DC Pension Transfer & Drawdown

oakland600

Hello everyone,

This is a brain dump from me on my financial situation and I would appreciate your feedback. Especially those sections highlighted in bold below.

 I retired 3 years’ ago with a final salary pension. I took the traditional pension from the scheme and not the drawdown option. This pension is the backbone of my retirement income.

 Due to other considerations I now need to crystallise an additional earlier DC scheme pension that is with Royal London. This is broken down into 6 pension policies with Royal London – 3 personal pensions, 2 Transfer-in Personal Pensions (Protected Rights) and 1 AVC. Total transfer value is around £165k. This is in addition to the Final Salary scheme mentioned above which will not change.

 My intention is to transfer these Royal London pension policies to Vanguard (or similar) and start drawing down.

Probably taking 10% tax free initially and then around £600/month income.Can anyone suggest a Vanguard fund (or a type of fund) that would average around 4% return/annum?

 I am unsure if the pension funds are ‘pulled across’ by Vanguard or ‘pushed over’ by Royal London.

 Using Royal London’s online contact form I submitted the following questions to them last week asking for a written response but have not heard back yet:

 

1.    What is the latest transfer value for each of the policies?

2.    Will each of the policies be transferred as cash or stock?

3.    Will any exit fees have to be paid for any of the policies?

4.    Will I be forfeiting any valuable benefits or guarantees for any of the policies?

5.    When is the next bonus payment due for each of the policies?

6.    What are the Royal London timescales for transferring each of the policies to another provider?

7.    Can I start the transfer process online? Or do I need to complete and send forms to you?

8.    Are there any other Royal London restrictions or issues that I should be made aware of regarding the transfer of the policies?

Any other questions I should be asking?

Would I be correct in assuming that I would need to create a SIPP with Vanguard prior to them receiving the funds and prior to me drawing down on the money?

Thank you for reading and thanks in advance for any feedback.

Ian

MallyGirl

The process would be to create the SIPP with Vanguard and ask them to transfer from Royal London. They would do all the work under authority from you.
Vanguard SIPP only offers Vanguard products which I am sure will not be used by Royal London so it will be a cash transfer

Marcon

oakland600 said:

Hello everyone,

This is a brain dump from me on my financial situation and I would appreciate your feedback. Especially those sections highlighted in bold below.

 I retired 3 years’ ago with a final salary pension. I took the traditional pension from the scheme and not the drawdown option. This pension is the backbone of my retirement income.

 Due to other considerations I now need to crystallise an additional earlier DC scheme pension that is with Royal London. This is broken down into 6 pension policies with Royal London – 3 personal pensions, 2 Transfer-in Personal Pensions (Protected Rights) and 1 AVC. Total transfer value is around £165k. This is in addition to the Final Salary scheme mentioned above which will not change.

 My intention is to transfer these Royal London pension policies to Vanguard (or similar) and start drawing down.

Probably taking 10% tax free initially and then around £600/month income.Can anyone suggest a Vanguard fund (or a type of fund) that would average around 4% return/annum?

 I am unsure if the pension funds are ‘pulled across’ by Vanguard or ‘pushed over’ by Royal London.

 Using Royal London’s online contact form I submitted the following questions to them last week asking for a written response but have not heard back yet:

 

1.    What is the latest transfer value for each of the policies?

2.    Will each of the policies be transferred as cash or stock?

3.    Will any exit fees have to be paid for any of the policies?

4.    Will I be forfeiting any valuable benefits or guarantees for any of the policies?

5.    When is the next bonus payment due for each of the policies?

6.    What are the Royal London timescales for transferring each of the policies to another provider?

7.    Can I start the transfer process online? Or do I need to complete and send forms to you?

8.    Are there any other Royal London restrictions or issues that I should be made aware of regarding the transfer of the policies?

Any other questions I should be asking?

Would I be correct in assuming that I would need to create a SIPP with Vanguard prior to them receiving the funds and prior to me drawing down on the money?

Thank you for reading and thanks in advance for any feedback.

Ian

You certainly need a receiving scheme in place before going any further, since the transfer value is indeed 'pulled' by them, not 'pushed' by the ceding (sending) scheme.

Albermarle

Normally it is not necessary to have contact with the current scheme ( RL in your case ), although they may contact you to just as a check that you are happy for the transfer to go ahead, once they receive the transfer request from Vanguard.

oakland600

Thank you all for your replies.

AlanP_2

Do you need to transfer out from RL to achieve what you want?

Presumably you have been happy with the RL investment options so far so what has changed?

It might be the right thing to do but maybe not.

Hal17

AlanP_2 said:

Do you need to transfer out from RL to achieve what you want?

Presumably you have been happy with the RL investment options so far so what has changed?

It might be the right thing to do but maybe not.

I have a drawdown pension with both Royal London and Vanguard. I find Royal London easier and certainly quicker than Vanguard.

LHW99

As said above, RL funds will not be available at Vanguard, and may not be available at any other platform, so may need to be transferred as cash, which would be an option to tick on the receiving provider's form.

JSL_2

oakland600 Can I ask why you wish to transfer to Vanguard and not consolidate and drawdown with Royal London ?
I myself am with Royal London and will soon be starting drawdown with them.

dunstonh

JSL_2 said:

oakland600 Can I ask why you wish to transfer to Vanguard and not consolidate and drawdown with Royal London ?
I myself am with Royal London and will soon be starting drawdown with them.

RL are one of the largest providers of drawdown in the country.  Indeed, in the past they were the largest. Although I haven't seen any stats for a while.

Royal London support all drawdown methods.   Vanguard does not.   RL prefunds tax relief, switches and withdrawals.  Vanaguard does not.    RL's new system comes in next month and things like tax free cash will be paid within 24 hours (still not the fastest but a lot quicker than many and quicker than Vanguard).

RL has 100% FSCS protection with no upper limit.  Vanguard hits out at £85k or no FSCS protection if ETFs.

RL is expensive for small values but improves as  the value goes up. Plus, as a mutual, the rebate around 0.15% a year as profit share.   Vanguard is also a mutual but does not rebate anything as a profit share.  Vanguard is cheaper for smaller values and very large values.

e.g. on a fund of £200k
Vanguard using VLS would be 0.15% platform, 0.22% fund OCF, 0.05% fund TC, 0.00% fund IC = 0.42%
Royal London would be 0.45% provider, no OCF as it uses pension funds,  TC 0.01% minus profitshare of 0.15% = 0.31%
If you disregard TC (as most do) then its 0.37% vs 0.30%.

So, that is a brief summary of the key differences.