Phoenix Pension 25% TFLS & access to flexible drawdown, without triggering MPAA

1manband

Hi everyone, hope you can help.
I have a very old (1980s) zombie Defined Contribution (money purchase) pension scheme with Phoenix Life (c£47k). I am just about to turn 55 and would like to take some or as much of the pension as possible without triggering the MPAA (I have over 3 years unused pension allowances and have not used this year's £60k allowance either. I'm hoping business will improve emough for me to make full use of it all but I know if I trigger the MPAA my allowance drops from £60k to £10k).

I should mention I have not taken any income from my company for this tax year 2023/24 so I have my full allowance available.

Ideally I'd at least like to take the 25% TFLS asap, it would cover some debts and give me 2-3 months runway to get paid for some work and start drawing a salary again, but there's a chance that I might run out before getting paid so I'd like to still have access to the remaining 75% without triggering the MPAA (as long as don't touch it).

If the MPAA wasn't an issue I would just take the entire pot, it would make things a lot easier and give me anough runway until next April even if I don't get paid and take an income, however it is an issue and I expect to have money in within 30-60 days so I'd rather find a middle ground option if possible.
.
Phoenix weren't very helpful, choosing anything other than cashing it all in requires a transfer to another provider first before accessing any of it, even the 25% TFLS, which could take weeks(?).

Having read the Phoenix retirement pack and done some googling I it appears that a flexi drawdown product might be the best balance, but I'd appreciate any alternatives, anything that once transferred will allow me to immediately take the 25%  TFLS (plus my personal allowance too perhaps?) whilst still allowing me access to the remainder in an emergency (even if that triggers MPAA).

In short I'd really appreciate any ideas on MPAA friendly drawdown strategies, some clarification on whether Flexi Drawdown products would work or what alternatives there might be, other than that if anyone has had any similar experience with Phoenix, particularly with transfers and how long they take (e.g. to someone mainstream like H/L or Fidelity?

Apologies for the waffling/repetition, the whole thing is a bit confusing.
Thanks in advance.
OMB

GrumpyDil

You're correct that taking any taxable cash will trigger the MPAA.

I'm no expert but one thing you might be able to consider would be if you can find a way of doing part transfers to a new provider, create separate policies of less than 10k and do small pots claims. You an do up to three of those without triggering MPAA but would need to be very clear with the providers that they are small pots claims. 

Otherwise yes drawdown and take the 25% but noting as soon as you take anything taxable the MPAA will kick in.

Dazed_and_C0nfused

Unless you go down the annuity route as soon as you take 1p in taxable income you will trigger MPAA.

Other than just taking a TFLS I think the most common way of avoiding this is to take <£10k as a "small pot".  You can do that three times in total.

AIUI the small pot has to be 25% TFLS and 75% taxable income but it doesn't trigger MPAA.

From what you've posted it sounds unlikely that Phoenix will offer that option but you could do a partial transfer to another provider who will.

Qyburn

1manband said:

Phoenix weren't very helpful, 

It sounds like you're planning some pretty big pension contributions this year, from which I'd assume that this £47K plan is not a big part of your retirement budget. If thats the case why not transfer into one of the DIY platforms?  

xylophone

You might check with Hargreaves Lansdown on whether if you transferred the Phoenix pension to the HL SIPP, they would split the cash so as to create three small pots - see here

https://moneyforums.citywire.com/yaf_postst11795_Lifetime-Allowance-and-Small-pot-Exemptions.aspx

Hargreaves Lansdown will create a £10,000 small pot for you from an existing SIPP when you want to take one.

They will do this 3 times giving you an extra £30,000 LTA.

I have done this once already with my HL SIPP.

Bimbly

As above, forget the idea of taking any of the remaining 75% taxable pension - even if you don't pay tax on it - as this will trigger the MPAA. There's no wriggle room on that.

The way to go is small pots, as stated. You cannot ahead of time take the 25% tax free and then take a small pot. You must take a small pot in one go, which is the 25% tax free and the 75% taxable. Talk to Hargreaves Lansdown. I was unaware you could move the whole lot then split off three small pots, but if you can do that - great! Otherwise, you could move out the whole pot elsewhere and part transfer up to 30k to HL.

Of any that is left, you could take 25% tax free from that if you still wanted to, leaving the remaining 75%.

dunstonh

Phoenix weren't very helpful, choosing anything other than cashing it all in requires a transfer to another provider first before accessing any of it, even the 25% TFLS, which could take weeks(?).

That isn't them being unhelpful.  That just reflects the fact you have a legacy product built in a period when drawdown was not available.    It's a bit like owning a black & white TV and expecting it to widescreen UHD just because modern TVs do it.

In short I'd really appreciate any ideas on MPAA friendly drawdown strategies, some clarification on whether Flexi Drawdown products would work or what alternatives there might be, other than that if anyone has had any similar experience with Phoenix, particularly with transfers and how long they take (e.g. to someone mainstream like H/L or Fidelity?

If you want to do drawdown (which is what you describe) then you need a plan that supports drawdown.

Which Phoenix company is it?     Phoenix have bought hundreds of brands legacy books over the years and the service levels vary depending on the legacy company.    Some parts of Phoenix are far more efficient than the legacy company that used to run your policy.  Some parts suffer the same issues the legacy company suffered.

handful

I posted on here some time ago about my dealings with Phoenix (Formerly an NPI pension) I wanted to transfer it into a SIPP and it took months. Without boring you with the details they were a nightmare and in the dealings I had with them incompetent. I wish you success in getting whatever you choose to do!

dunstonh

handful said:

I posted on here some time ago about my dealings with Phoenix (Formerly an NPI pension) I wanted to transfer it into a SIPP and it took months. Without boring you with the details they were a nightmare and in the dealings I had with them incompetent. I wish you success in getting whatever you choose to do!

I transferred an ex NPI pension a few months ago and it took 3 days.   It was not a nightmare and both sides used Origo.   Right at the quickest end of the scale as far as transfers go.
Requested by receiving scheme 18th June at 9.16
Acknowledge by Phoenix (NPI) 20th June at 9.23
Funds arrived from Phoenix (NPI) 21st June 15.44
Transfer marked completed and funds invested 21st June 15:47

xylophone

both sides used Origo.

It would appear that for whatever reason, this was not the case for the OP.

https://forums.moneysavingexpert.com/discussion/comment/80271710/#Comment_80271710

I transferred a "non Origo" pension into ii and it took months. ii were actually very helpful and proactive but the transferring company Phoenix were shocking.

dunstonh

For non-origo, the key is getting the discharge forms in advance of submitting the transfer and making sure the receiving scheme knows it is non-origo.