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    • Annielou
    • By Annielou 10th May 18, 5:27 PM
    • 79Posts
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    Annielou
    Friends Life (now Aviva) Non-Flexible/No Drawdown Pension Problem
    • #1
    • 10th May 18, 5:27 PM
    Friends Life (now Aviva) Non-Flexible/No Drawdown Pension Problem 10th May 18 at 5:27 PM
    I have been paying into my Friends Life policy (now Aviva) for nearly 30 years (when I opted out of SERPS) and was really looking forward to cashing in 25% tax free this August when I turn 55. I was therefore really disappointed to find out from Aviva (ex Friends Life) that they do not offer a drawdown facility on my policy and so if I want to get 25% tax free I will have to transfer the whole pot to another pension provider and accept the penalty of approx. £3k to do so (because of loss of bonus due in 5 years’ time which is when I reach 60, the age I originally said I wanted to retire although no chance of that now, circumstances mean I will have to work until I'm at least 67 and continue paying into a separate company pension).

    I therefore find myself right back to square one and have no idea where is the best place to transfer the pot to. If anyone could offer me any advice then I would be very grateful. Should I transfer it all into my employer's company pension with Scottish Widows and amalgamate it all, or do I go with someone else like Hargreaves Lansdown or the like. Or should I try my hardest to continue until age 60 with the ex-Friends Life policy at all costs - though will be hard as I do really need the money. I do have an appointment booked at PensionWise next week but would be interested in others views and grateful for any advice. I must confess to being a bit miffed that the provider I originally went to and have been with for 30 years doesn’t offer the drawdown facility!
Page 1
    • dunstonh
    • By dunstonh 10th May 18, 6:01 PM
    • 94,517 Posts
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    dunstonh
    • #2
    • 10th May 18, 6:01 PM
    • #2
    • 10th May 18, 6:01 PM
    I was therefore really disappointed to find out from Aviva (ex Friends Life) that they do not offer a drawdown facility on my policy
    As it quite normal across the board with legacy pensions. For old schemes it would be similar to wondering why your black & white TV cant show colour.

    r and accept the penalty of approx. £3k to do so (because of loss of bonus due in 5 years!!!8217; time which is when I reach 60, the age I originally said I wanted to retire although no chance of that now
    Penalties change at 55.
    I therefore find myself right back to square one and have no idea where is the best place to transfer the pot to.
    If you intend to DIY then any of the DIY providers frequently mentioned on this site.

    Should I transfer it all into my employer's company pension with Scottish Widows and amalgamate it all
    That won't achieve your objective.

    Or should I try my hardest to continue until age 60 with the ex-Friends Life policy at all costs
    We cant answer that as we dont know the terms of the product.

    I do have an appointment booked at PensionWise next week but would be interested in others views and grateful for any advice.
    Pensionwise wont give you advice. Its guidance on options (and only generic - which means not all options will be covered).

    I must confess to being a bit miffed that the provider I originally went to and have been with for 30 years doesn!!!8217;t offer the drawdown facility!
    That's a bit like buying a motorcycle and then complaining later that it doesnt have 4 wheels. If you wanted drawdown then you should have bought a pension that offered drawdown functionality. However, 30 years ago, you couldn't do drawdown on protected rights. So, it seems a bit daft to blame Aviva for not offering something that didnt exist at the time. Indeed, you couldnt even get 25% TFC on protected rights. So really quite silly to be miffed about it.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Annielou
    • By Annielou 10th May 18, 9:34 PM
    • 79 Posts
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    Annielou
    • #3
    • 10th May 18, 9:34 PM
    • #3
    • 10th May 18, 9:34 PM
    Thanks for replying Dunstonh, and sorry if I sounded a bit huffy, I didn't mean to and I don't really blame Aviva (or Friends Life), it was just that I understand very little about pensions and had previously thought everyone over 55 was able to take out the 25% tax free cash and stupidly I had no idea not everyone could until I called up Aviva. So I was miffed, but that was my own stupidity, not them. When you say moving the pot into my workplace pension wouldn't achieve my goal, why is that? I called Scottish Widows and from what I understand they allow transfers in and also 25% cash tax free at 55 too, whist I can carry on with the pension payments in after that. Well that's what I thought but maybe I have completely misunderstood that too!!! And I guess the reason I am keen to do this myself rather than going to an expert is that the cost appears to be around the £750 mark for expert advice which for a smallish pension pot is worth trying to avoid if at all possible. but maybe i'm wrong there too.
    • zagfles
    • By zagfles 10th May 18, 10:00 PM
    • 13,321 Posts
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    zagfles
    • #4
    • 10th May 18, 10:00 PM
    • #4
    • 10th May 18, 10:00 PM
    For some old pensions there was massive front loaded commission, eg the adviser who sold you it taking the first 2 years' or so premiums in commission! So because of that, there were high exit charges, to disguise the fact that the first couple of years' premiums had gone in commission to the adviser rather than into your pension.

