Aegon claims I need IFA advice to take tax free cash

Pat38493

I posted a question to Aegon asking if I would be able to withdraw my (so far available) tax free cash at age 55, even whilst both me and my employer are actively making contribution to the pension.

They have just come back with an answer but they are saying yes I can do this, but only if I take independent financial advice.

Their exact wording is "I can confirm that you can still be in an active employment and withdraw your pension via option 5. In order to withdraw your pension this way, you will need to go through an Independent Financial Advisor or our own Aegon Assist.  You must also be over the age of 55 to withdraw any of your pension unless you have an ill-health claim or protected retirement age."

Since when would I need to take IFA advice in order to withdraw tax free cash from a DC pot and are they allowed to insist on this?  If so I would then just ask them if I can partially transfer out the existing balance but still continue to contribute...

Marcon

Pat38493 said:

I posted a question to Aegon asking if I would be able to withdraw my (so far available) tax free cash at age 55, even whilst both me and my employer are actively making contribution to the pension.

They have just come back with an answer but they are saying yes I can do this, but only if I take independent financial advice.

Their exact wording is "I can confirm that you can still be in an active employment and withdraw your pension via option 5. In order to withdraw your pension this way, you will need to go through an Independent Financial Advisor or our own Aegon Assist.  You must also be over the age of 55 to withdraw any of your pension unless you have an ill-health claim or protected retirement age."

Since when would I need to take IFA advice in order to withdraw tax free cash from a DC pot and are they allowed to insist on this?  If so I would then just ask them if I can partially transfer out the existing balance but still continue to contribute...

They aren't saying you do have to take IFA advice - you can use their free Aegon Assist service.

Pat38493

Marcon said:

Pat38493 said:

I posted a question to Aegon asking if I would be able to withdraw my (so far available) tax free cash at age 55, even whilst both me and my employer are actively making contribution to the pension.

They have just come back with an answer but they are saying yes I can do this, but only if I take independent financial advice.

Their exact wording is "I can confirm that you can still be in an active employment and withdraw your pension via option 5. In order to withdraw your pension this way, you will need to go through an Independent Financial Advisor or our own Aegon Assist.  You must also be over the age of 55 to withdraw any of your pension unless you have an ill-health claim or protected retirement age."

Since when would I need to take IFA advice in order to withdraw tax free cash from a DC pot and are they allowed to insist on this?  If so I would then just ask them if I can partially transfer out the existing balance but still continue to contribute...

They aren't saying you do have to take IFA advice - you can use their free Aegon Assist service.

OK yes - I just looked up this "Aegon Assist" service and it seems like it's not a financial adviser it's a free service where they will hopefully just do what I ask them to do (if indeed I even wanted to go ahead with it - I am more exploring options at the moment).

Marcon

Pat38493 said:

Marcon said:

Pat38493 said:

I posted a question to Aegon asking if I would be able to withdraw my (so far available) tax free cash at age 55, even whilst both me and my employer are actively making contribution to the pension.

They have just come back with an answer but they are saying yes I can do this, but only if I take independent financial advice.

Their exact wording is "I can confirm that you can still be in an active employment and withdraw your pension via option 5. In order to withdraw your pension this way, you will need to go through an Independent Financial Advisor or our own Aegon Assist.  You must also be over the age of 55 to withdraw any of your pension unless you have an ill-health claim or protected retirement age."

Since when would I need to take IFA advice in order to withdraw tax free cash from a DC pot and are they allowed to insist on this?  If so I would then just ask them if I can partially transfer out the existing balance but still continue to contribute...

They aren't saying you do have to take IFA advice - you can use their free Aegon Assist service.

OK yes - I just looked up this "Aegon Assist" service and it seems like it's not a financial adviser it's a free service where they will hopefully just do what I ask them to do (if indeed I even wanted to go ahead with it - I am more exploring options at the moment).

It's a bit of free financial education for those who may not have other resources to work out what to do - and they might even be able to throw a useful crumb or two into your thought processes, so could be worth giving it a go!

Albermarle

Pat38493 said:

Marcon said:

Pat38493 said:

I posted a question to Aegon asking if I would be able to withdraw my (so far available) tax free cash at age 55, even whilst both me and my employer are actively making contribution to the pension.

They have just come back with an answer but they are saying yes I can do this, but only if I take independent financial advice.

Their exact wording is "I can confirm that you can still be in an active employment and withdraw your pension via option 5. In order to withdraw your pension this way, you will need to go through an Independent Financial Advisor or our own Aegon Assist.  You must also be over the age of 55 to withdraw any of your pension unless you have an ill-health claim or protected retirement age."

Since when would I need to take IFA advice in order to withdraw tax free cash from a DC pot and are they allowed to insist on this?  If so I would then just ask them if I can partially transfer out the existing balance but still continue to contribute...

They aren't saying you do have to take IFA advice - you can use their free Aegon Assist service.

