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

handful

dunstonh said:

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

That's fine but I can only speak as I found from my experience as per this thread https://forums.moneysavingexpert.com/discussion/6392695/hoops-to-jump-through-for-transfer-to-sipp/p1

They couldn't do mine through Origo.I was given the name of individuals who promised to resolve the issues for me and all 3 never made any more contact with me. Sorry but for me they were incompetent.

1manband

GrumpyDil said:

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.

Thanks GrumpyDil, I'm glad you mentioned the £10k small pots, when I researched they seemed the only way to drawdown over the 25% without triggering MPAA but I didn't think they would apply to me, I couldn't find anything re multiple splits, I also thought it would be overly complicated and take too long(?) so any knowledge you have on that would be welcome.

To clarify, as far as you are aware I could realistically do the following?:
- Transfer to another provider (or different providers) from Phoenix Life
- the provider(s) split(s) the £47k into 5 Pots: (£10k, £10k, £10k, £10k, £7k)
- I immediately drawdown, either only what I need or all of it if necessary, all without triggering the MPAA

If so would the following drawdown(s) be the best way to maximise tax allowances and possible?:
- Pot1(£10k): 25% £2500 + £7500 (leaving £5070 remaining of my £12570 Annual Personal Allowance)
- Pot2(£10k): 25% £2500 + £5070 (using up the remainder of my Annual Personal Allowance)
- Pot3(£10k): 25% £2500
- Pot4(£10k): 25% £2500
- Pot5(£7k): 25% £1750
Total tax free drawdown(s)= £24320 net
(Leaving £22680 in the pots which I leave or pay income tax on each drawdown, still without triggering MPAA)

If all of that is correct then my concern is how long it would take to action/process the transfer to get to the point of first drawdown asap and who to go to to get that done in the shortest time.

I had to start the process of cashing in my pension yesterday because the process takes 2 weeks, a 5 day cooling off period + 3-5 days to receive the money.
I have until the cooling off period ends on Monday 18th to find an alternative/change my mind/pull out.

Clearly I would much prefer the above small pots option, it's by far the most common sense and tax efficient but I need funds as soon as possible, it's a balancing act, either I could:
- have c£33k from Phoenix by end of next week but pay much more tax than I need to, trigger MPAA and lose £1000s in unused/future allowances
or
- cancel the cash-in and start a transfer to another provider's multiple-split small pots product(s) which would save maximum tax/avoid MPAA issues but could potentially mean waiting months I don't have.

Despite the risks I'm leaning towards the latter, could you suggest any providers that offer what I need and have a reputation for quick transfers? I'm assuming I need to stick with mainstream H/L, Fidelity etc?

Any thoughts urgently welcome.
Thanks
OMB

1manband

GrumpyDil said:

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.

Apologies GrumpyDil I just re-read your post and realised you mentioned a limit of 3 times for small pot claims before triggering MPAA.
Not sure if claims means any drawdown, even TFLS, or just if a pot is totally cashed in?
Could my previous calculation still work even with this limit without triggering MPAA?:
thanks

1manband

Dazed_and_C0nfused said:

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.

Thanks Dazed_and_C0nfused,
Does that mean I could still split into 5 pots but only claim beyond the TFLS/Personal allowance on 3?
Could I still:
- take only the TFLS from each of the 5 pots without triggering the claim limit/MPAA?
or 
- take the TFLS & up to my remaining personal allowance without triggering the claim limit/MPAA?

Also, as I mentioned in my previous reply above I have a very short timescale to decide on transferring or just taking a lump sum and triggering the MPAA, I'd really appreciate it if you have any suggestions on providers  that can provide what I need quickly, a multi-split small pot product(s) and also be quick with transfers?

Thanks
OMB

dunstonh

handful said:

dunstonh said:

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

That's fine but I can only speak as I found from my experience as per this thread https://forums.moneysavingexpert.com/discussion/6392695/hoops-to-jump-through-for-transfer-to-sipp/p1

They couldn't do mine through Origo.I was given the name of individuals who promised to resolve the issues for me and all 3 never made any more contact with me. Sorry but for me they were incompetent.

Its good that there are multiple posts showing experiences.   One very good. One not so.   

1manband

Qyburn said:

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?  

Hi Qyburn,
Hardly, it's most likely wishful thinking for the future, I hope for a turnaround in finances that might allow me to take advantage of those unused and future allowances but the truth is it's not likely for a while if at all, still I 'm loathe to lose them due to my poor situation and bad planning.

I urgently need to make a decision either way unfortunately so I'll certainly look into the platforms too, are there any providers or platforms you know that can offer splitting into multiple small pots and quick transfers?

In general how long do transfers take and is it usually best to stick with mainstream providers to ensure the quickest turnaround? H/L, Fidelity, AJBell etc.?
Thanks,
OMB

1manband

xylophone said:

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.

Hi xylophone,
Apologies to you and the other respondees on here I think I've been getting mixed up over exactly what the 3 limit actually means for small pots.
Can I only split into 3 or can I split into 5 and only cash-in 3 before triggering MPAA?

Also, someone in your article mentioned NEST having unlimited pots? Could I transfer to NEST split into 5 pots and then take 3?

Thanks,

OMB

Dazed_and_C0nfused

Why do you want to split it into 5 (rather than 4)?

Bimbly

You seem to have made this needlessly complicated and have confused yourself. Back to basics:

Under the small pots rule, you can withdraw a pension pot of up to £10,000 without triggering the MPAA. This will be 25% tax free and 75% taxable. You have to take the whole lot out in one go. You can do this a maximum of three times.

If you want to take even more money out of your pension without triggering the MPAA, you could take 25% tax free of whatever is left. If you start with £47k and take out 3x£10k under the small pots rule, you will have £17k left - so you can take out 25% of that, which is £4,250 tax free and must leave the rest to avoid triggering the MPAA.

Hargreaves Lansdown is often mentioned as a company which can do this. Check that you can transfer all of your pot to them and they will still split out 3x£10 which you can then take as small pots. You could always transfer to another SIPP of your choosing and part-transfer the £30k to HL.

When withdrawing a small pot, you must specify that you are doing so under the small pots rule. Not all providers support this. I believe Vanguard does not.

The posts here have been quite clear. Maybe take some time to re-read them and read up on the small pots rule itself.

Bimbly

Or you make it super simple and transfer your pension to any SIPP which supports drawdown and take out 25% tax free, leaving the 75% invested for your future.

Assuming £47k, that would be £11,750 to withdraw, leaving £35,250 invested.