Pension switching incentives

Notepad_Phil

MeteredOut said:

The Freetrade SIPP Key Features Document states

"Transfers in of funds that are in drawdown are not currently accepted."

I have a DC pension where I've taken the 25% tax free cash, but no more, so not in drawdown, but does anyone know if FreeTrade will allow that transfer. Or has anyone done that?

I fired off a message to them last week and they've just got back to say they're asking the wider team.

By taking the full tax-free amount out then I would have thought that your pension will be counted as being fully in drawdown by FreeTrade, it's just that you've not taken any further taxable income out. I.e. it's the drawing out of the 25% tax free that puts it into drawdown, not the subsequent further drawing out of taxable income. If you had only taken out some of the tax-free cash then they might have allowed the other portion of the pension to be transferred in (but that's only a might).

Juno_Moneta

MeteredOut - Isn't this the key statement?

"At present, Freetrade only supports Uncrystallised Fund Pension Lump Sums (UFPLS) for customers who wish to withdraw funds from their SIPP after their 55th birthday. We strongly encourage you to seek financial advice before making any withdrawals from your SIPP."
https://freetrade.io/pension/sipp

As you have taken the 25% lump sum, the 75% remainder is crystallised now even though you have not drawn down yet.
That suggests Freetrade is not for you, but call them to find out?

granta

Juno_Moneta said:

Granta yes you're getting a little but of interest, but not much:

The SIPP charges page definitely does say:
"Your Available Funds will not attract any interest, even if they are in credit. You acknowledge that we may receive interest on all of our clients' funds held by our Custodians, and hereby waive your right to claim payment of any part of such interest."
https://freetrade.io/pension/sipp/sipp-charges-schedule

But their package choice page says:
Basic plan £0 a month = 1% AER on up to £1,000 uninvested cash
Standard plan £4.99 a month = 3% AER on up to £2,000 uninvested cash
Plus plan £9.99 a month = 5% AER on up to £3,000 uninvested cash
https://freetrade.io/get-started

So you must be on Plus and paying £119.98 (£9.99 * 12) a year to receive that £150 (£5000 * 3%), net benefit £30.02
I would view this as a bit of a marketing gimmick to build customer base, and at some point in the future the interest element of the package is withdrawn, and the monthly fees continue, and possibly even rise in the future - that's just good business.

I think the top text covers them by confirming that eg if you have a large balance, you're getting no interest on the majority of this uninvested cash. In contrast as I highlighted, you'd get about 2.6%+ (tiered) on the whole lot with HL.

Yes I'm on the Plus Plan as I thought you had to be to access the SIPP.

I never need to hold more than £3k cash anyway so at the moment it's working well, mainly receiving the interest within my ISA. But yes, who knows what changes they could make in future.

MeteredOut

Juno_Moneta said:

MeteredOut - Isn't this the key statement?

"At present, Freetrade only supports Uncrystallised Fund Pension Lump Sums (UFPLS) for customers who wish to withdraw funds from their SIPP after their 55th birthday. We strongly encourage you to seek financial advice before making any withdrawals from your SIPP."
https://freetrade.io/pension/sipp

As you have taken the 25% lump sum, the 75% remainder is crystallised now even though you have not drawn down yet.
That suggests Freetrade is not for you, but call them to find out?

Thanks, that makes sense, I've message them and they're looking into it, so will wait for their response. Was thinking about transferring £50K for the £1,500 bonus. I do have another untouched pot I'm still contributing to, but I'm not sure I'd want to transfer any of that over.

artyboy

artyboy said:

Just initiated my move from CS Direct to Freetrade, all seemed simple enough. Didn't appear to be any way to just elect to have fees paid from the pension itself but for that amount of cashback I'm not going to grumble too much...

Already looking for the next offer 

Well... how very antiquated. Turns out that CS Direct don't even use Origo for transfers, so I now have to fill out a paper form, and send it to Freetrade in the post. 

Thought I'd left this sort of nonsense behind after I'd transferred my old WTW administered works pensions. Maybe that's why CS Direct actually charge a transfer out fee (although they won't in my case for *reasons*)

Ho hum, let's see if I can make the last post in town today 

MeteredOut

Juno_Moneta said:

MeteredOut - Isn't this the key statement?

"At present, Freetrade only supports Uncrystallised Fund Pension Lump Sums (UFPLS) for customers who wish to withdraw funds from their SIPP after their 55th birthday. We strongly encourage you to seek financial advice before making any withdrawals from your SIPP."
https://freetrade.io/pension/sipp

As you have taken the 25% lump sum, the 75% remainder is crystallised now even though you have not drawn down yet.
That suggests Freetrade is not for you, but call them to find out?

In case anyone else has the same question, Freetrade have confirmed that any pension where tax free cash has been withdrawn (even just £1) cannot be transferred to them.