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  • FIRST POST
    • Joey Soap
    • By Joey Soap 17th May 18, 11:21 AM
    • 189Posts
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    Joey Soap
    Issues taking a DC small pot pension lump sum.
    • #1
    • 17th May 18, 11:21 AM
    Issues taking a DC small pot pension lump sum. 17th May 18 at 11:21 AM
    Hello all, I won't name the SIPP provider just yet but I have A 10K DC pension pot that I want to exercise my right to draw down as a single small pot lump sum.

    The SIPP provider says "our SIPP team do not allow this". Needless to say, I checked this very fact with them before investing in a SIPP with them.

    I am on the verge of making a formal complaint against the SIPP provider since I do not understand how they can unilaterally decide to deny me this right to access my money in a legal and above board manner.

    Obviously, this process will delay my accessing the money which is undesirable but it seems I have no option open other than go through the formal complaints process.

    I will update the thread as the situation unfolds and later I will probably name the SIPP provider.
Page 1
    • AnotherJoe
    • By AnotherJoe 17th May 18, 11:27 AM
    • 10,630 Posts
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    AnotherJoe
    • #2
    • 17th May 18, 11:27 AM
    • #2
    • 17th May 18, 11:27 AM

    I will update the thread as the situation unfolds and later I will probably name the SIPP provider.
    Originally posted by Joey Soap
    Probably?
    Waste of time you posting until you do.
    • LHW99
    • By LHW99 17th May 18, 11:28 AM
    • 1,444 Posts
    • 1,321 Thanks
    LHW99
    • #3
    • 17th May 18, 11:28 AM
    • #3
    • 17th May 18, 11:28 AM
    Did you have it in writing from them, or just in a phone call with an operative? You may have more dificulties if only the latter.
    • Linton
    • By Linton 17th May 18, 11:32 AM
    • 9,745 Posts
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    Linton
    • #4
    • 17th May 18, 11:32 AM
    • #4
    • 17th May 18, 11:32 AM
    Sounds very strange. Perhaps you are not using a mainstream SIPP provider and/or there is something unsusual about your investments and/or there is more to this than the bare statement you have given and/or there is something unusual about you - are you 55 or over? Are you insisting on using the "small pot" route? If so there is no point with a SIPP, you can drawdown a DC pension anyway. More information would help.
    • Joey Soap
    • By Joey Soap 17th May 18, 11:32 AM
    • 189 Posts
    • 67 Thanks
    Joey Soap
    • #5
    • 17th May 18, 11:32 AM
    • #5
    • 17th May 18, 11:32 AM
    Did you have it in writing from them, or just in a phone call with an operative? You may have more dificulties if only the latter.
    Originally posted by LHW99
    Thanks we have both, the problem with these people often is you get a different story depending on who you talk to each time you call. If there is no resolution today a complaint will be made since I do not believe a companies in house admin or incompetence should trump me legally accessing my money in the manner I choose.
    • Joey Soap
    • By Joey Soap 17th May 18, 11:35 AM
    • 189 Posts
    • 67 Thanks
    Joey Soap
    • #6
    • 17th May 18, 11:35 AM
    • #6
    • 17th May 18, 11:35 AM
    Did you have it in writing from them, or just in a phone call with an operative? You may have more dificulties if only the latter.
    Originally posted by LHW99
    Sounds very strange. Perhaps you are not using a mainstream SIPP provider and/or there is something unsusual about your investments and/or there is more to this than the bare statement you have given and/or there is something unusual about you - are you 55 or over? Are you insisting on using the "small pot" route? If so there is no point with a SIPP, you can drawdown a DC pension anyway. More information would help.
    Originally posted by Linton
    Yes, they are mainstream.
    No nothing unusual the money ( 8k) was paid in in March, now I want to draw it out.
    There is no investment as such, cash sits in the SIPP account.
    I want to use the small pot route, using draw down prevents me putting more than 4k a year into a SIPP in future years.
    I am 57.
    It seems to be an simply admin issue at the SIPP provider "we do not process trivial/small pot withdrawals".
    Watch this space later for an update as it unfolds.
    Last edited by Joey Soap; 17-05-2018 at 11:38 AM.
    • Tealblue
    • By Tealblue 17th May 18, 11:42 AM
    • 774 Posts
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    Tealblue
    • #7
    • 17th May 18, 11:42 AM
    • #7
    • 17th May 18, 11:42 AM
    Watch this space later for an update as it unfolds.
    Originally posted by Joey Soap
    Given how coy you are being about the provider, I doubt anyone is that interested.
    • Joey Soap
    • By Joey Soap 17th May 18, 11:44 AM
    • 189 Posts
    • 67 Thanks
    Joey Soap
    • #8
    • 17th May 18, 11:44 AM
    • #8
    • 17th May 18, 11:44 AM
    Given how coy you are being about the provider, I doubt anyone is that interested.
    Originally posted by Tealblue
    Thank you for your opinion, feel free to not read any further. I will name and shame or name and praise when appropriate thank you. Good bye.
    • Linton
    • By Linton 17th May 18, 11:47 AM
    • 9,745 Posts
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    Linton
    • #9
    • 17th May 18, 11:47 AM
    • #9
    • 17th May 18, 11:47 AM
    Yes, they are mainstream.
    No nothing unusual the money ( 8k) was paid in in March, now I want to draw it out.
    There is no investment as such, cash sits in the SIPP account.
    I want to use the small pot route, using draw down prevents me putting more than 4k a year into a SIPP in future years.
    I am 57.
    It seems to be an simply admin issue at the SIPP provider "we do not process trivial/small pot withdrawals".
    Watch this space later for an update as it unfolds.
    Originally posted by Joey Soap

