AVC to Drawdown

bucksman

I am trying to understand and work through the pension drawdown maze. I intend to move my Pru AVC to release tax-free funds (+£200k).  After a session with Pension Wise, I am now trying to decide if it is preferable to use an IFA to oversee the transfer of the funds and to pay them to do this. However, there are a number of providers that offer a free transfer service. Are these preferable (e.g. HL/Aviva etc)?  Thank you in advance for you sharing your thoughts on this.

 

Marcon

bucksman said:

I am trying to understand and work through the pension drawdown maze. I intend to move my Pru AVC to release tax-free funds (+£200k).  After a session with Pension Wise, I am now trying to decide if it is preferable to use an IFA to oversee the transfer of the funds and to pay them to do this. However, there are a number of providers that offer a free transfer service. Are these preferable (e.g. HL/Aviva etc)?  Thank you in advance for you sharing your thoughts on this.

 

No reason you can't DIY.

You say you intend to release +£220K of tax-free funds. Have you remembered that the abolition (possibly temporary!) of the LTA still has an impact on tax free cash? That has been frozen at a quarter of the 'old' LTA for all your pension arrangements combined, so if you've taken any tax free cash from the main scheme, there may be an impact. 

bucksman

I appreciate your message.  I have the LTA information, and my wording here was not clear in terms of the tax-free monies, yes, I am onto it in terms of not exceeding the LTA.  If DIYing it, are there any preferred platforms giving flexibility and low annual fees

dunstonh

 However, there are a number of providers that offer a free transfer service. Are these preferable (e.g. HL/Aviva etc)?  

That is not the same thing.    Platforms IFAs use don't charge for transferring.   You are not paying the IFA to transfer the pension (that is a relatively small part of what the IFA does).  You are paying the IFA for advice.   HL and Aviva do not provide advice.  hence you do not pay for advice with them.   (ignoring HL's restricted advice service, where you do pay).

When you don't use an IFA, you are going DIY instead.  i.e. you pick the provider, you pick the funds, you pick the drawdown investment strategy, you pick the drawdown method etc.

So, yes you can DIY.  As to whether they are preferable, that depends on how well you DIY.  DIY well and you can save money. DIY badly and it can cost you more.

 If DIYing it, are there any preferred platforms giving flexibility and low annual fees

Neither of the two you mentioned in your first thread.  And be wary of focusing on fees ahead of functionality.  

Depending on what drawdown strategy & method you are using, some DIY platforms are easier than others to deal with.    i.e. if you are using phased UFPLS (either totally or partially) then you will want a platform that doesn't require you to undergo long phone calls every time.   If you are using bucketing and single sector funds, then ideally, you want a platform that does that (otherwise you may have to use a spreadsheet).    Cost is a secondary consideration to suitability/functionality.     

Also, some platforms price higher or lower depending on the fund universes you intend to use.  You haven't mentioned which fund universe you intend to use.  i.e. OEICs/UTs, ITs, ETFs etc.  

You should also consider the cash interest rate as the cash float interest could be lower if the charges are low or vice versa or other combination.   How much you will be holding in your cash float will depend on the drawdown strategy and method you are using.