IFA and my 25% tax free lump sum

dunstonh

LHW99 said:

Once upon a time there were "pension mortgages", which I seem to remember were interest only, with the principal to be paid back from the TFLS of the pension in due course.

I assume if there are any of those left, then they shouldn't trigger FCA Issues? ...or would they these days?

Yes they would because the pension and the mortgage were not linked directly in any way.   Remember that drawdown wasn't available back then.

MEM62

westv said:

So much for pension "freedoms".

Perhaps some curtailment of the freedoms to prevent people from screwing up their retirement years through ignorance is not a bad thing  :-) 

Albermarle

eastcorkram said:

Why involve an IFA in this at all? If you want to take the TFLS, just take it. 

If the pension was set up by an IFA and/or run by them, then it would be normal to ask them to organise the TFLS. Often the pension providers/platforms used by IFA's are exclusive for them, and if you asked them to pay the TFLS, they would just refer you back to the advisor. 

Ibrahim5

Hopefully your TFLS will be greater than your IFA's fees.

bjorn_toby_wilde

Oh dear. Here we go again.

ader42

A question for the more knowledgeable…

Under what circumstances are people not allowed to take / prevented from taking a 25% TFLS from an old DC pension? 

NoMore

ader42 said:

A question for the more knowledgeable…

Under what circumstances are people not allowed to take / prevented from taking a 25% TFLS from an old DC pension? 

Having hit 100% of the LTA (or LSA now) via other pensions is one. Basically there's no tax free cash left to take.

ader42

Thanks.

The reason I ask is that I have a friend in a similar position. He hasn’t taken anything from any of his pension pots yet, but has been trying for months to move an old “executive” plan from the 90s that is scheme closed to a SIPP. He wants to move it to a SIPP to self-manage and take his 25% TFLS but seems to be getting nowhere and the latest is that Aviva are asking for a letter from his Financial Advisor (without saying what the contents of said letter might be). 

I can see how my friends original scheme might have included things like protected rights or bonuses, a guaranteed annuity rate or even a higher protected amount than 25% that might preclude him (upon a financial advisers advice) from transferring to a SIPP; but if so I would still think he’d be able to take his 25% without transferring (and in effect be forced to take the annuity which he’s not keen on). 

Hypothetically, would having no other non-state pension or income provision be reason enough for an FA to say “no”?

I thought any replies might also further inform the OP so decided to not start a new thread. 

The trouble my friend is having makes me glad I transferred all of my own pensions to a SIPP years ago when I had the chance. 

dunstonh

He hasn’t taken anything from any of his pension pots yet, but has been trying for months to move an old “executive” plan from the 90s that is scheme closed to a SIPP. 

EPPs usually end up with greater than 25% tax free cash.  That would be lost if transferred to a SIPP.

 He wants to move it to a SIPP to self-manage and take his 25% TFLS but seems to be getting nowhere and the latest is that Aviva are asking for a letter from his Financial Advisor (without saying what the contents of said letter might be). 

Safeguarded benefits are almost certainly the reason.  Its the only reason Aviva would need a signature from an IFA to take on liability for the transfer.

I can see how my friends original scheme might have included things like protected rights or bonuses, a guaranteed annuity rate or even a higher protected amount than 25% that might preclude him (upon a financial advisers advice) from transferring to a SIPP; but if so I would still think he’d be able to take his 25% without transferring (and in effect be forced to take the annuity which he’s not keen on). 

Many providers now will pay the increased tax free cash entitlement and transfer the residue as flexible benefits.

Hypothetically, would having no other non-state pension or income provision be reason enough for an FA to say “no”?

No.  Its the whole scenario that matters.  If he has £100k in the SIPP then the answer would be different to if he had £500k.

The trouble my friend is having makes me glad I transferred all of my own pensions to a SIPP years ago when I had the chance. 

Throwing away valuable guarantees may not be a good thing.

xylophone

 the latest is that Aviva are asking for a letter from his Financial Advisor (without saying what the contents of said letter might be). 

They might not have specified what the adviser should say but presumably they have given the reason why they consider that advice is required?