    Ah thanks, all is now clear. You could always transfer from the SIPP to a restricted Personal Pension, but perhaps its a matter of principle.
    • Brynsam
    • By Brynsam 17th May 18, 11:48 AM
    • 1,607 Posts
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    Brynsam
    Thank you for your opinion, feel free to not read any further. I will name and shame or name and praise when appropriate thank you. Good bye.
    Originally posted by Joey Soap
    Get off your high horse....

    There's every chance your pot is now over the 10,000 'small pot' threshold if the funds have been invested for a couple of months, which is why your SIPP provider can't do as you are requesting.
    • dunstonh
    • By dunstonh 17th May 18, 12:03 PM
    • 94,560 Posts
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    dunstonh
    Hello all, I won't name the SIPP provider just yet but I have A 10K DC pension pot that I want to exercise my right to draw down as a single small pot lump sum.
    When you say 10k do you mean under 10k or over 10k.

    It has to be 10k or under to use the small pots rule.

    No nothing unusual the money ( 8k) was paid in in March, now I want to draw it out.
    Was that 8k gross or 8k net?
    If 8k net then tax relief would take it to 10,000 and returns on the investment (or interest if in cash) would be taking it above 10k. So, small pots rule would not be available to you.

    Some providers do have the functionality to split a pot in pay it in phases but its not common (ie. 30k could be paid as 3x10k) Its a fluke in their software rather than something they planned and not many do it but it is possible. I assume you researched this before you chose your provider.
    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.
    • Brynsam
    • By Brynsam 17th May 18, 12:19 PM
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    Brynsam
    Was that 8k gross or 8k net?
    If 8k net then tax relief would take it to 10,000 and returns on the investment (or interest if in cash) would be taking it above 10k. So, small pots rule would not be available to you.
    Originally posted by dunstonh
    OP's original post describes it as 10K - hence my post immediately above yours making the same point on 'small pots' (confirmation always welcome!). Sounds as if you have exactly described the issue re SIPP software, which could have been resolved some posts back had the SIPP provider been identified.
    • Joey Soap
    • By Joey Soap 17th May 18, 12:57 PM
    • 189 Posts
    • 67 Thanks
    Joey Soap
    There was 8k paid into a new SIPP in March which is now 10k. Small pot rules apply. As I say, it is in cash so it is exactly 10k. Also, as I say, it appears to be an internal admin issue at the SIPP provider who has previously confirmed the transaction could take place before the investment in March. I am not naming and shaming just yet, because if the SIPP provider comes good, it will be name and praise. I have only had good experience with these people to date, so it really could be inexperience on the part of the customer service rep. If they fix it promptly I will name and praise here. On the other hand if they try to deny me access to my money and I lodge formal complaint, I will name and shame. It is slightly premature to do so.

    Thank you those who have made a positive contribution, learning from other's experience is what makes the forum worthwhile.

    Cheers.

    Soap.
    • Joey Soap
    • By Joey Soap 17th May 18, 12:59 PM
    • 189 Posts
    • 67 Thanks
    Joey Soap
    When you say 10k do you mean under 10k or over 10k.

    It has to be 10k or under to use the small pots rule.



