Aviva 98 Series Personal and Group Personal Pension

thingswerentthisbadinmyday

Hi everyone,

I’m trying to help a close friend understand his options when it comes to drawing some tax free cash from his existing 98 Series PP. I’m not giving advice - just attempting to wade through the plethora of info which Aviva have sent him following a recent phone call.

He’s invested in about 6 funds (I think there are around 30 in total in the 98 Scheme). They are annotated “Series 4” funds.

He wants to do 2 things;

a) withdraw some tax free cash (Aviva have told him he can do this on the 98 scheme), but he wasn’t told how to go about this. Aviva gave useful info about how to switch funds, but not how to withdraw tax free cash. They also confirmed the 98 scheme offered a drawdown option
Does anyone know if he can give the instruction on-line, in writing or whether it needs to be another (long) phone call?
He doesn’t seem to have a cash balance anywhere, so does he need to encash units from some/all of his existing funds and if yes, do the proceeds have to go into another (cash/deposit) fund before being disbursed to his bank account?
If he takes his maximum tax free cash, the balance of his Pension fund will be in Drawdown. Does he have to choose different funds from those he already has? I ask because on reviewing the funds available to him, I see reference to funds called Pathway, 1, 2 ,3 and 4 which state that they are only available for drawdown.

b) At the same time as drawing cash, he’d also like to de-risk his portfolio.
Subject to the reference to Pathway funds, above, could anyone kindly clarify whether fund switches are ‘free’ or whether he’ll have to suffer a bid/offer spread. I’ve tried to answer this from the info available, but am struggling to do so.

Personally, I have my own SIPP (not Aviva) and understand very well how this works. I may be asked to give an opinion as to whether he should stay with the Aviva pension or move to a SIPP. Are there are clear/obvious advantages/disadvantages other than wider fund choice with a SIPP?

And just to say that I have suggested that he should seriously consider meeting with an IFA for professional advice.

Grateful for any help or guidance. If I could phone Aviva and ask the ‘right’ questions on his behalf, then I would do so. But they simply aren’t going to talk to me because of data protection rules.

Thanks

dunstonh

Does anyone know if he can give the instruction on-line, in writing or whether it needs to be another (long) phone call?

Old Aviva plans are by phone.

He doesn’t seem to have a cash balance anywhere, so does he need to encash units from some/all of his existing funds and if yes, do the proceeds have to go into another (cash/deposit) fund before being disbursed to his bank account?

It's a personal pension, not a SIPP.  There is no cash account and no need to sell units in advance.  Aviva Life & Pension plans pre-fund the transactions.  So, not wait in that respect.

If he takes his maximum tax free cash, the balance of his Pension fund will be in Drawdown. Does he have to choose different funds from those he already has? I ask because on reviewing the funds available to him, I see reference to funds called Pathway, 1, 2 ,3 and 4 which state that they are only available for drawdown.

Pathway funds are designed for drawdown.   Effectively very simple options that will never be the best but never be the worst.   They are more about doing no harm rather than doing what is best.  So, ideal for this scenario.

b) At the same time as drawing cash, he’d also like to de-risk his portfolio.
Subject to the reference to Pathway funds, above, could anyone kindly clarify whether fund switches are ‘free’ or whether he’ll have to suffer a bid/offer spread. I’ve tried to answer this from the info available, but am struggling to do so.

Most plans have been free of switching charges for almost 25 years.  However, only Aviva can answer that when talking about a specific plan.

Personally, I have my own SIPP (not Aviva) and understand very well how this works. I may be asked to give an opinion as to whether he should stay with the Aviva pension or move to a SIPP. Are there are clear/obvious advantages/disadvantages other than wider fund choice with a SIPP?

Better FSCS protection with the old plan.  Potentially cheaper or more expensive than a SIPP.  Smaller fund range but a much simpler product with the inability to do something particularly silly.

thingswerentthisbadinmyday

dunstonh said:

Does anyone know if he can give the instruction on-line, in writing or whether it needs to be another (long) phone call?

Old Aviva plans are by phone.

He doesn’t seem to have a cash balance anywhere, so does he need to encash units from some/all of his existing funds and if yes, do the proceeds have to go into another (cash/deposit) fund before being disbursed to his bank account?

It's a personal pension, not a SIPP.  There is no cash account and no need to sell units in advance.  Aviva Life & Pension plans pre-fund the transactions.  So, not wait in that respect.

If he takes his maximum tax free cash, the balance of his Pension fund will be in Drawdown. Does he have to choose different funds from those he already has? I ask because on reviewing the funds available to him, I see reference to funds called Pathway, 1, 2 ,3 and 4 which state that they are only available for drawdown.

Pathway funds are designed for drawdown.   Effectively very simple options that will never be the best but never be the worst.   They are more about doing no harm rather than doing what is best.  So, ideal for this scenario.

b) At the same time as drawing cash, he’d also like to de-risk his portfolio.
Subject to the reference to Pathway funds, above, could anyone kindly clarify whether fund switches are ‘free’ or whether he’ll have to suffer a bid/offer spread. I’ve tried to answer this from the info available, but am struggling to do so.

Most plans have been free of switching charges for almost 25 years.  However, only Aviva can answer that when talking about a specific plan.

Personally, I have my own SIPP (not Aviva) and understand very well how this works. I may be asked to give an opinion as to whether he should stay with the Aviva pension or move to a SIPP. Are there are clear/obvious advantages/disadvantages other than wider fund choice with a SIPP?

Better FSCS protection with the old plan.  Potentially cheaper or more expensive than a SIPP.  Smaller fund range but a much simpler product with the inability to do something particularly silly.

