25% Tax Free Lump Sum Withdrawal: Any Advice?

WittyUserName

I’m at that age and reached out to my pension provider about withdrawing my tax free 25% lump sum - they said they’d arrange for an adviser to speak to me. 

Are they mandated by regulation to do this or is this them trying to dissuade me or upsell other products?! 

I don’t want anything other than my tax free lump sum - is there anything I need to be aware of when I speak to the adviser, other than to firmly decline any products? E.g. questions to ask or the right responses to give. 

Or is it likely to be a straightforward discussion to tick regulatory boxes. 

I’m well aware that a penny above the 25% attracts income tax. 

Thank you 

dunstonh

I’m at that age and reached out to my pension provider about withdrawing my tax free 25% lump sum - they said they’d arrange for an adviser to speak to me. 
Are they mandated by regulation to do this or is this them trying to dissuade me or upsell other products?! 

The answer it "it depends".

Most providers do not have advisers.   Most take instruction from the policyholder or advisers.
A small number of providers will have an in-house salesforce.

In many cases with older schemes, the plan doesnt support drawdown and it requires the old pension to be transferred to a modern one that allows drawdown.   If your provider is one that has an in-house salesforce, then they will refer it to them but it doesn't mean you have to use them.  You are free to go to a provider of your choice (assuming they retail direct to consumer) or an adviser of your choice.

For example, most Prudential legacy plans don't support drawdown. only UFPLS.   Pru have an in-house salesforce (who are not advisers) and will try and sell you their new product (even though it feels like a 2005 product!) and charge you more than an IFA, who would be an adviser.

I don’t want anything other than my tax free lump sum - is there anything I need to be aware of when I speak to the adviser, other than to firmly decline any products? E.g. questions to ask or the right responses to give. 

Is that an adviser in the regulatory sense? (i.e. FCA authorised and able to give advice on regulated products) or someone like a customer service adviser who has no regulatory permissions?     Knowing their status is important.   i.e. unqualified call centre worker, qualified restricted adviser who is a sales rep or an IFA.

If the existing plan cannot offer drawdown, as many legacy plans cant, then you will need a new product.

Apart from that, any questions ask should be answered as you see fit.

Mr.Generous

The adviser might be going to ask when you want the money and into which account. I was asked what I was using the cash for when I drew mine, so maybe its usual thing. They didn't try and sell me anything.

dunstonh

Mr.Generous said:

The adviser might be going to ask when you want the money and into which account. I was asked what I was using the cash for when I drew mine, so maybe its usual thing. They didn't try and sell me anything.

It is unlikely that an adviser would be used for that as it would be a very inefficient use of an adviser.   Its the sort of thing a call centre worker or support worker would do.

pterri

When I spoke to Vanguard about starting drawdown they book a call in with one of their people. It’s not ‘advice’ as such, it’s to explain how it works with them and playback some of the info from pension wise. I guess it’s not compulsory but it was useful to understand the nuances of how it works with them. May be a similar thing. 

WittyUserName

For example, most Prudential legacy plans don't support drawdown. only UFPLS.   Pru have an in-house salesforce (who are not advisers) and will try and sell you their new product (even though it feels like a 2005 product!) and charge you more than an IFA, who would be an adviser.

This is precisely it ^ thank you. 

The call handler mentioned that drawdown is unsupported, and said they’d arrange a call with an adviser. 

Having read up on UFPLS it’s definitely not what I want and I’m not sure I want the hassle of converting to a new product as I have another ‘more modern’ pension I can access for the tax-free lump sum. 

So how are other people using these legacy pensions - for annuities? Or do people tend to purchase the new products that support drawdown? Not seeking advice, just wondering what the trend is. 

Thank you all for taking the time to respond.  

eastcorkram

I would imagine it's pretty straightforward to transfer it these days. Probably done in a couple of days . 

Dazed_and_C0nfused

WittyUserName said:

For example, most Prudential legacy plans don't support drawdown. only UFPLS.   Pru have an in-house salesforce (who are not advisers) and will try and sell you their new product (even though it feels like a 2005 product!) and charge you more than an IFA, who would be an adviser.

This is precisely it ^ thank you. 

The call handler mentioned that drawdown is unsupported, and said they’d arrange a call with an adviser. 

Having read up on UFPLS it’s definitely not what I want and I’m not sure I want the hassle of converting to a new product as I have another ‘more modern’ pension I can access for the tax-free lump sum. 

So how are other people using these legacy pensions - for annuities? Or do people tend to purchase the new products that support drawdown? Not seeking advice, just wondering what the trend is. 

Thank you all for taking the time to respond.  

What do you mean by that?

Is your other 'more modern' pension large enough you will get the maximum TFLS of ~£268k from that?

Or are simply not bothered about having more tax free cash 🤔

dunstonh

So how are other people using these legacy pensions - for annuities? Or do people tend to purchase the new products that support drawdown? Not seeking advice, just wondering what the trend is. 

They transfer them to a modern plan with the required functionality.  Its a doddle to move from most providers to another.

WittyUserName

Dazed_and_C0nfused said:

WittyUserName said:

Having read up on UFPLS it’s definitely not what I want and I’m not sure I want the hassle of converting to a new product as I have another ‘more modern’ pension I can access for the tax-free lump sum. 

What do you mean by that?

Is your other 'more modern' pension large enough you will get the maximum TFLS of ~£268k from that?

Or are simply not bothered about having more tax free cash 🤔

I wish!

Sadly my other pension isn’t large enough to release the max. 

What I meant was, I don’t want to go through the hassle at this moment in time as I have another pension where I can access the funds I need for now.

I will have to address the matter at some point I know, so you could say I’m intentionally kicking the can down the road, but only by a few yards because I’m nervous that the rules might change in the next round of pension reform, whenever that might be. 

I’ll research and revisit the transfer to a product that supports the 25% tax free drawdown soon. 

Thank you 

Roger175

WittyUserName said:

For example, most Prudential legacy plans don't support drawdown. only UFPLS.   Pru have an in-house salesforce (who are not advisers) and will try and sell you their new product (even though it feels like a 2005 product!) and charge you more than an IFA, who would be an adviser.

This is precisely it ^ thank you. 

The call handler mentioned that drawdown is unsupported, and said they’d arrange a call with an adviser. 

Having read up on UFPLS it’s definitely not what I want and I’m not sure I want the hassle of converting to a new product as I have another ‘more modern’ pension I can access for the tax-free lump sum. 

So how are other people using these legacy pensions - for annuities? Or do people tend to purchase the new products that support drawdown? Not seeking advice, just wondering what the trend is. 

Thank you all for taking the time to respond.  

The transfer process is really very simple. All you do is choose a new provider (or use one you already have) and ask them (the new company) to instigate the transfer from your old provider. Depending on companies involved this can take anything from a few days to a few months, but once the money is transferred over, you have full flexibility to do what you want with it.

I transferred two pensions last year, one old one from Prudential and another from Hargraves Lansdown. The HL was very simple and took a few days, the one from Prudential dragged on for a few months because Prudential are incompetent and incapable of doing anything quickly, but all eventually sorted and now all under one roof at A J Bell.