    Was that 8k gross or 8k net?
    If 8k net then tax relief would take it to 10,000 and returns on the investment (or interest if in cash) would be taking it above 10k. So, small pots rule would not be available to you.

    Some providers do have the functionality to split a pot in pay it in phases but its not common (ie. 30k could be paid as 3x10k) Its a fluke in their software rather than something they planned and not many do it but it is possible. I assume you researched this before you chose your provider.
    Originally posted by dunstonh
    Thanks for the feedback. Yes, we did due diligence on the SIPP provider. I think I have covered the other points elsewhere, but thanks for the info.
    • Joey Soap
    • By Joey Soap 17th May 18, 1:04 PM
    • 189 Posts
    • 67 Thanks
    Joey Soap
    Ah thanks, all is now clear. You could always transfer from the SIPP to a restricted Personal Pension, but perhaps its a matter of principle.
    Originally posted by Linton
    Yes, indeed, that is an option. I'm hoping the present provider can sort out their own internal admin issues that seem to be in the way first. Thanks for the suggestion.

    Soap.
    • Malthusian
    • By Malthusian 17th May 18, 2:35 PM
    • 4,662 Posts
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    Malthusian
    You could always transfer from the SIPP to a restricted Personal Pension, but perhaps its a matter of principle.
    Originally posted by Linton
    Could be more than principle involved if the SIPP provider applies an exit / transfer charge.

    How the OP asked the question of whether he could take his pension as a small pot depends crucially on how the question was asked. If the question was "can I take the money out" then the SIPP provider would reasonably have interpreted this as meaning "can I take drawdown" and the OP hasn't been misled. If on the other hand the OP asked "can I take the money out using the small pots rule" and the SIPP provider said yes, then they are clearly liable for any costs and the inconvenience involved that arise from going back on this. I.e. the cost of transferring to another provider.

    It would help if he had it in writing, but it's not essential. If he can persuade the FOS that he asked specifically about the small pot rule and was told he could use this, and the provider can't contradict this from their call recordings, then he will get redress one way or the other.
    Last edited by Malthusian; 17-05-2018 at 3:00 PM.
    • Joey Soap
    • By Joey Soap 17th May 18, 2:39 PM
    • 189 Posts
    • 67 Thanks
    Joey Soap
    Thanks, I can confirm everything was done correctly and the SIPP provider is looking into it. I hope they realise it is an error on the part of the front line customer service rep. If you get a not so experienced one, you get a different answer than you expect. Hoping for a positive outcome at this stage.
    • dunstonh
    • By dunstonh 17th May 18, 3:02 PM
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    dunstonh
    Thinking out loud....

    did you specifically say "small pots rule" or did you say triviality or trivial lump sum? Triviality/trivial payments were abolished in 2015. An inexperienced call centre worker may be taking you too literally.

    or

    Could interest be accruing on the value that has yet to be paid and that is taking it above 10k

    (seeing as the service issue is being investigated - just thinking of alternative reasons)
    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.
    • Joey Soap
    • By Joey Soap 17th May 18, 3:09 PM
    • 189 Posts
    • 67 Thanks
    Joey Soap
    Thanks, there is definitely no chance of there being more than gbp 10k in the pot.

    You are quite right in your thinking, the change in terminology for DC pension small pots might be an issue to the front line person answering the phone. It won't be everyday they take a call about this.

    The form that you are given to fill in doesn't have a tick box for small pot withdrawal either. That won't help. As I said earlier, this firm has been pretty good in the past. I think they will get over this as an admin issue.

    Hopefully, in a couple of days I will know for sure.

    Thanks for the input.
    • Joey Soap
    • By Joey Soap 17th May 18, 5:33 PM
    • 189 Posts
    • 67 Thanks
    Joey Soap
    Update is, the SIPP provider tells me they have no way to deliver a small pot withdrawal to me. They have told me (incorrectly) that if I do a Uncrystallised Funds Pension Lump Sum for the 10k then my future SIPP contribution limit of 40k is protected. They are simply wrong. By doing Uncrystallised Funds Pension Lump Sum for the entire DC pot, the Money Purchase Annual Allowance of 4k is triggered****. The only way I can draw the 10k and protect my future SIPP contribution level of 40k per year is by small pot withdrawal.

    I will be speaking to them again tomorrow and if this goes into a formal complaint at that point I will name the SIPP company as a warning to others in the same position.

    **** It is very clear on this web page - https://www.pensionsadvisoryservice.org.uk/about-pensions/pension-reform/freedom-and-choice

    Regards and thanks.

    Soap.
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