Confused on charges

Madeinireland
Madeinireland Posts: 76 Forumite
in Pensions, annuities & retirement planning
A while ago I spoke to the iweb and ii helpdesks to get some info on charges on a potential transfer of a SIPP. Typically these companies charge a flat rate (for iweb it’s £180) and then charge further amount (another £180) per annum when you go into drawdown. For both of them they said that I could transfer and then extract my 25% tax free lump sum without going into “drawdown” and therefore avoid the additional per annum charge until I decide to officially go into drawdown and start taking an income.

More recently I’ve rung both to ask again and now both are saying taking the tax free lump sum is in fact going into drawdown and so I would attract the charge even if I took no further income.

Which is correct? ... as I don’t know which to believe now.

Thanks...

Comments

  • Albermarle
    Albermarle Posts: 22,097 Forumite
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    I think you have to assume what ii and Iweb have told you directly will be the case.
    Depending on size of pot etc , it might be worth while , looking at a platform that does not charge for drawdown at all . That would solve the issue anyway.
  • Madeinireland
    Madeinireland Posts: 76 Forumite
    The point is they have both told me different things on the two occasions I have rung so not sure now which is correct so just wondered if anyone knew for sure.

    Those that don’t charge on drawdown charge a percentage fee which makes their charges much more unless someone knows a provider that doesn’t?
  • MallyGirl
    MallyGirl Posts: 6,617 Senior Ambassador
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    II have recently changed their pricing model so it might be that both answers were correct at the time of giving them
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  • Albermarle
    Albermarle Posts: 22,097 Forumite
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    hose that don’t charge on drawdown charge a percentage fee which makes their charges much more
    It depends on the size of the fund involved . % chargers are usually OK for sums less than £100K , especially if there is no SIPP/drawdown costs .
  • shinytop
    shinytop Posts: 2,099 Forumite
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    II will charge if you want to get any money out of your SIPP. It will either be via UFPLS (£50+VAT) or by going into drawdown (£10 per month inc VAT). Drawdow fee applies 'even if you elect to take ‘nil’ income in any year'

    edit - same as iWeb then ...

    It's worth pointing out II have a cashback offer on SIPP transfers
    https://www.ii.co.uk/transfer-cashback-offer#terms
  • ColdIron
    ColdIron Posts: 9,033 Forumite
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    I don't have an iWeb SIPP so bear this in mind. You can take your tax free lump sum in one of two ways 1) You crystallise some or all of your SIPP, take 25% tax free and move the balance (75%) into drawdown. This will trigger the additional £180 fee. 2) Instruct them to pay you an Uncrystallised Funds Pension Lump Sum (UFPLS). Doing this with some or all of your SIPP you take 25% tax free and also take the balance (75%) as a taxable payment. This is not going into drawdown so would not incur the additional fee

    What you cannot do is take 25% tax free and leave everything else uncrystalised

    So they are correct that you can take the tax free amount without going into drawdown but you must use UFPLS and take a taxable payment as well. If you asked them how you can take the tax free amount and leave the remainder within the pension then you must go into drawdown

    NB I note there is a £90 fee for UFPLS
  • Albermarle
    Albermarle Posts: 22,097 Forumite
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    It's worth pointing out II have a cashback offer on SIPP transfers
    https://www.ii.co.uk/transfer-cashback-offer#terms
    It is amazing really that these platforms can charge such low fees and still offer cashback .
    The recent Fidelity cashback offer was even more generous and means pretty much a free service for a couple of years . Not sure how this type of business model is sustainable and/or its a move to force some smaller players out of the market.
  • Madeinireland
    Madeinireland Posts: 76 Forumite
    Thanks for pointing out the cash back - I hadn’t spotted that ��
  • shinytop
    shinytop Posts: 2,099 Forumite
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    Madeinireland wrote: »
    Thanks for pointing out the cash back - I hadn’t spotted that ��
    I wouldn't have either if I hadn't looked to check the charges. That's £500 I didn't know I had.;)
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