Pensions Advice

Somerset

Hello. I have three pension pots, all DC, that I want to deal with

Standard Life £22671 25% tax free available

Scottish Widows £12994 25% tax free available

Aviva £67146 25% already taken

I am 64, will retire 10/25, house mortgage free, full SP at retirement date, already receiving pension income of £1300 pm, rental income of £3200 pm, enough savings in both isa's and other savings accounts.

I want to 'sort' these pension pots this year before SP and retirement proper kicks in. I thought I would take the 25% tax free from the two pots now, and purchase a lifetime annuity afterwards with the balance.

I spoke to pensionwise who suggested transferring the Scottish Widows into the Standard life pot, then taking the 25% tax free. Then transferring that remaining combined pot into Aviva, then purchasing the annuity, either through them or using 'moneyhelper' if I could get a better annuity.

Any advice or other things to consider ?

barnstar2077

Have you considered retiring today? 

dunstonh

I spoke to pensionwise who suggested transferring the Scottish Widows into the Standard life pot, then taking the 25% tax free. Then transferring that remaining combined pot into Aviva, then purchasing the annuity, either through them or using 'moneyhelper' if I could get a better annuity.

The person you spoke to has breached Pensionwise rules.  They are not meant to say such things.   Plus pensionwise do not retail financial services.   So, you cannot arrange things through them.

Either you are being scammed (not speaking to Pensionwise but a clone site or look-a-like site that gave you the contact details of someone different)  or you have someone working for pensionwise was a side hustle.

Almost certainly, you cannot do what they suggest (crystallising two old pensions then transferring crystallised fund to another old pension).  Even if you could do it, the way they are telling you to it is not optimal and would result in a lower annuity rate.

Any advice or other things to consider ?You should report the person to moneyhelper as they are acting outside of their remit and giving duff info and trying to gain financially from it.            

If annuity is what you are after then use a local IFA of your choosing.   IFAs tend to get the best annuity rates  unless the pot is small.  Yours should be ok.    They will also give the advice to handle it in the best way and not the backhanded way you have been told.

Albermarle

I spoke to pensionwise who suggested transferring the Scottish Widows into the Standard life pot, then taking the 25% tax free. Then transferring that remaining combined pot into Aviva, then purchasing the annuity, either through them or using 'moneyhelper' if I could get a better annuity.

As said this seems very strange. The PensionWise telephone chat is only to advise you of possible options, not to offer any specific personal advice.

For example they could say something like ' One option is to transfer one of your pensions to the other' but not to advise SW to SL for example.

For sure they can not offer you an annuity !

Did you definitely arrange the telephone appointment through this link??

Pension Wise: free pension guidance | MoneyHelper

I notice that when you google Pension Wise, you get four commercial hits before you get the real website. Did you by any chance click on of these?

barnstar2077

The OP does use the word "suggested", which could imply it was just an option that was explained to them.  That is how I read it anyway.

rebs

I also read the bit about purchasing an annuity from 'them' differently to previous posters - I assumed the 'them' was Aviva rather than Pensionwise.

dunstonh

barnstar2077 said:

The OP does use the word "suggested", which could imply it was just an option that was explained to them.  That is how I read it anyway.

They are not allowed to do that.  Not winking or nodding to a scenario.  No suggestions and no advice.  And for the very reason that they are not trained, qualified, or experienced in that.    And that is reflected in the rubbish information they were told in this case.

I also read the bit about purchasing an annuity from 'them' differently to previous posters - I assumed the 'them' was Aviva rather than Pensionwise.

I can see that interpretation. 
However, buying an annuity from Aviva direct is unlikely to give the best outcome (open market option would be better) and the method of doing it is completely wrong. 
And pensionwise does not retail or arrange annuities.  They display tables based on assumptions.     They are good for a guide for information on ballpark figures but the final figures are often different and the real information can shove a provider that was bottom of the list in generic tables to being top when specific details are used.

Somerset

Well I seem to have opened a can of worms, apologies. I did talk to pensionwise, or thought I did - I did google so maybe hit a rogue number. The moneyhelper reference wasn't meant as buying an annuity from them, I understood it was a sort of comparison site, where you input the details of the pension and it churned out 'better' annuity choices.

So the swopping into the'pots' isn't a good option. So two questions if I may :

1 : I could still take the 25% tax free from SL and SW myself without an IFA being involved ? Given the pension pot sizes, would this be the best option or is that an IFA question?

2 : Would the cost of an IFA be worth it, assuming they could get better annuity rates ? And (sorry) what sort of cost would we be talking about here ?

Many thanks for all of the replies.

xylophone

If you intend to engage an adviser you might try

https://adviserbook.co.uk/

Tick "confirmed independent", "pensions and retirement" and other options required.

You could then ring round to discuss your requirements.

dunstonh

So the swopping into the'pots' isn't a good option.

It may be but the method was completely wrong.

1 : I could still take the 25% tax free from SL and SW myself without an IFA being involved ? Given the pension pot sizes, would this be the best option or is that an IFA question?

Yes, unless there are safeguarded benefits.   And you may need to transfer the pensions to a modern pension to do this (many older pensions do not support drawdown)

2 : Would the cost of an IFA be worth it, assuming they could get better annuity rates ? And (sorry) what sort of cost would we be talking about here ?

For an annuity, yes.   If you buy an annuity via the internet, they are still allowed to take commission.  That commission is factored into the annuity rate (i.e. you get a lower annuity rate).     An IFA cannot take a commission but would charge a fee.    That fee is taken from the pension pot and uses the nil-commission annuity rate.   So, the pot will be lower due to the fee but the annuity rate will be higher.  (the fee can also be paid after the TFC is taken or externally)

There comes a point where the IFA fee is lower than the commission for the direct option (providing you don't use a greedy IFA).  e.g. if the IFA fee is £1500 and the commission option is £2500.  Smaller pots tend to favour 

 Plus,the insurers have said that IFAs generally get better rates because the quality of the medical disclosures tends to be better than non-advised distribution.   I get that because I have done quotes for people who have used a direct option for a quote and via us, and the medical form they filled in was low detail, and I had to do a fair bit of extra questioning to get the detail, and it makes a difference.  Extra information can never lower the annuity rate. It can only leave it the same or improve it.   The direct options don't question the info they are given as they are non-advised.  Like most quote engines on various products, they quote on what they are told.

Last year, someone got a quote from one of the larger online sites and was told £12k.   The initial quotes I was getting using their initial medical information were £8.5k.   I couldn't understand the difference and we looked into it and found out the online site was using the basic quote system rather than the actual quote system. The basic system shows no medical issues vs maximum medical issues.  So, they were using the higher one to make them look better.    He then gave them the same medical questionnaire, and they returned £8.4k.  Not a lot in it.   However, in the meantime, there were so many gaps on the medical Q, and I pushed for GP/consultant letters and filled in missing details (and a lot was missing) and got them after three attempts, and the end annuity came to over £11k.     So, that gives you an idea of where an IFA can be better.     However, if there were no medical issues, then the differences are likely to be minor in the end rate.   

Somerset

Thank you for all the replies, especially dunstohn, food for thought.