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

xylophone

Could I transfer to NEST split into 5 pots and then take 3?

No. 

IF HL accepted the transfer in and were prepared to do the split, you would be left with a residue of £17,000.

You could then take 25% of the residue as a  tax free PCLS leaving the balance invested.

https://techzone.abrdn.com/public/pensions/Guide-triviality-small-pots

1manband

Bimbly said:

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%.

Bimbly said:

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.

Thanks Bimbly, sorry for all the confusion, I understand now, I'm speaking to H/L tomorrow to see what's possible either £47k to them and split off £30k into 3 pots or £30k to them and £17k to another SIPP elsewhere I imagine, whatever is quickest/least complicated.
Fingers crossed.

Bimbly said:

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.

This would be simplest but I need more than the 25%, the 3 pots option does this and I may not need to take all 3.

1manband

dunstonh said:

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.

Thanks dunstonh, undertood.
The pension was originally with NPI, it's Unit-Linked and was originally called Managed Series 2
It had variations of this name over the years but most recently: "Phoenix NPI Pens Managed Series 2"

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

When I speak with Phoenix and H/L about transferring should I request they use Origo for speed or does it not work like that?

dunstonh said:

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.   

Ok, understood, will do if needed.

1manband

xylophone said:

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.

It seems to be a common thread with Phoenix that they delay and obfuscate to hold onto funds but I'm not sure if this is just frustratingly extra due diligence or deliberately/unnecessarily obstructive. I'll will feedback my experience if I get that far

1manband

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.

Thanks handful, hopefully I'll have a better experience but consensus seems not, I'll let you know.

1manband

Dazed_and_C0nfused said:

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

My mistake, apologies for my ignorance, I thought it if I split into small pots I would have to split the entire £47k in that way which would need to be 5 small pots: 10k,10k,10k,10k,7k

But I understand now it would be £30k into 3 small pots and the remainder into a 4th larger pot to be kept invested to avoid triggering MPAA.

1manband

xylophone said:

Could I transfer to NEST split into 5 pots and then take 3?

No. 

IF HL accepted the transfer in and were prepared to do the split, you would be left with a residue of £17,000.

You could then take 25% of the residue as a  tax free PCLS leaving the balance invested.

https://techzone.abrdn.com/public/pensions/Guide-triviality-small-pots

Thanks for the clarification and the link, I understand what's possible under small pots now.
I'm speaking with HL tomorrow, hopefully they can do what you suggest.

dunstonh

When I speak with Phoenix and H/L about transferring should I request they use Origo for speed or does it not work like that?

Phoenix (NPI) use Origo on most of their plans.   It tends not to be used on complicated plans, such as section 32 buy out bonds.    HL use Origo.   So, as long as both sides use Origo, it will default to that without you needing to do anything.       

You need to tell Phoenix that you are considering transferring the pension and ask them to supply you with discharge forms if they do not support Origo transfers with that plan.    That way you will know if Phoenix will use Origo or not and if not, you have the discharge forms to give HL right at the start.

Pat38493

dunstonh said:

When I speak with Phoenix and H/L about transferring should I request they use Origo for speed or does it not work like that?

Phoenix (NPI) use Origo on most of their plans.   It tends not to be used on complicated plans, such as section 32 buy out bonds.    HL use Origo.   So, as long as both sides use Origo, it will default to that without you needing to do anything.       

You need to tell Phoenix that you are considering transferring the pension and ask them to supply you with discharge forms if they do not support Origo transfers with that plan.    That way you will know if Phoenix will use Origo or not and if not, you have the discharge forms to give HL right at the start.

By the way what are the security checks behind the scenes on these Origo transfers to make sure that the receiving pension belongs to the same person?  I was a bit surprised when my transfer went ahead in the end just by filling in online forms.  I suppose the thinking is that if the pension holder is the same NI number, it must be the same person, so if the name and the NI number match that's all the checking that's needed?

dunstonh

By the way what are the security checks behind the scenes on these Origo transfers to make sure that the receiving pension belongs to the same person?

All the usual identifiers with pensions are verified by both the ceding scheme and the receiving scheme.  Any differences result in failure.  i.e. name, address, NI number number, DOB.   Some schemes operate discretion on differences. i.e. they look at it and can clearly see its the same person.   Some have it completely computerised and will reject every error until both sides match 100%.

A common failure to transfer is with workplace pensions where the payroll team input the name of the person incorrectly or just used an initial for the Christian name (which happens a lot as many employees fail to complete the personal info the scheme requests of them).    It can happen where people use a hyphen in their name, but one provider doesn't have the hyphen.  Or even where one uses a middle name and the other doesn't.