General questions re drawdown schemes

CarterUSM

Hi

I will be 63 in May and am considering taking retirement this summer. I am interested in the possibility of taking out a drawdown pension, as it enables me to receive income whilst retaining investments at the same time.

I currently have a stakeholder pension arrangement to which I am currently contributing. I also have two deferred pensions in final salary (DB) schemes with previous employers, and I can currently contributing to my employers’ scheme. I also have a significant amount of spare cash.

I have a number of questions, as follows:

1.       I am aware that it is not possible to transfer benefits from DB schemes to a drawdown arrangement. Is it possible, in practice, to transfer the benefits in my two deferred pensions, to a new defined contribution arrangement (such as a personal pension), or to my existing stakeholder plan, and then transfer onwards to a drawdown arrangement?

2.       Is it possible to make a cash payment directly into a drawdown arrangement, or would I have to transfer it into a new defined contribution arrangement (such as a personal pension), or to my existing stakeholder plan, and then transfer onwards to a drawdown arrangement?

3.       Are there any websites which are particularly useful in this area?

Many thanks in anticipation of your assistance.

 

DE_612183

I think some DB schemes allow you to get a CETV ( cash equivilent transfer value ) which is basically a sum of money - you then transfer that to another provider ( say legal and general or nest ) - then you can draw down on that...

Cobbler_tone

DE_612183 said:

I think some DB schemes allow you to get a CETV ( cash equivilent transfer value ) which is basically a sum of money - you then transfer that to another provider ( say legal and general or nest ) - then you can draw down on that...

You had to rip that sticking plaster off? 

Linton

CarterUSM said:

Hi

I will be 63 in May and am considering taking retirement this summer. I am interested in the possibility of taking out a drawdown pension, as it enables me to receive income whilst retaining investments at the same time.

I currently have a stakeholder pension arrangement to which I am currently contributing. I also have two deferred pensions in final salary (DB) schemes with previous employers, and I can currently contributing to my employers’ scheme. I also have a significant amount of spare cash.

I have a number of questions, as follows:

1.       I am aware that it is not possible to transfer benefits from DB schemes to a drawdown arrangement. Is it possible, in practice, to transfer the benefits in my two deferred pensions, to a new defined contribution arrangement (such as a personal pension), or to my existing stakeholder plan, and then transfer onwards to a drawdown arrangement?

2.       Is it possible to make a cash payment directly into a drawdown arrangement, or would I have to transfer it into a new defined contribution arrangement (such as a personal pension), or to my existing stakeholder plan, and then transfer onwards to a drawdown arrangement?

3.       Are there any websites which are particularly useful in this area?

Many thanks in anticipation of your assistance.

 

1) Transfer of DB pensions to drawdown pensions is not possible for government schemes - eg Civil Service or NHS.  For non government DB pensions worth more than £30K you would need to pay for advice from a suitably qualified IFA which would be expensive.  Except in rare circumstances (eg terninal illness), the advice is likely to be not to transfer since DB pensions usually give better returns than you would be likely to get from a cash lump sum..  In theory there is no requirement to follow the advice but most pension will not take the risk of accepting you as a customer against an IFA recommendation.

2) Any SIPP will operate drawdown. Drawdown is just a feature of many pension schemes not something separate. However I do not believe it is directly available with any stakeholder pensions.  By law stakeholder pensions must accept transfers of any other pension  but I have not heard of that happening for DB transfers recently.  I believe some stakeholder pensions will only accept such instructions from IFAs or other intermediaries, and no IFA is going to help someone act against advice.  So if you do get to transfer your >£30K DB pension into a SIPP via a stakeholder pension please let the forum know.

3) The best website for info as far as I know is this one. Beware of any commercial outfit offering transfers of DB pensions.

Albermarle

1) Type 'DB Transfer' into the search box at the top of the page and leave an afternoon free to read all the threads about it.
Basically it is difficult and expensive to do, and usually not a good idea anyway for the large majority. Giving up guaranteed income for the vagaries of the financial markets is not something to be done lightly.

2) Drawdown is offered by most DC pension providers. However if you have an older pension, it could well be necessary to transfer to a newer pension product, either with the same or a different provider.
If you have a newer pension already, then normally you can just start drawdown whilst staying put.