Private Pension Beneficiary Account product

pjs493

Jowwie said:

I am not a financial adviser. Pensions are a bit of a minefield. Do you know what the ongoing fees of this financial adviser would be? Can you deal direct with the pension fund and bypass the adviser? Do you know what fees the pension fund is charging?

Transferring the funds into such as a Fidelity SIPP yourself, which you then invest in FTSE market tracker funds could have substantially lower fees. Over the course of 25 years the low fees could more than make up for the tax hit you are looking to avoid. Also avoids the costs of the advisor. You need to be comfortable with managing the pension investments yourself though.

Whilst the pot would be taxable in your own pension, if you are looking to retire before state pension age you can currently draw circa £17k per year tax free if you have no other taxable income.

Might be worth asking on the pensions forum?
https://forums.moneysavingexpert.com/categories/pensions-annuities-retirement-planning

I'm unsure exactly how much the ongoing fees are, I just know they are considerably more than what I pay with my high street bank. Looking through paperwork I have relating to my husband's investments it appears that the fund mangers take a monthly charge and other ongoing fees that are expressed as percentages so the cost depends on how well the investments are doing, the wealth management company also charge a quarterly fee. I'd have to do some maths to figure out exactly what the costs are in comparison to what he was paying in, but its in the region of a few hundred pounds a year. Comparatively, my high street bank charges a fraction of that. Frustratingly, the paperwork only gives so much information and suggests accessing the online app (that I don't have access to) for more information on fees.

On the forms I was sent detailing my options it appears that I need to engage a financial advisor if I wish to do anything other than take a lump sum payment. Due to their bereavement rules there are no fees to pay if I take a lump sum. I had hoped that transferring into a beneficiary account with my bank would have lower fees than a wealth management company like the one my husband was using. If I stay with my late husband's financial advisor I would need to pay £750 (as a 50% reduced) initial fee, and presumably similar ongoing costs to what he was paying for them to manage the pension.

My husband and I discussed a few times about moving his pension and ISA to our high street bank but the thing that was putting him off moving the money was that his parents are in their late 70s/early 80s and their estate was due to be split equally between my husband and his brother when they die. Therefore, due to the age of his parents, my husband was expecting to come into a fairly substantial inheritance in the next 10-20 years at which point he would need more personalised advice than he'd get through the investment arm of a high street bank. 

QrizB

pjs493 said:

On the forms I was sent detailing my options it appears that I need to engage a financial advisor if I wish to do anything other than take a lump sum payment.

There's a good chance that you can transfer it elsewhere without engaging a FA.

Is your late husband's FA with one of the big national chains, SJP or similar? There will be people here on the forum (most likely in the "pensions" or "investments" sections) who will have dealt with them before, in similar circumstances.

Marcon

pjs493 said:

On the forms I was sent detailing my options it appears that I need to engage a financial advisor if I wish to do anything other than take a lump sum payment. Due to their bereavement rules there are no fees to pay if I take a lump sum. 

I'm really sorry you are having to go through all this on top of such an untimely bereavement.

You say 'it appears you need to engage a financial advisor' -  but I wonder if that's actually the case? Providers are encouraged by the powers that be to give customers a clear steer towards getting advice, which many interpret as a 'requirement'. I'd ask the direct question: "If I set up a personal pension for myself, is it a requirement that the transfer has to be done via a financial adviser, and if so, please could you explain why?".

There shouldn't be any fees to pay if you proceed with a transfer to a personal pension you've set up yourself, unless this is a very old contract with exit charges.

pjs493

QrizB said:

pjs493 said:

On the forms I was sent detailing my options it appears that I need to engage a financial advisor if I wish to do anything other than take a lump sum payment.

There's a good chance that you can transfer it elsewhere without engaging a FA.

Is your late husband's FA with one of the big national chains, SJP or similar? There will be people here on the forum (most likely in the "pensions" or "investments" sections) who will have dealt with them before, in similar circumstances.

It's a small regional firm. I think my in-laws first started using the firm because it was founded by someone my father-in-law met through his Rotary Club back in the day.

pjs493

Marcon said:

pjs493 said:

On the forms I was sent detailing my options it appears that I need to engage a financial advisor if I wish to do anything other than take a lump sum payment. Due to their bereavement rules there are no fees to pay if I take a lump sum. 

I'm really sorry you are having to go through all this on top of such an untimely bereavement.