Thank you so much for answering in such detail.
Just to confirm, if I may?
He phones Aviva and advises how much he wants to withdraw tax free.
He advises Aviva which funds he wants to encash in full or in part.
If he withdraws his absolute maximum tax free cash, then immediately his residual funds are, by default, in drawdown.
Is the Pension fund renamed or annotated in some way?
Is there any obligation to change funds on drawdown, or could he stay in his existing 6 funds if he so chooses? i.e. does he have to go into one of the Pathway products?
Many thanks.

dunstonh

Is the Pension fund renamed or annotated in some way?

It will be reclassified as crystallised.  However, how that will show I cannot tell you as I have yet to leave an old Aviva plan in place crystallised as modern alternatives have been better.

Is there any obligation to change funds on drawdown, or could he stay in his existing 6 funds if he so chooses? i.e. does he have to go into one of the Pathway products?

If they are doing it within the existing plan, then it will have the same fund range.  If they are transferring to a new plan, then it will have the funds of the new plan. 

thingswerentthisbadinmyday

dunstonh said:

Is the Pension fund renamed or annotated in some way?

It will be reclassified as crystallised.  However, how that will show I cannot tell you as I have yet to leave an old Aviva plan in place crystallised as modern alternatives have been better.

Is there any obligation to change funds on drawdown, or could he stay in his existing 6 funds if he so chooses? i.e. does he have to go into one of the Pathway products?

If they are doing it within the existing plan, then it will have the same fund range.  If they are transferring to a new plan, then it will have the funds of the new plan. 

Thank you.

DRS1

Aviva have something called MyAviva which lets you see details about your pensions (and other stuff) with Aviva all in one place.  It may be worth his while have a look around that just to see what it allows him to do.  For my old Aviva policies the answer wasn't much - not even switching investments but none of my policies were as modern as 1998.

It may not be relevant to him but last year I bought an annuity with several Aviva pensions.  I also took a lump sum from each.  The lump sum was paid at the same time as Aviva transferred the balance to the annuity provider.  For whatever reason the whole process took some time.  Oh and they wanted a copy of my bank statement so they could make the payment.

Albermarle

He advises Aviva which funds he wants to encash in full or in part.
If he withdraws his absolute maximum tax free cash, then immediately his residual funds are, by default, in drawdown.

Some older pension plans do not allow part encashment of the tax free cash, it is all or nothing.

If part encashment is allowed and this is what he does, he will end up with two separate pots. Exactly how Aviva do this with this older pension, I do not know.

For example if his pension pot is £100K and has not been previously touched. In the jargon it is known as being uncrystallised.
If he takes £10K in tax free cash, then £40K of the pot will be crystallised. £10K will be transferred to his bank account and £30K will be in some kind of drawdown account. Any money taken from this is taxable income.
He will still have £60K left uncrystallised in his original pot. At some point he can take 25% of this as tax free cash. The exact amount will depend on whether the pot grows or shrinks due to investment performance.

thingswerentthisbadinmyday

Albermarle said:

He advises Aviva which funds he wants to encash in full or in part.
If he withdraws his absolute maximum tax free cash, then immediately his residual funds are, by default, in drawdown.

Some older pension plans do not allow part encashment of the tax free cash, it is all or nothing.

If part encashment is allowed and this is what he does, he will end up with two separate pots. Exactly how Aviva do this with this older pension, I do not know.

For example if his pension pot is £100K and has not been previously touched. In the jargon it is known as being uncrystallised.
If he takes £10K in tax free cash, then £40K of the pot will be crystallised. £10K will be transferred to his bank account and £30K will be in some kind of drawdown account. Any money taken from this is taxable income.
He will still have £60K left uncrystallised in his original pot. At some point he can take 25% of this as tax free cash. The exact amount will depend on whether the pot grows or shrinks due to investment performance.

Thank you. That’s helpful.

I do have some experience of SIPP and Drawdown accounts (mine and family members are all with HL) and I have some idea of the questions which still need to be asked.

Where we’re struggling, is not knowing the exact procedure which Aviva follow on Drawdown.

If only I could get to talk to Aviva on his behalf (which I know I can’t), I think I could be of some real help in explaining the procedure he needs to follow and in what order.

Your comment about some plans possibly not allowing part withdrawal of tax free cash is really well made - thank you - and is something I hadn’t considered (being used to the HL way of doing things).

LHW99

If only I could get to talk to Aviva on his behalf (which I know I can’t), I think I could be of some real help in explaining the procedure he needs to follow and in what order.

Could you get him to phone while you are with him, and he asks Aviva if they will talk to you on his behalf? I used to do that for various things with my late mum.

thingswerentthisbadinmyday

LHW99 said:

If only I could get to talk to Aviva on his behalf (which I know I can’t), I think I could be of some real help in explaining the procedure he needs to follow and in what order.

Could you get him to phone while you are with him, and he asks Aviva if they will talk to you on his behalf? I used to do that for various things with my late mum.

Thanks.
Although I didn’t make mention of this in my last message, I’ve been thinking along the same lines.
The more I look at the information about this specific plan, the more questions I seem to have.

Albermarle

thingswerentthisbadinmyday said:

LHW99 said:

If only I could get to talk to Aviva on his behalf (which I know I can’t), I think I could be of some real help in explaining the procedure he needs to follow and in what order.

Could you get him to phone while you are with him, and he asks Aviva if they will talk to you on his behalf? I used to do that for various things with my late mum.

Thanks.
Although I didn’t make mention of this in my last message, I’ve been thinking along the same lines.
The more I look at the information about this specific plan, the more questions I seem to have.

If you do then be aware though that not all pension call centre staff are that clued up .