Getting pension out of the Prudential!

misscanon · 6 April 2018 at 4:28PM

I have pension pot of around £27k with the Pru (it was set up to replace SERPS payments years ago). As I'm retired but not a taxpayer I want to draw it out over 2 tax years before I draw my state and occupational pensions so I can reclaim the tax. Pru say I can only do this via (1) draw down or (2) partial withdrawals, which both involve putting the pot into another fund and differ only in respect of how they are treated for tax - which doesn't really matter in my circumstances.
The rub is that I cannot arrange this myself but have to go to an IFA to do it - or use Pru's own advice service for which I will also have to pay!
Given that I bought the pension direct from the Pru and no IFA has ever had anything to do with it I find this bizarre. I have to pay to access my own pension. At this point Pru cannot give me any info about costs, either of the advice or the charges connected with the execution.
I can transfer the pension to another provider apparently.
Can anyone suggest a way to get my pension without paying these costs - or do I just take the pot in one lump sum and pay the tax?

dunstonh · 6 April 2018 at 4:45PM

Pru say I can only do this via (1) draw down or (2) partial withdrawals, which both involve putting the pot into another fund and differ only in respect of how they are treated for tax - which doesn't really matter in my circumstances.

This is because legacy plans were built and coded before the changes. So, it needs moving to a plan that facilitates the functionality you are after.

The rub is that I cannot arrange this myself but have to go to an IFA to do it - or use Pru's own advice service for which I will also have to pay!

That is not correct.
Pru only retail their own product via IFAs or their in-house team (not that many IFAs would use prus product). So, their response is correct only if you want to use Pru's product.

If you want to use another product and used a DIY provider then no adviser or rep is required.

Given that I bought the pension direct from the Pru and no IFA has ever had anything to do with it I find this bizarre.

Financial products are like retail products. The manufacturer can decide which distribution channels it wants its products sold through. Do you buy your baked beans direct from Heinz or do you buy them via a retailer? Pru only retail theirs via a retailer.

Can anyone suggest a way to get my pension without paying these costs - or do I just take the pot in one lump sum and pay the tax?

You have already been given the answer. You said it in your penultimate line...

"I can transfer the pension to another provider apparently."

misscanon · 6 April 2018 at 5:36PM

dunstonh wrote: »

This is because legacy plans were built and coded before the changes. So, it needs moving to a plan that facilitates the functionality you are after.

Fair enough

That is not correct.
Pru only retail their own product via IFAs or their in-house team (not that many IFAs would use prus product). So, their response is correct only if you want to use Pru's product.

By 'their product' I assume you mean Pru's fund for the drawdown?

If you want to use another product and used a DIY provider then no adviser or rep is required.

I'm really asking what alternatives are available

Financial products are like retail products. The manufacturer can decide which distribution channels it wants its products sold through. Do you buy your baked beans direct from Heinz or do you buy them via a retailer? Pru only retail theirs via a retailer.

I bought the pension at my door:)

You have already been given the answer. You said it in your penultimate line...

"I can transfer the pension to another provider apparently."

Is this viable, which companies offer this?

I'm sorry for my lack of understanding in this area, I used an IFA for 30 years until he retired a couple of years ago. I did a similar drawdown with an L&G pension last year with no hassle, so I am grateful for your advice dunstonh

dunstonh · 6 April 2018 at 5:50PM

Is this viable, which companies offer this?

Virtually all pension providers do now (except stakeholder pensions). You just need to use one that focuses on the DIY market (direct to consumer). Not one that deals with intermediaries/advisers.

I did a similar drawdown with an L&G pension last year with no hassle

Most legacy L&G plans dont allow drawdown but they do allow UFPLS (lump sum withdrawals) without the need to transfer. What you appear to want is UFPLS (lump sums taken over two years). To be honest, Pru are unusual on not offering UFPLS. Even some stakeholder pensions offer that.

I expect one of the other regulars will be along in due course and name some of the DIY providers that would do this. Moving pensions is very easy nowdays.

misscanon · 8 April 2018 at 7:08PM

Can anyone point me towards a DIY provider that I can contact please?

ProDave · 8 April 2018 at 8:28PM

misscanon wrote: »

Can anyone point me towards a DIY provider that I can contact please?

Hagreaves Lansdown is one of many suggested on here.

I recently moved a similar sized pot there from Aviva because Aviva would not offer me what I wanted.

It sounds like you want a Flexible Drawdown SIPP like me and you are then free to withdraw what you want when you want.

In total it took about 8 weeks for the transfer and there was no transfer fee involved. You open the account with HL and on the application form is space to provide the details of the funds you wish to transfer in from another provider and they arrange the transfer.

misscanon · 8 April 2018 at 8:52PM

Many thanks Pro Dave.

jamesperrett · 8 April 2018 at 9:47PM

Hargreaves Lansdown are fairly attractive for this sort of thing as the don't charge for withdrawals (unless you withdraw it all within 12 months of opening the pension). The downside is that they charge a higher percentage of your fund than others. There are various charge comparison websites which will show you how much effect the different charges will have and there is also Snowman's spreadsheet which does a similar thing and is worth searching for.

xylophone · 9 April 2018 at 10:25AM

The downside is that they charge a higher percentage of your fund than others.

It may be that the OP will wish to leave the pension in cash as he wishes to take the pension over two tax years. HL do not charge for holding cash.

The 25% PCLS will be around £7000 and he can then take up to his Personal Allowance as income in this tax year and the next.

Even if he chooses to invest in a fund, for so modest a pension the HL charge (0.45%) is not particularly onerous and their administration is excellent.

misscanon · 9 April 2018 at 9:23PM

Thanks for your replies jamesperrett and xylophone, I'll look into that. What is PCLS?

mgdavid · 9 April 2018 at 9:38PM

Pension Commencement Lump Sum

Getting pension out of the Prudential!

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