Consolidating existing pensions and taking drawdown

GDB2222

I have unit linked pensions with Standard Life and Clerical Medical. Those are the main ones, although I have a couple of others.

I'm getting on a bit and I would like some income. I'd also like to draw the 25% tax free lump sum. I need this in the next 6 weeks.

I was thinking of setting up a SIPP. If I cash in the pensions, transfer the cash, and reinvest it within the SIPP, I'll be paying expenses unnecessarily perhaps? Is that an issue, and if so is there a way round it?

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/6661136/consolidating-existing-pensions-and-taking-drawdown

Do you move the investments into cash within the existing pensions to start with, then transfer them?

"cash in the pensions" sounds more taking the money out of the pension wrapper first.

Marcon

https://forums.moneysavingexpert.com/discussion/6661136/consolidating-existing-pensions-and-taking-drawdown

If you cash them in, you'll be paying tax unnecessarily - and reinvesting in a SIPP might fall foul of pension recycling, and/or you won't have the relevant earnings in the tax year to enable you to get tax relief on the whole amount.

Instead of cashing in and reinvesting, simply transferring them to a SIPP might be a better approach?

GDB2222

https://forums.moneysavingexpert.com/discussion/comment/81935848#Comment_81935848

Sorry, I meant transfer. But, I was distinguishing between a) surrendering the units and transferring the cash, or b) an in specie transfer. If that's possible!

Or, are there alternatives, like taking drawdown from each of the individual plans, without consolidating them?

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81935852#Comment_81935852

There could be but if your pension is old you may need to transfer it to make use of more modern options.

The two pension companies will be able to give you a definitive answer on this.

GDB2222

Am I right in thinking that I should be able to take the 25% TFLS and then transfer the balance of the fund at a later date? Or, would it be sensible to check this with each of the companies before taking the TFLS?

DRS1

There have been comments on here that it can be more difficult to transfer a pension after you have taken the 25% TFLS than before. I am not sure why.

But you should be talking to your pension providers about how best to do this as you want the TFLS in the next 6 weeks (for part of which they will be on holiday). Putting a transfer to a SIPP into the mix will probably not help the timetable but you need to know if you can just take the 25% TFLS from each current scheme without any issues, such as having to buy an annuity at the same time.

With places like Standard Life I imagine they will take care of cashing in the relevant number of units for you to allow them to pay the 25% TFLS out as cash but you should check that and maybe which fund they encash if you have more than one.

If you do opt for the transfer to the SIPP as part of the process then you should check that none of your current pensions have any safeguarded benefits (like a guaranteed annuity rate) which could put a spanner in the works.

squirrelpie

I'd also like to draw the 25% tax free lump sum. I need this in the next 6 weeks.

Be aware that if you transfer your pension, the new provider will have to set up how much of it is crystallised and how much is uncrystallised before you can withdraw anything at all. This may not be possible within six weeks. So please check this aspect as well as the other points that have already been mentioned.

GDB2222

It didn't hit the reserve at auction today. Bids reached £1.5m.

DRS1

https://forums.moneysavingexpert.com/discussion/comment/81938173#Comment_81938173

Have you been auctioning off your pension schemes?

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81935958#Comment_81935958

I am not exactly sure why either but for example if you want to transfer an uncrystallised pot to Fidelity,you can do it online very quickly.

If any part of the pot is crystallised, you have to book a telephone appt with them ( which can take a few days).

Anyway the OP would be advised that is they wish to transfer their pots to a SIPP, then ideally do it before withdrawing anything from them.

There could be but if your pension is old you may need to transfer it to make use of more modern options.

The two pension companies will be able to give you a definitive answer on this.

If it is an older Standard Life pension, then they will be able to transfer you internally to a more modern Standard Life pension.

Clerical Medical is just a trading name for Scottish Widows nowadays, so I guess there will be an option there to transfer to a SW retirement pension.

Or of course one could be transferred to the other , or one or both transferred out altogether.