Which draw down pension

happywelder

hi, I`m self employed and 4 years away from state pension age, 67, and would like to take my Reassure pension pot and open a draw down pension, which some firms are calling Sipps.

I`ve spoken to a couple of financial advisers, but it seems like their fees can vary quite a lot, one even asking for 4.5% of my pot, which I think is way to high, I`m tempted to do some research, pick a safe bet as I dont want to take any chances with my pot, and do it myself.

I have a distrust of financial institutions after Reassure terminated my pension for no reason, and I had to fight tooth and nail to prove their mistake, so a drawdown will suit me fine, but which one lol.

I would appreciate any advice.

MallyGirl

if you are comfortable with managing the investment choices yourself - the S in SIPP is for Self - then you could transfer to a SIPP. There are several providers commonly mentioned regularly on here. Their pricing does vary so the size of your pot makes a difference.

for example:

Hargreaves Lansdown (HL) charges a percentage of the pot but there are different fees for buying/selling different things. There are also caps on certain types of investments

Interactive Investor (ii) has fixed fees, not based on pot size, so is a better deal for larger pots.

Knowing what you might want to invest in should be the first choice and then you can find the best platform for it.

Investment choice's doesn't necessarily need to be complicated- you could put it all in a multi asset fund alongside holding a cash reserve and just leave it alone.

SVaz

Are you going to carry on working to 67? Have you got a full State pension entitlement?

Any of the Large Sipp providers are going to be fine, I’m self employed and my Sipps are with Hargreaves and also AJ Bell.

Are you likely to take your tax free cash all in one go, or in chunks?

Even if you know next to nothing about investing, the companies above have their own ‘retirement plans’ that won’t cost anywhere near 4%. What funds are you currently invested in within reassure? are you happy with how they’ve performed over the last decade?

Given your age, You will need to sort out a cash or ‘cashlike’ pot in your pension to hold your tax free cash and a couple of years worth of planned income, having the lot invested so close to retirement is risky

Albermarle

https://forums.moneysavingexpert.com/discussion/6653521/which-draw-down-pension

The 4.5% seems high as an initial charge, but that maybe reflects the amount of money involved.

Typically advisors are not interested in anything much less than £100K and I would guess if you had say £250K the charge would have been more like 2.5%.

As well as the two providers already mentioned, you could have a look at the websites of these as well.

Fidelity International | ISAs, Shares, Funds & Pensions (SIPPs)

Pensions | Standard Life

dunstonh

I`ve spoken to a couple of financial advisers, but it seems like their fees can vary quite a lot, one even asking for 4.5% of my pot, which I think is way to high, I`m tempted to do some research, pick a safe bet as I dont want to take any chances with my pot, and do it myself.

4.5% could be cheap or expensive. It needs context based on the amount. 4.5% of £100k or above is high. But 4.5% of £20k is very low.

If you are doing drawdown, then there is no safe bet. Drawdown by definition is a risk based option.

You haven't said what method of drawdown you will be using. Some providers support all methods. Some support a limited number.

You haven't said what investment strategy you will be using for drawdown. Will it be yield, total return or bucketing or one of the others?

You haven't said what type of investments you will be using. e.g. ETFs/ITs, Shares, OEICs/UTs etc. Some providers target their pricing around one particular type.

So, you need to be giving us a bit more detail on what you are looking to do. That can help eliminate options and focus on those that meet your methods and requirements.

Albermarle

If some of the options mentioned in the posts above are unfamiliar, you may want to book a free chat with PensionWise. It is a Govt service. They will not recommend anybody but they will explain the different options when you start to withdraw from the pension.

Pension Wise: free pension guidance | MoneyHelper

nd would like to take my Reassure pension pot and open a draw down pension, which some firms are calling Sipps.

For clarity a SIPP is a type of DC pension. They offer a large range of possible investments and tend to have modern software, which can make them more flexible when dealing with them. They are not just for drawdown, although they all offer the facility. Some examples are

Hargreaves Lansdown; Fidelity; Aj Bell

You can also have personal pensions, which are also a DC pension. There is less choice of investments, but that is not necessarily a bad thing and most also offer a drawdown facility. Examples are Vanguard & Standard Life.

happywelder

to answer a few questions raised, yes I will carry on working until my full state pension kicks in in 2029, I`m self employed and run my own business and well aware of not falling into the higher rate 40% tax bracket.

the pension pot with Reassure is a personal pension with a value of £92k many many years ago it was Guardian Royal Exchange, in fact its done very well over the last few years, but for reasons mentioned previously Id like to take it away from Reassure asap.I have spoken to PensionWise as well

my ideal plan would be to take 25% tax free and pay for a couple of funeral plans for my wife and I and dump the rest into an ISA, then draw down approx 25% a year over the next 3 -4 years keeping it under my control and not all in one basket.

for what I want to do I`m really shying away from some of the Sipps with quite high management fees, I don`t want to risk any of my fund at this late stage so do feel it wont need managing as such, so very wary of my pot being eaten away by unnecessary fees and charges.

it seems a minefield, even speaking to financial advisors, fees charged can be all over the place, so far I am waiting on written confirmation that there are no exit fees from Reassure, and then I will be able to make a firm decision, at present my research leads me towards AJBell,or Aviva.

I know most will say use a financial advisor, but for what I am seeking to achieve I am reluctant to pay anything up to £2k for what I would consider to be a simple task, as Im not seeking an annuity or stock and shares, just taking a draw down over 3-4 years an paying no more than 20% tax on the remaining 75%

dunstonh

my ideal plan would be to take 25% tax free and pay for a couple of funeral plans for my wife and I and dump the rest into an ISA, then draw down approx 25% a year over the next 3 -4 years keeping it under my control and not all in one basket.

That does not seem a logical use of funds. Why do you think it is a good idea?

it seems a minefield, even speaking to financial advisors, fees charged can be all over the place, so far I am waiting on written confirmation that there are no exit fees from Reassure, and then I will be able to make a firm decision, at present my research leads me towards AJBell,or Aviva.

Fees are explicit on investment products. They were unbundled so you can see which each stage is taking. Your ReAssure pension is bundled. So you just get the bottom line.

Its a bit like going into Tesco and buying a tin of beans. You see the one price - that is bundled pricing.

Unbundling would like having the tin of beans price ticket showing how much goes to the farmer, the processor, the tin maker, the haulage, and the retailer and any other party involved.

I know most will say use a financial advisor, but for what I am seeking to achieve I am reluctant to pay anything up to £2k for what I would consider to be a simple task, as Im not seeking an annuity or stock and shares, just taking a draw down over 3-4 years an paying no more than 20% tax on the remaining 75%

However, nothing you have said so far indicates that it is a good idea. Making bad decisions can be more expensive

Albermarle

for what I want to do I`m really shying away from some of the Sipps with quite high management fees, I don`t want to risk any of my fund at this late stage so do feel it wont need managing as such, so very wary of my pot being eaten away by unnecessary fees and charges.

It depends what you mean by high charges.

With a SIPP there two charges; The platform charge ( you might describe it as the pension and investments administration charge) and the charges for the actual investments you choose.

SIPP platform charges vary between 0.45% and zero ( a new player).

Investment charges can vary between 0.1 % and 1.8% . The cheaper ones are passive investments, whilst the more expensive ones are actively managed.

A typical overall cost would normally be between 0.3% and 1%, a bit less for the MSE forum regulars.

LHW99

Be careful on the funeral plans:

https://www.moneysavingexpert.com/family/prepaid-funeral-plans/

https://www.financial-ombudsman.org.uk/businesses/complaints-deal/complaints/pre-paid-funeral-plans