Advice please: 54 and accessing NEST pot

mickmog

Hi

I turn 55 in two months time. 

I have WMPF/LGPS pot that has slumped in transfer value (DB) and a TPT that has done the same.  I also have a prudential AVC that went from £40K to £25K (I think due to gilts)

And I have £198K in nest.  I naively thought I can pull 25% of the nest pot when I hit 55 and let the rest ride.  I now realise I need to move it out of nest in order to access it as a drawdown. 

I am drawn to Vanguard but would welcome advice.  If I move it over, can I draw 25% tax free as soon as it lands and then flexi-draw?  Am I missing something obvious and am I going to have to pay someone to help move it?  As it is not a DC I am assuming I can just port it over.  

Many thanks all!

Linton

You can easily transfer your NEST pension elsewhere. Set up an account with your chosen provider and then ask them to transfer-in your NEST pension.  They will manage the whole process. Once it is in your account you can take the 25% tax free as soon as you are 55 and can then start drawing down.  There is no need for any paid-for help to transfer, you just fill in the provider's forms.

There is no need to take all the 25% as a single lump sum.  If for example you just withdrew £10K lump sum you would then be able to drawdown up to £30K (£10K being 25% of £40K) as and when you wished.  The system is very flexible, the only constraint is that you cannot draw down tax free money after you have taken the corresponding taxable money.

Have you sorted out what funds you will be using?  NEST will transfer the pension as cash.  It will be up to you to choose appropriate funds.
 

jamesd

Yes, it's DC with no old benefits so you can just transfer it. You're right and likely right about the rest too 

LHW99

I have WMPF/LGPS pot that has slumped in transfer value (DB)

That is largely irrelevant, as a DB scheme is a promise to pay an income, not a "pot of money". What is the projected annual income? That won't have changed even though the CETV ("transfer value") will have.

And I have £198K in nest.  I naively thought I can pull 25% of the nest pot when I hit 55 and let the rest ride.  I now realise I need to move it out of nest in order to access it as a drawdown. 

I am drawn to Vanguard but would welcome advice.  If I move it over, can I draw 25% tax free as soon as it lands and then flexi-draw?  Am I missing something obvious and am I going to have to pay someone to help move it?  As it is not a DC I am assuming I can just port it over.

Is NEST your current employer scheme? If so, you need to check if you can transfer without having to opt out / rejoin.

If you can, then to move it you would open a SIPP / PP with your chosen provider (eg Vanguard nut others are available), and ask them to do the transfer.

Albermarle

Although their regular charges are a bit higher than Vanguard, both Fidelity and Hargreaves Lansdown are offering cashback for pension transfers in.

I have WMPF/LGPS pot that has slumped in transfer value (DB) and a TPT that has done the same.

Transfer values for DB pensions are largely irrelevant for most people. Your guaranteed annual pension from these schemes will not have changed.

a prudential AVC that went from £40K to £25K (I think due to gilts)

That is a real drop. Gilts had a once in a lifetime big drop, although they had increased in value previous to that by more than normal.

penners324

You can't transfer out of Nest if your current employer is still paying into it. You'd likely need to opt out then transfer, then rejoin

mickmog

To answer:  Yes I appreciate that my DBs are more about the annual pension rather than the transfer value - but appreciate the confirmation.

My DC with nest:  A former employer I have left.  My plan is to move it to a drawdown but which one to choose?  I realise if I turn it into an income I cannot then keep paying in more than £10K, so am only looking to take the 25K.  So key question is how to find a good home for drawdown of £200K (so I can draw £50K tax free) and what can I expect to pay or see as a RoI

Again, thank you all

born_again

Linton said:

You can easily transfer your NEST pension elsewhere. Set up an account with your chosen provider and then ask them to transfer-in your NEST pension.  They will manage the whole process. Once it is in your account you can take the 25% tax free as soon as you are 55 and can then start drawing down.  There is no need for any paid-for help to transfer, you just fill in the provider's forms.

There is no need to take all the 25% as a single lump sum.  If for example you just withdrew £10K lump sum you would then be able to drawdown up to £30K (£10K being 25% of £40K) as and when you wished.  The system is very flexible, the only constraint is that you cannot draw down tax free money after you have taken the corresponding taxable money.

Have you sorted out what funds you will be using?  NEST will transfer the pension as cash.  It will be up to you to choose appropriate funds.
 

So it seems till you start doing it.
Daughters took over 6 months. To move to a big banking employer scheme.
Nest would not allow her to transfer in via that route. It all had to be done via nest & they drip feed paperwork out to you. As you send one lot in another lot comes out..

For OP, make sure that you turn acc back to paper rather than paperless. As Nest process is once funds are transferred out, they close the account out & send a message via what is set up. Of course if you are paperless. You can't access account anymore, so have no idea what they have done.

Albermarle

So key question is how to find a good home for drawdown of £200K (so I can draw £50K tax free) and what can I expect to pay or see as a RoI

There are numerous pension/drawdown providers, many mentioned on this forum on a daily basis.

Charges are dependent on size of funds, what you invest in etc 

ROI is inevitably much less predictable, and depends on which investments you pick for your new pension, asset allocation, performance of financial markets etc

Marcon

mickmog said:

To answer:  Yes I appreciate that my DBs are more about the annual pension rather than the transfer value - but appreciate the confirmation.

My DC with nest:  A former employer I have left.  My plan is to move it to a drawdown but which one to choose?  I realise if I turn it into an income I cannot then keep paying in more than £10K, so am only looking to take the 25K.  

You could avoid the MPAA problem by transferring your NEST pension into more than one 'pot' - four, to be precise. If three of these pots are of no more than £10K each, you can withdraw each of them (all three at the same time or sequentially, as you choose) under the 'small pots' regime, which won't trigger the MPAA. Just ensure you choose a provider which supports the 'small pots' regime. Easiest way to know is simply to ask them if you can't find confirmation on their website.

Make sure you specify you want to use the small pots route. 25% of each will be tax free, the rest taxable at your marginal rate. You could also take up to 25% of the 'fourth' pot without triggering the MPAA.