You say 'it appears you need to engage a financial advisor' -  but I wonder if that's actually the case? Providers are encouraged by the powers that be to give customers a clear steer towards getting advice, which many interpret as a 'requirement'. I'd ask the direct question: "If I set up a personal pension for myself, is it a requirement that the transfer has to be done via a financial adviser, and if so, please could you explain why?".

There shouldn't be any fees to pay if you proceed with a transfer to a personal pension you've set up yourself, unless this is a very old contract with exit charges.

The bereavement discharge form I have been sent gives me three options if I wish to take the pension away from the current provider: a lump sum payment, a flexi-access drawdown, or an annuity, (or a combination of these options). 

Given my relatively young age, and the fact that I have no immediate need for the money, I decided that taking the lump sum and ring-fencing the money until I reach retirement age in a beneficiary pension account seemed like the most sensible option. Throughout the document it encourages me to seek independent financial advice and that I might be best shopping around rather than using the current provider (as one might expect them to say), but it does explicitly state that if I wish to opt for the flexi-access drawdown or an annuity I do need a financial advisor. However, I don't intend on taking these options. 

In an email from my husband's financial advisor, he stated that if I want to transfer the funds within the current provider to a beneficiary pension account I would need a financial advisor to do so and quoted me £750 (as an initial client fee with a 50% discount because he already manages my late husband's investments) if I opted to engage him to do it.

I was hoping that if my bank did have a beneficiary pension account product I could just liaise with them in a similar way as I will do for my husband's stocks and shares ISA APS allowance transfer.

There aren't any exit fees or charges due from the provider in either case. The current provider has a policy that no fees are charged in the case of a bereavement. Fees and charges have been suspended since the date of death but the ISA and pension remain open to market fluctuations. The only fees will be those associated with me engaging a FA, and obviously any ongoing management fees associated with managing the pension portfolio going forward if I decide to stick with the current provider and engage my late husband's FA

I hope that all makes sense, I'm typing this while being distracted by small children.

HobgoblinBT

Looking at your options, what is described as a flexi-drawdown pension appears to be what you earlier described as a beneficiary pension.   As I understand it, the drawdown fund will remain tax free without using any of the op’s pension contribution allowance and should be free to take as income, or invest as you wish within the “draw down pension”.  

pjs493

HobgoblinBT said:

Looking at your options, what is described as a flexi-drawdown pension appears to be what you earlier described as a beneficiary pension.   As I understand it, the drawdown fund will remain tax free without using any of the op’s pension contribution allowance and should be free to take as income, or invest as you wish within the “draw down pension”.  

Thank you for this. I've just reread the paperwork and I'm going to send a follow up email to my husband's financial advisor. Your explanation now makes a lot of sense.

I was initially under the impression that flexi-access drawdown was an option that allowed me to take money out of the pot on an ad hoc basis, eg if I needed some funds to pay off the mortgage and then wanted to leave the rest of it until retirement.

When I first read all the paperwork it was only three or four weeks after my husband died and I wasn't really taking in all the information that was being thrown at me from various different directions. We always talked about financial planning with the idea that we'd both live on into old age, we never contemplated one of us dying suddenly. We'd had hypothetical conversations but really nothing concrete, only vague stuff, mostly on the back of having children and wanting to prepare for their future. We'd looked into life insurance policies when I was pregnant with one of our children, but ultimately decided there were better ways to use our money because we never imagined this would happen.

I wasn't even aware (and I don't think my husband was either) that I, and our children, would receive a pension from my husband's work place pension until I was told that following his death. I knew there was a death in service benefit lump sum, but I didn't expect that I'd get a not insignificant sum each month for the rest of my life and that our children would also get a smaller pension each until they finish formal education. All the money just feels grotesque when all I want is my husband back.

NlghtOwl

Glad you’re sorting the pension details. Make sure you claim Bereavement support payment, details on gov.uk as well. 

pjs493

NlghtOwl said:

Glad you’re sorting the pension details. Make sure you claim Bereavement support payment, details on gov.uk as well. 

Yes, thank you. I was signposted to this early on. It was actually one of the most straightforward things to do. Completed an application online, received a call asking me to pop into a Job Centre with my ID and marriage certificate and received the lump sum and first monthly payment shortly afterwards. The lady on the phone and the people in the Job Centre were extremely helpful and very compassionate. I was a bit of a mess at the time and they were all very kind.