Taking pension Drawdown

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This discussion was created from comments split from: Taking pension Drawdown.

urrrrz

Hi,I am a 1st time user of any forum.
I retired early  (61) and set myself up with a drawdown pension which I wanted to last me until I reached my  state pension, supplementing my company pension income. I am now 70 and have left my drawdown pension dormant since getting my state pension at 66. My pension company (LV) have recently written to me advising me that as my pot is only £11K their charges are likely to be more than the gains annually and I should reconsider my position. I am intending to empty the pot and place the money ( around £8.8K, after tax) in a savings account, but not sure what to do. Any thoughts please.

dunstonh

. I am now 70 and have left my drawdown pension dormant since getting my state pension at 66. My pension company (LV) have recently written to me advising me that as my pot is only £11K their charges are likely to be more than the gains annually and I should reconsider my position. 

Did they actually say that or is that your interpretation of what they have said?  
That is not a typical communication from a provider.   I wonder if it is a cash warning (i.e. you are heavy in cash rather than investments) and you reading it different to how it is intended.

MSE_Stephen

@urrrrz

We've split this into a new thread for you.

urrrrz

It is my interpretation, their comment was, as I have a small fund value I am at risk of having my pension fund eroded by their charges and I should consider if this is still the right place for my fund.

LHW99

So then the question is - do you know what the charges are?

Albermarle

urrrrz said:

It is my interpretation, their comment was, as I have a small fund value I am at risk of having my pension fund eroded by their charges and I should consider if this is still the right place for my fund.

They are probably just covering themselves, as seems unlikely that charges would erode an invested pension fund that much.
On the other hand it is not a large amount, so probably does not make a lot of difference, if you take it out or leave it where it is. 
Maybe take it out and spend some of it on something, like a holiday.

urrrrz

LHW99 said:

So then the question is - do you know what the charges are?

the new minimum charge is only £195 p.a. plus any investment charges. But the fund only increased by £300. 

urrrrz

Albermarle said:

urrrrz said:

It is my interpretation, their comment was, as I have a small fund value I am at risk of having my pension fund eroded by their charges and I should consider if this is still the right place for my fund.

They are probably just covering themselves, as seems unlikely that charges would erode an invested pension fund that much.
On the other hand it is not a large amount, so probably does not make a lot of difference, if you take it out or leave it where it is. 
Maybe take it out and spend some of it on something, like a holiday.

I probably will take it out as I will have to pay 20% tax on it whenever I take it out and in a savings account I know it will not go down in value. 

urrrrz

is there such a thing as selling your pension fund to the highest bidder?

Notepad_Phil

urrrrz said:

Albermarle said:

urrrrz said:

It is my interpretation, their comment was, as I have a small fund value I am at risk of having my pension fund eroded by their charges and I should consider if this is still the right place for my fund.

They are probably just covering themselves, as seems unlikely that charges would erode an invested pension fund that much.
On the other hand it is not a large amount, so probably does not make a lot of difference, if you take it out or leave it where it is. 
Maybe take it out and spend some of it on something, like a holiday.

I probably will take it out as I will have to pay 20% tax on it whenever I take it out and in a savings account I know it will not go down in value. 

Not saying that putting it in cash is the wrong thing for you to do, but do remember that if inflation is greater than the interest rate of your savings account then your money may not go as far in what it can buy after a year or two.

urrrrz said:

is there such a thing as selling your pension fund to the highest bidder?

Unfortunately not.