Moving a pension from Aberdeen to a SIPP

wannaretireearly

Hello, I have a friend who is in his 70s and has a pension with Aberdeen. This man still does self employed work, earning a low wage and receives his SP (not full rate). He has been paying monthly contributions to this pension and now wants to stop and cash it in over this and next tax year so he stays in the 20% tax bracket. The pension pot is worth approx £55k and he wants to take the 25% tax free lump sum, 50% of the remaining taxable amount leaving the balance to be drawn at the beginning of the new tax year. He has had the paperwork through and for the pension to be put into drawdown (they call it an Aberdeen Elevate a/c) they are charging him management fees amounting to around £500 as well as leaving the balance invested which carry fees of over 1% and leave him open to the risk of having even less left when he wants to access it next April.

I wondered if he could open a SIPP and transfer the pension into that, drawing out himself and holding the balance in cash until April 27 when he can draw it out. I've had a quick look and found Interactive Investor (II) who appear to charge £5.99 pcm to hold the funds but give interest of 2.21%. This will mean he can keep more of his money.

Does anyone have any experience of transferring a pension out from Aberdeen? Does this idea sound possible? I've looked on II and it doesn't have Aberdeen on the list of pension providers they can pull in from. I don't want to get him to open an account only to find they can't get it for him.

I'm just trying to help him get as much of his money as he can so any advice or suggestions would be greatly appreciated. Thanks in advance

dunstonh

they call it an Aberdeen Elevate a/c

Aberdeen don't call it that, so I guess you are referring to your friend?

Aberdeen Elevate is a whole of market platform. Their pension product is a SIPP. Although Elevate call it a pension investment account.

they are charging him management fees amounting to around £500 as well as leaving the balance invested which carry fees of over 1% and leave him open to the risk of having even less left when he wants to access it next April.

The only charge that Elevate makes is the platform charge. Their platform charge tends to be in the 0.2x% range. Investment charges on SIPPs are whole of market, so would be the same on any other SIPP if you use the same investments.

I wondered if he could open a SIPP and transfer the pension into that, drawing out himself and holding the balance in cash until April 27 when he can draw it out. I've had a quick look and found Interactive Investor (II) who appear to charge £5.99 pcm to hold the funds but give interest of 2.21%. This will mean he can keep more of his money.

Elevate's interest rate is 1.68%.But there is no platform charge applied to any balance held in cash.

So whilst II is slightly better, it's not exactly a big deal.

Does anyone have any experience of transferring a pension out from Aberdeen? 

You ought to stop referring to it as Aberdeen. The platform is called Elevate and would be recognised by other platforms as Elevate. Aberdeen have another platform which goes under the name of Aberdeen and using the Aberdeen name by itself would cause confusion, probably resulting in the receiving scheme requesting a transfer from the wrong Aberdeen platform.

Does this idea sound possible?

Yes, it sounds possible. People move from SIPP to SIPP all the time. Although it's not going to be the big game changer that you seem to think it may be. II will be slightly cheaper, but not by much.

af1963

I transferred from Aberdeen's predecessor, Standard Life, to ii. No problems with the transfer, although it took a few weeks to be processed.

You can also find cash-like investments on ii which would do better than 2.2% with little or no risk. (Gilts, money market funds)

QrizB

You can also find cash-like investments on ii which would do better than 2.2% with little or no risk. (Gilts, money market funds)

Those same funds are likely to be available on Elevate, too, as dunstonh says it's a whole-of-market SIPP.

wannaretireearly

dustonh, thankyou for your response. My friend doesn't manage this pension himself, it is managed for him and the literature supplied showed he was paying £46 pcm to his advisor which I assume is on top of the 0.2% charge made by the platform.

The small amount showing as being held in cash showed no interest rate and the three investments held all had investment fees in percentage showing at the side which were well over 1% each. I was unaware this was a SIPP as I wrongly assumed that a SIPP had to be self managed. I have limited knowledge in this field but am just trying to help him get the most out of his pension due to his age/financial situation.

I really appreciate you taking the time to respond and helping me to understand things better.

af1963, thank you for your response. I appreciate there may be ways to get him a better return and after he's transferred the funds/withdrawn some I may have more time to help him achieve a better return on the balance for the short time it's going to be held. Again, thank you for taking the time to respond.

QrizB

My friend doesn't manage this pension himself, it is managed for him and the literature supplied showed he was paying £46 pcm to his advisor

If your friend has an (I)FA managing their pension for them, they should speak to their advisor and explain how they want to draw down their pension. Their advisor will be better placed to advise than anyone on this forum is.

And I'd also ask whether your friend is ready to manage their own SIPP at this stage, with less than a year left before it's depleted.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82063713#Comment_82063713

To be accurate, the Standard Life arm that had products for financial advisoras was sold to Aberdeen.

The retail arm of Standard Life ( dealing with the public) was sold to Phoenix Group, but continues to operate as Standard Life and was never part of Aberdeen.

I think that is how it worked anyway.