whole process from start of transfer to tax free amount in bank took 4 weeks. 

3. No transfer fees.

Note, your first withdrawal from your drawdown account after your initial 25% lump sum will be taxed at 40% no matter what your normal tax rate is. You will have to go through the process of claiming that back which is reasonably quick it you do it online through your online tax account if you have one set up (Government gateway). After that it seems to be at the standard 20% (providing you keep under the 40% tax threshold)

Your provider is doing something wrong then.

The first taxable payment from a personal pension should have the emergency tax code (1257L) applied.  This will mean that a proportion will have no tax deducted then depending on the amount of the first withdrawal  some 20% tax, then some at 40% and if large enough payment some at 45% as well.

You can claim a refund of any excess tax but you don't have to do this, if you do nothing HMRC will automatically refund any excess tax when they review things after the end of the tax year.

Or it will be sorted via your tax return if you have to file one.

VXman

Dazed_and_C0nfused said:

Your provider is doing something wrong then.

The first taxable payment from a personal pension should have the emergency tax code (1257L) applied.  This will mean that a proportion will have no tax deducted then depending on the amount of the first withdrawal  some 20% tax, then some at 40% and if large enough payment some at 45% as well.

You can claim a refund of any excess tax but you don't have to do this, if you do nothing HMRC will automatically refund any excess tax when they review things after the end of the tax year.

Or it will be sorted via your tax return if you have to file one.

It may not have been 40% actually. I remember thinking at the time it was an odd amount as it didn't work out as exactly 40%. 

I wouldn't have waited for HMRC to refund or until a tax return as I know I should only pay 20% and it was about £5000. For me that's a lot of money sitting with the HMRC when it should be mine.

BIGFATBALOO

Albermarle said:

What we want is the full value of the policy (- 25%) put into an account that we can draw on and for it to grow reasonably in the mean time and to avoid any charges if possible.

That's what we all want !  Hopefully in the long run our pension pots should 'grow reasonably' but no one will ever promise you that. Plus no pension provider offers the services free of charge, although the transfer should be free. In fact some providers offer cashbacks for transfers in from time to time. 

 Yes, which is likely to be Vanguard. What I am trying to work out is the easiest and best way to do that. It looks like asking Vanguard to do the transfer

That is in fact the only way to do it. You do not need to have contact with RL.

What does RL mean ? 

Albermarle

BIGFATBALOO said:

Albermarle said:

What we want is the full value of the policy (- 25%) put into an account that we can draw on and for it to grow reasonably in the mean time and to avoid any charges if possible.

That's what we all want !  Hopefully in the long run our pension pots should 'grow reasonably' but no one will ever promise you that. Plus no pension provider offers the services free of charge, although the transfer should be free. In fact some providers offer cashbacks for transfers in from time to time. 

 Yes, which is likely to be Vanguard. What I am trying to work out is the easiest and best way to do that. It looks like asking Vanguard to do the transfer

That is in fact the only way to do it. You do not need to have contact with RL.

What does RL mean ? 

Royal London

BIGFATBALOO

Albermarle said:

BIGFATBALOO said:

Albermarle said:

What we want is the full value of the policy (- 25%) put into an account that we can draw on and for it to grow reasonably in the mean time and to avoid any charges if possible.

That's what we all want !  Hopefully in the long run our pension pots should 'grow reasonably' but no one will ever promise you that. Plus no pension provider offers the services free of charge, although the transfer should be free. In fact some providers offer cashbacks for transfers in from time to time. 

 Yes, which is likely to be Vanguard. What I am trying to work out is the easiest and best way to do that. It looks like asking Vanguard to do the transfer

That is in fact the only way to do it. You do not need to have contact with RL.

What does RL mean ? 

Royal London

Thank you 👍