    However the rules have changed and once you get to 55, exit charges are capped at 1%, see https://www.pensionsadvisoryservice.org.uk/content/spotlights-files/uploads/Exit_Charges_Cap_SPOT022.pdf

    So you could wait till you're 55 before transferring to somewhere that allows drawdown.

    Pensionwise should explain all this - technically they provide "guidance" rather "advice" but at least you know they have no financial incentive to lead you down any particular path.
    • Annielou
    • By Annielou 10th May 18, 10:33 PM
    • 79 Posts
    • 6 Thanks
    Annielou
    • #5
    • 10th May 18, 10:33 PM
    • #5
    • 10th May 18, 10:33 PM
    Thank you Zagfles, I will certainly try to ask as many questions at Pensionwise, its whether I understand the answers that is my problem as I understand it the £3k i would lose by transferring the old pension into a new one would be by missing out on what they call a 'bonus payment' paid at the end for keeping up the pension until my 60th birthday. I had no idea that was even a thing so guess its not such a big deal. But knowing where to transfer the money to is a problem to me as I have no idea what the differences are really, or whether the main ones are simply all much the same. I think my sticking point is that its hard to get any advice at all really without paying quite a lot of money for it, but I guess that's the nature of the business.
    • zagfles
    • By zagfles 10th May 18, 10:49 PM
    • 13,321 Posts
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    zagfles
    • #6
    • 10th May 18, 10:49 PM
    • #6
    • 10th May 18, 10:49 PM
    Thank you Zagfles, I will certainly try to ask as many questions at Pensionwise, its whether I understand the answers that is my problem as I understand it the £3k i would lose by transferring the old pension into a new one would be by missing out on what they call a 'bonus payment' paid at the end for keeping up the pension until my 60th birthday. I had no idea that was even a thing so guess its not such a big deal. But knowing where to transfer the money to is a problem to me as I have no idea what the differences are really, or whether the main ones are simply all much the same. I think my sticking point is that its hard to get any advice at all really without paying quite a lot of money for it, but I guess that's the nature of the business.
    Originally posted by Annielou
    I think you'll be OK there - loss of a terminal bonus seems to be seen as an early exit charge.

    See https://www.gov.uk/government/publications/occupational-pensions-capping-early-exit-charges/implementing-a-cap-on-early-exit-charges-for-members-of-occupational-pension-schemes

    Which although title occupational pensions has a section on personal pensions which includes:

    Those regulations also provide that where a member has a reasonable expectation that they are entitled to the value of certain benefits, such as a terminal bonus, an adjustment to that value at the point of surrender is not excluded from the definition of an early exit charge
    Something to check with Pensionwise!
    • Annielou
    • By Annielou 10th May 18, 10:53 PM
    • 79 Posts
    • 6 Thanks
    Annielou
    • #7
    • 10th May 18, 10:53 PM
    • #7
    • 10th May 18, 10:53 PM
    Right, thanks so much for that and I certainly will check that out properly then and ask Pensionwise. Cheers
    • dunstonh
    • By dunstonh 11th May 18, 12:51 AM
    • 94,517 Posts
    • 62,465 Thanks
    dunstonh
    • #8
    • 11th May 18, 12:51 AM
    • #8
    • 11th May 18, 12:51 AM
    When you say moving the pot into my workplace pension wouldn't achieve my goal, why is that? I called Scottish Widows and from what I understand they allow transfers in and also 25% cash tax free at 55 too, whist I can carry on with the pension payments in after that.
    Most workplace schemes do not offer drawdown. Scottish Widows plans tend to be dated and lack functionality. If yours is a rare one that does do drawdown then it would work. I would get 100% confirmation first though.

    as I understand it the £3k i would lose by transferring the old pension into a new one would be by missing out on what they call a 'bonus payment' paid at the end for keeping up the pension until my 60th birthday. I had no idea that was even a thing so guess its not such a big deal.
    Depends on what it is. Some older plans (typically 80s or earlier) can have significant bonuses paid at 60,65,70 etc that are lost if you dont leave it to that date. I had someone with a couple of those a week or two back where the transfer value quadrupled in 10 years all down to the guarantees.

    The key thing to ask the provider is if there are any safeguarded benefits. if yes, what are they.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Annielou
    • By Annielou 11th May 18, 9:29 AM
    • 79 Posts
    • 6 Thanks
    Annielou
    • #9
    • 11th May 18, 9:29 AM
    • #9
    • 11th May 18, 9:29 AM
    Many thanks for that advice, and I will definitely ask those questions of both Aviva and Scottish Widows too. Much appreciated. Would you be able to give me any steers on companies I could look at who would be good to transfer the pot to or are you not allowed to say? Its about £110k to date.
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