OK yes - I just looked up this "Aegon Assist" service and it seems like it's not a financial adviser it's a free service where they will hopefully just do what I ask them to do (if indeed I even wanted to go ahead with it - I am more exploring options at the moment).

It sounds very similar to the Fidelity system. Before you can withdraw anything from your pension, you have to book a phone call with one of their retirement advisors ( which is free)  There seems to be three reasons behind this. 
1) They explain your options/how the process works/try to help you  make sure you know what you are doing.
2) They are covering their backside, in case later you say you did not realise the money would run out or some other similar claim.
3) They try and gently push you towards their paid personal advice service.

dealyboy

@Pat38493 ...
It may just be one of these psychological manipulation (strong nudge) suggestions, just in case you can't be trusted to know your own mind, just as in the case of taking a UFPLS you're asked to confirm you've taken PensionWise advice.

Just say you don't need guidance you're not obliged to hear.

squirrelpie

As ever, taking money from your pension whilst still working may not be in your best interest, so I expect they want to confirm that you know what you're doing. Also, it might be worth finding out exactly what they mean by 'option 5' - you might be giving up some specific extra feature of your pension in order to extract the tax free cash, for example.

Pat38493

Option 5 was on the list of their standard options for how to take your pension - option 5 was basically taking tax free cash only without taking any taxable.

I am aware of the impact of it - I am exploring the option of reducing my work to 3 days a week and having the option to take out some tax free cash to supplement higher costs in the last couple of years of working.

Since one of my options is to quit completely at the same time, I see this more as preserving my pension long term rather than raiding it as I would be taking less out of the pension, if any at all, for the first 2-3 years.  The reason for taking only tax free cash is obviously if I take out any taxable amount I will trigger the MPAA and it will be taxed at the marginal rate of most likely still 40%.

dunstonh

OK yes - I just looked up this "Aegon Assist" service and it seems like it's not a financial adviser it's a free service where they will hopefully just do what I ask them to do (if indeed I even wanted to go ahead with it - I am more exploring options at the moment).

If you do not use an adviser, they are required to take you through a guided process pointing out the key risks of the transaction you are carrying out.  They also need to protect their own backsides.

When taking money out of a pension, it is considered a higher risk transaction. Even more so when drawing whilst working.   So, the provider will be looking to cover their backsides from a future speculative complaint.

When an IFA does it, the IFA takes on the liability.  When you do it direct with provider, the provider carries the liability, albeit to a reduced level.

gm0

Chill pills for everyone

It will be just a free "guidance" call as risk management.  Aegon compliance driven process. They are instructed to do "something at touch points" by the FCA via conduct of business and similar.  Count it and report back. 

Nanny would love it if we all took advice. The last FCA consultation appropos advice market and pensionwise was looking for ways to force more of this stuff not less.  Around DIY self harm and advice gap.

Providers don't want to incur costs doing these calls especially with self service clients who don't want it and will be ticked off. Those who arrived with a "just process my transaction" attitude (whether they are in the well or less well informed group).
But they are under regulatory orders for it.  A process to be endured and a cost of business for them.

I found it a mildly useful discussion - free other than my time obviously.  Not a hard sell of an in house advice offer. 
Boilerplate will be read out.  A useful review discussion of broader plans may sometimes be possible - depends who you get - their propensity to wander near edges of piste (recorded) and whether you want to explore parts of your thinking.

The contrarian argument to getting grumpy at them asking is this. 

Would you rather your provider just ignores what the FCA tell them to do.  In this case let anyone and everyone rip on with whatever they fancy self-service without any risk managed guidance and signposting and informing process?   Would that be more or less professional of them in the context that they have been told to do it by the regulator

Clearly it varies across the industry with lighter weight process and a general lack of compliance capacity and focus from the new, small and digital self service focused outfits.  Lots of money for tv ads marketing and sign up incentives. Not much for this stuff.  They call it "innovation".  From the regulators perspective just an experiment on a few people at (in their mindset) a greater risk of self harm but because few in number thats OK to soft pedal for now.  Robos have tended to launch pension last - because it is heavier to do process wise.  As they scale they will run into the same issues and rightly receive more FCA attention. 

Older outfits like Aegon, Fidelity and life companies actually HAVE a risk and compliance function to some level likely at war with operations and sales making them do stuff they don't particularly value and which some customers don't like either.

Consequently you run into this stuff more often and it's more old fashioned when you do

Pat38493

It's no big deal for me - I was concerned at first because it sounded like I was going to have to pay for advice to do what I wanted to do, even when I had heavily researched it in advance and know what I am doing.

The main usefulness for me actually will be to understand what charges I will incur by doing this transaction - I assume that to crystallize a portion of the existing pot requires moving it to a drawdown arrangement and I am guessing it will have a different charging structure, or at least a transaction fee.

So actually I would have wanted to speak to them anyway before going ahead - now that I realised it's free and not charged "advice" it's no problem.