Pension Drawdown help needed

realitybites

Hi, I have recently been medically retired from my job at royal mail. I have savings in the bank so not eligible for any benefits. I have 2 small retirement pots that combined total £60k. Both can be transferred to another provider as neither provide drawdown as an option. What I want to do is take a lump sum of 25% and draw the remainder over the next 5 years in equal amounts until my state pension is due, weekly, monthly annually, doesn't matter. I have tried the comparison sites but as you delve deeper there seem  to be more charges applicable. Any recommendations on a route to take, company to go with would be very welcome.

Linton

Are these small retirement pots from Royal Mail or some previous employer?  If they are RM, looking on the net I see that RM pensions can either be Defined Benefit (pre 2008) or  Collective Plan (post 2008).  If a DB pension  Transfer Value is over £30K you would need to pay for expensive advice to transfer.  The Collective Plan appears much more complex with both DB and DC features so you may need to consult the Scheme Rules to determine the transfer arrangements.

Hopefully someone with specific knowledge of the RM scheme and Collective Plans can comment.

As to where to put the money - to get drawdown you would transfer to a modern SIPP or Personal Pension. They will either charge fixed fees or a % of the pot size each year.  £60K is a small amount and so % charging would be cheaper.  Possible examples include HL or AJBell and a range of others.  

Normally one would invest the pot in share or bond funds but as you plan to withdraw it all in 5 years taking any sort of investment risk could be imprudent.  Unfortunately you wont get market leading interest rates from cash held in a pension. 

realitybites

It is Defined Benefit. There is no charge for transferring as far as I know (Scottish Widows are the provider) and my second smaller pot is through Phoenix Life, again, no transfer fee. I was looking towards the providers that just need the plan references and will do all the legwork in transferring the across like Standard Life among others.

MallyGirl

realitybites said:

It is Defined Benefit. There is no charge for transferring as far as I know (Scottish Widows are the provider) and my second smaller pot is through Phoenix Life, again, no transfer fee. I was looking towards the providers that just need the plan references and will do all the legwork in transferring the across like Standard Life among others.

If DB and with a transfer value above £30k then you will need to take advice from a pension transfer specialist. This will cost something like £5k and may come back advising against transfer. Can't you start taking the DB pension early?

realitybites

MallyGirl said:

realitybites said:

It is Defined Benefit. There is no charge for transferring as far as I know (Scottish Widows are the provider) and my second smaller pot is through Phoenix Life, again, no transfer fee. I was looking towards the providers that just need the plan references and will do all the legwork in transferring the across like Standard Life among others.

If DB and with a transfer value above £30k then you will need to take advice from a pension transfer specialist. This will cost something like £5k and may come back advising against transfer. Can't you start taking the DB pension early?

I can but this will be my only income. I wanted to spread this over the five years to provide a liveable income (along with my partners) and then will be eligible for state pension. Is the transfer specialist compulsory? If it is I might be better off taking the complete lot and suffer the tax loss.

Cobbler_tone

I'm not sure these are DB pensions. If you have values on a page (i.e. a pot value) and haven't requested the cash equivalent transfer value, they are DC pensions. It's an important point to clarify to know what options you realistically have.

MallyGirl

realitybites said:

MallyGirl said:k

realitybites said:

It is Defined Benefit. There is no charge for transferring as far as I know (Scottish Widows are the provider) and my second smaller pot is through Phoenix Life, again, no transfer fee. I was looking towards the providers that just need the plan references and will do all the legwork in transferring the across like Standard Life among others.

If DB and with a transfer value above £30k then you will need to take advice from a pension transfer specialist. This will cost something like £5k and may come back advising against transfer. Can't you start taking the DB pension early?

I can but this will be my only income. I wanted to spread this over the five years to provide a liveable income (along with my partners) and then will be eligible for state pension. Is the transfer specialist compulsory? If it is I might be better off taking the complete lot and suffer the tax loss.

If it is a DB then there is no pot to take - just a promise to pay a certain amount for the rest of your life. That is why it is essential to know what sort of pensions these are. If it is a DB and over £30k then transfer specialist is compulsory. If it is a DB then there is no option to 'take the lot and suffer the tax loss'

Linton

realitybites said:

MallyGirl said:

realitybites said:

It is Defined Benefit. There is no charge for transferring as far as I know (Scottish Widows are the provider) and my second smaller pot is through Phoenix Life, again, no transfer fee. I was looking towards the providers that just need the plan references and will do all the legwork in transferring the across like Standard Life among others.

If DB and with a transfer value above £30k then you will need to take advice from a pension transfer specialist. This will cost something like £5k and may come back advising against transfer. Can't you start taking the DB pension early?

I can but this will be my only income. I wanted to spread this over the five years to provide a liveable income (along with my partners) and then will be eligible for state pension. Is the transfer specialist compulsory? If it is I might be better off taking the complete lot and suffer the tax loss.

If the transfer value of the DB pension is more than £30K getting paid-for advice from a transfer specialist is compulsory - no pension company would accept a transfer-in without it.  However, legally,  following the advice is not compulsory.

But if it is a DB pension you wont be able to take the whole lot as cash either.  You can either do the things that the pension scheme explicitly permits or transfer (with advice) to another pension that does permit it.

LHW99

Are there any provisions in terms of the DB pension conditions relating to medical retirements?

Albermarle

OP- 
It seems unclear what sort of pensions you are talking about.

Are they Defined Contribution (DC) type, as explained in the link below?
Defined contribution pension schemes | MoneyHelper

Or are they Defined Benefit ( DB ) type, as explained in the link below.?
Defined benefit pensions | MoneyHelper

Miiade

realitybites said:

It is Defined Benefit. There is no charge for transferring as far as I know (Scottish Widows are the provider) and my second smaller pot is through Phoenix Life, again, no transfer fee. I was looking towards the providers that just need the plan references and will do all the legwork in transferring the across like Standard Life among others.

If these amounts were built up whilst you were at RM I suspect they are AVC funds and not DB. Royal Mail use Scottish widows as their AVC provider. My advice would be to check your annual statement to see if they are indeed AVCs.  If so you should be able to transfer them to a pension company that’s offers yearly drawdown. Contact RM pensions in Sheffield if you are unsure.