Drawing down pension

rizzo_2

Please can someone explain to me why I have to employ an FA to draw down money from my pension and how much are they likely to charge?
Thanks

dunstonh

Please can someone explain to me why I have to employ an FA to draw down money from my pension and how much are they likely to charge?

You are not required to employ an FA to use drawdown unless
a) your pension has safeguarded benefits and is worth over £30,000
b) your existing pension doesn't support drawdown and a new one needs to be set up and the provider you have chosen will only transact via an FA or IFA.
c) not a requirement as such but if you start asking the provider advice questions, they will tell you that you need to speak to an IFA as providers don't have advice permissions (apart from their in-house sales team in a small number of cases - and they will charge for that)

Charges will vary. Often displayed as a percentage of the fund value from 1% to 5%. Circa, £2500 in monetary terms would be a target.

xylophone

https://forums.moneysavingexpert.com/discussion/comment/80402523/#Comment_80402523

You say that this is not an occupational pension so this is a personal pension opened a number of years ago?

Does it have a Guaranteed Annuity Rate?

If so, see https://www.gov.uk/government/publications/pension-benefits-with-a-guarantee-and-the-advice-requirement/pension-benefits-with-a-guarantee-and-the-advice-requirement

Albermarle

rizzo_2 said:

Please can someone explain to me why I have to employ an FA to draw down money from my pension and how much are they likely to charge?
Thanks

Exactly what have you been told and by who? because you may well have misunderstood.

Qyburn

rizzo_2 said:

Please can someone explain to me why I have to employ an FA to draw down money from my pension and how much are they likely to charge?
Thanks

What's the context? For example are you taking a large sum, well in advance of the planned retirement date that the scheme has on record?

rizzo_2

It’s a private pension worth £54k.  Been told this by the Prudential.
There are two options, draw down or buy an annuity from a third party. I’ve decided on the former 🙂

dunstonh

It’s a private pension worth £54k.  Been told this by the Prudential.

Prudential retail their products via IFAs or their in-house salesforce (which is non advised and usually more expensive than an IFA).  

So, its likely in that respect, that what you were told relates to using them as provider. i.e. if you want Pru, then you have to use an adviser.

Usually Pru try to refer you to their in-house sales force rather than say you need an adviser.   They normally only say you need an adviser if you have safeguarded benefits.   You don't mention if you do or do not.  So, do you have any safeguarded benefits?

Albermarle

rizzo_2 said:

It’s a private pension worth £54k.  Been told this by the Prudential.
There are two options, draw down or buy an annuity from a third party. I’ve decided on the former 🙂

The Pru crops up regularly on this forum for two items;

1) Appalling customer service - they even admitted it themselves publicly
2) When a client wants to move to drawdown they impose a charge ( 3%?) supposedly for 'advice'. Other providers do not do this ( or very few if any others do)

The usual recommendation is to to actually transfer the pot to a new provider ( easier than it sounds) . Unless as mentioned above it has some kind of guaranteed benefits as opposed to just being a pot of money.

rizzo_2

What’s a safeguarded benefit?

dunstonh

rizzo_2 said:

What’s a safeguarded benefit?

A range of benefits that could be potentially beneficial.  Such as guaranteed annuity rates, guaranteed minimum pension or other forms of gurantees.

Normally, you would ask the question of the provider before you transfer out if there are any safeguarded benefits.  Many will tell you in their retirement pack when leading up to taking benefits. Some will only tell you when you ask them as they previously made you aware (20-30 years ago).

rizzo_2

There are two choices, draw down or buy an annuity from a third party via a financial company.