Taking pension Drawdown

Makemydeal

Hi, I have a Standard Life Pension, which was funded by "Contracting Out of SERPS in 1987" and need to convert it so I can start drawdown. They have pathway pension funds to switch to which allow drawdown. I don't want to actively manage my pension so is this a good option? I am age 61 and have been retired a year already, living on savings. I will get the full New State Pension at age 67, so I want live on the drawdown until then. It would also mean, if drawdown is less than my tax allowance each year, I won't pay tax. Unlike if I leave my pension for when I get state pension, this would take my total above the tax free £12570 p/a.  Any advice would be welcome.

dunstonh

Hi, I have a Standard Life Pension, which was funded by "Opting Out"

Opting out is rarely a good decision.   All that free money from the employer lost.

They have pre made pension funds to switch to which allow drawdown. I don't want to actively manage my pension so is this a good option?

pathways are simple options.  They wont be the best, they wont be the worst.  

swindiff

Maybe the OP means contracting out, rather than opting out?

gm0

If you have this pension (from the 1990s) from the period of "opting out" of SERPS.  So that reduced NI went into SP but instead was diverted to and funded a "private pension".

Then SL will have some options for how you take this.

BUT they will only talk to you about the options they support on this scheme - not the full range available under legislation.  Old schemes don't support all investments, nor all pension freedom features.  That's just how this whole complicated field is regulated.  They don't give personalised advice

You have more choices both DIY and fairly simplistic, and adviser based which you *could* transfer to. To access different options for how drawdown income is organised or investment.

Investment Pathways are a recent (last ~5 years or so) Financial Conduct Authority (FCA) mandate on the industry to provide some "simple" labelled, consistent default options for pension investments. 
Optimal - probably not.  Acceptable - quite possibly.

You will need to learn a bit more to explore other providers and options. 

https://www.moneyhelper.org.uk/en?source=mas#

This is a link to the government site.  The advantage of guidance from people who are not selling you something should be fairly obvious.  Even if you decide to either take an SL option as is or if the pot is sufficient and you wish to be helped through it professionally - seeking regulated financial advice from an organisation which serves that part of the market.   There are advisers who work with smaller pension pots and others with a "minimum" to talk to you. 

It can be awkward.  There is a phenomenon called the "advice gap" - people who want advice (because it's complex) and cannot easily access it - because they are not financially interesting to providers - who in turn are heavily regulated on the what/how/how documented/audited - of what they do by the FCA.  So they want the profitable and not the unprofitable to them customers - All quite rational yet unhelpful to a particular demographic.

Albermarle

I have a SL pension that was funded by NI payments, as I opted out of SERPS for a number of years.
I am still operating the pension via the SL website but have not withdrawn from it. I did enquire and they said I would have to first transfer to a more modern SL pension before starting drawdown/withdrawals. ( or transfer out to another provider)  I suspect the OP will be in the same position.
OP - if you do that you still need to decide how to invest the money via an 'Investment Pathway' or not.
You seem to want to withdraw it all in the next 6 years?
If so  one of the Investment pathways says something like ' for clients who want to withdraw all the money in the next 5 years' so that would seem suitable.

EnergyUser

I think that I am in a similar position in that my pension schemes were started before drawdown was a thing - though as a regular punter I wasn't really aware of this. So I have four policies, one of which is with my current employer. So I wanted a sum of cash recently to fund a purchase and had thought that I would just contact the company and make arrangements to drawdown 25 % tax free. The first policy I tried I wasn't able to do so from that fund except through an IFA, that will make sense to someone ie they will understand that there is something protected about it. The second policy didn't have the possibility of drawdown because that wasn't around when that policy started. At the moment I am having to wait for a call back so that I can set up a new plan/policy and then transfer from the old to the new to then be able to make a 25% tax free withdrawal. The third policy is only small so not relevant and the current work pension - others I know have made withdrawals from and I am aware that has been a bit of a performance.
In my head it was going to be simple as all the messaging has been once over the age of 55 (I am 60 this May) that 25% drawdown is possible. So while not impossible I wish that I had reviewed these plans earlier as I knew that I was going to want to take out some cash and it didn't occur to me that it would be such a faff!
Of course I can't give advice, but my advice is to get an understanding of your policies, especially if they are relatively old if you know that taking some cash out is on the horizon for you.

Makemydeal

Hi, I have transferred my original pension to an "Active Money Personal Pension" 
This was done online, and was straight forward, as long as you have already done your homework and decided what is best for you. It's possible to do a dummy run, then not submit the forms at the final page. The pages get saved to return to another time. Giving you time to digest all the information before committing.
I withdrew the 25% tax free, using drawdown. I left the remaining 75% in the "Pathway 4 Pension Fund"
I set up a direct debit for £1k per month drawdown. This keeps my total below the tax free allowance. Standard Life still stop the 20% tax on the £1k, but I will claim it back at the end of each tax year, as it is my only income.
You get lots of warnings saying its not the best investment choice, it won't last etc etc. My opinion is, I'll do what works for me.

Albermarle

Makemydeal said:

Hi, I have transferred my original pension to an "Active Money Personal Pension" 
This was done online, and was straight forward, as long as you have already done your homework and decided what is best for you. It's possible to do a dummy run, then not submit the forms at the final page. The pages get saved to return to another time. Giving you time to digest all the information before committing.
I withdrew the 25% tax free, using drawdown. I left the remaining 75% in the "Pathway 4 Pension Fund"
I set up a direct debit for £1k per month drawdown. This keeps my total below the tax free allowance. Standard Life still stop the 20% tax on the £1k, but I will claim it back at the end of each tax year, as it is my only income.
You get lots of warnings saying its not the best investment choice, it won't last etc etc. My opinion is, I'll do what works for me.

If this £1k per month is your only income, then there should be no deductions ( not after the first month or two anyway) as £12k pa is below your personal allowance of £12570 and SL should have this tax code in their system.
However if you have other taxable income, such as state pension, employment earnings etc then of course that changes the story.

If you are owed tax, you do not need to claim it back. It will be calculated automatically around September following the tax year in question. Although if you want it quicker you can call HMRC ( be prepared for a long wait).