Pensions and getting to 55

[Pondy]

Seeing as the average age of peeps on here seems to be in the fifties, I was wondering if anyone has taken their 25% tax-free lump of their PPP when reaching 55?
If so, what were the fees from the pension provider?
I am seriously thinking of taking my 25% when I get to 55 (very soon) just so I can spend it before I get too old to enjoy it.

 

[Mr Tidy]

I'm older than that.

I was able to take one work-place pension at 51 (just before Gordon Brown changed the age limit from 50 to 55) then a couple more at 55 because of the scheme limitations, and haven't regretted it at all. I figured I'd rather have the 25% tax free than get a few quid a month for as long as I lasted that would be taxed! And I'd have to last a long time before I actually broke even. :lol:

Sorry I can't offer any help regarding fees though as all of mine were work-place pensions.

 

[Scubaregs]

Took mine at 55, bought a Porsche 718 Boxster, lifelong dream.

I transferred 2 final salary and a small private pension into a drawdown pension. IFA has to do due diligence first which is costly as has to be outsourced, set up costs were high initially, but we agreed a lower fee. From then on, no fees for taking the 25% or further drawdowns, but obviously ongoing fees for IFA and investment managers.

If taking your 25% from a final salary pension I don't think there are any fees, my fees were for moving my pensions, set up etc.

Was a no brainer for me, no kids/wife so my final salary pensions would have died with me, now the money goes to whoever I wish.
Personally, I'd seek professional, independent advice, normally an initial chat is free.

 

[Pondy]

OK, thanks. Mine are Private pensions, as I've been self-employed for 30 years. I can draw £50k as tax-free and keep the rest in-situ.
I do like to keep my money (the little I have) close by in case I have a hankering to buy something. I know it doesn't make fiscal sense; 1/2% savings at present and 15% pension fund, but it's just the way I am

 

[GJ1]

Some pension providers charge a fee when you access tax-free cash but many don't. Probably worth checking with your existing provider(s) first.

If there is a fee I wouldn't have thought it should be anymore than £250. From memory I think I've seen a provider charge £130. They are not giving advice, so it's more to cover their 'admin' costs.

 

[buzyg]

I was told it is a legal requirement to get independent pensions advice before you can draw down a works pension. I have had to do that. Initial fee is around £250. That may not apply to an independent pension. I'm in the process of taking my 25% out of my main works pension right now. Looking forward to receiving the money, though I plan to invest it in property not spend it. That way I can draw an income from it and the kids can have anything that's left after the nursing homes and tax man have finished nicking it. :wink:

 

[Zedebee]

I was told it is a legal requirement to get independent pensions advice before you can draw down a works pension. I have had to do that. Initial fee is around £250. That may not apply to an independent pension. I'm in the process of taking my 25% out of my main works pension right now. Looking forward to receiving the money, though I plan to invest it in property not spend it. That way I can draw an income from it and the kids can have anything that's left after the nursing homes and tax man have finished nicking it. :wink:

I believe the only legal requirement to get independent financial advice is when transferring out of a final salary scheme, into a SIPP for instance and then only for pots in excess of £30k, but there may be other situations which I am not aware of. As usual, whenever there is money involved, there are plenty of scrupulous and unscrupulous folk ready to take a slice.

 

[pvr]

I was told it is a legal requirement to get independent pensions advice before you can draw down a works pension. I have had to do that. Initial fee is around £250. That may not apply to an independent pension. I'm in the process of taking my 25% out of my main works pension right now. Looking forward to receiving the money, though I plan to invest it in property not spend it. That way I can draw an income from it and the kids can have anything that's left after the nursing homes and tax man have finished nicking it. :wink:

And you save on the newly introduced (initial) 1.25% tax as well as rental income is for unknown reason except

 

[Benderloch]

Find yourself a good independent financial advisor and be prepared to pay for his or her advice. Best thing I ever did.

 

[PerryGunn]

I was told it is a legal requirement to get independent pensions advice before you can draw down a works pension. I have had to do that. Initial fee is around £250. That may not apply to an independent pension. I'm in the process of taking my 25% out of my main works pension right now. Looking forward to receiving the money, though I plan to invest it in property not spend it. That way I can draw an income from it and the kids can have anything that's left after the nursing homes and tax man have finished nicking it. :wink:

And you save on the newly introduced (initial) 1.25% tax as well as rental income is for unknown reason except

You wouldn't pay that anyway as you don't pay NI on pension income.

 

[pvr]

I was told it is a legal requirement to get independent pensions advice before you can draw down a works pension. I have had to do that. Initial fee is around £250. That may not apply to an independent pension. I'm in the process of taking my 25% out of my main works pension right now. Looking forward to receiving the money, though I plan to invest it in property not spend it. That way I can draw an income from it and the kids can have anything that's left after the nursing homes and tax man have finished nicking it. :wink:

And you save on the newly introduced (initial) 1.25% tax as well as rental income is for unknown reason except

You wouldn't pay that anyway as you don't pay NI on pension income.

But you do on the new tax once through the system. Pension income is also taxed with this new tax (when it is no longer called NI)

 

[PerryGunn]

But you do on the new tax once through the system. Pension income is also taxed with this new tax (when it is no longer called NI)

Not according to KPMG - it'll only apply if you continue to work after pension age, and then only on the earned income, not pension income
https://home.kpmg/uk/en/home/insights/2021/09/tmd-the-birth-of-a-whole-new-tax-the-health-and-social-care-levy.html

So, what do we know about the HSC Levy? The 1.25 percent will apply to the same income as National Insurance which means earned income such as salary and self-employed profits but not unearned income such as pension, rental or investment income. It will also have the same starting thresholds as National Insurance, will be uncapped and will fall on employers, employees and the self-employed.

From April 2023, the HSC Levy will be distinguished from National Insurance and we will see it as a separate line on our payslips and on our self-assessment tax returns for the self-employed. From then, the HSC Levy will also apply to those working but above state pension age (in contrast to National Insurance which does not apply to earnings after retirement age).

 

[pvr]

Right, so that reads that up to 2023 I won’t have to pay that on my dividend income from my company, but afterwards I will.

The newspaper article I read had it wrong then

 

[Pondy]

So, I spoke with an IFA this week (one that originally sold me the pensions as he sent me a letter). All good apart from the 3% of my pot he wants to change my pensions to be what I want. That's £10,000 on top of the fees from the provider
That's not going to happen. I have a year. I'm sure I can sort it myself in that time.

 

[Scubaregs]

Negotiate on the percentage, that's what I did.

 

[True-Blue]

So, I spoke with an IFA this week (one that originally sold me the pensions as he sent me a letter). All good apart from the 3% of my pot he wants to change my pensions to be what I want. That's £10,000 on top of the fees from the provider
That's not going to happen. I have a year. I'm sure I can sort it myself in that time.

Contact the pension provider directly, ask them if your contract with them enables you to take advantage of the Pensions freedom rules. Some providers have not adopted the rules on old contracts.
Ask them if you can instruct them to crystallise the fund and draw your PCLS, whilst leaving the remaining funds invested.
Ask them if they make any admin charges for doing this. If it’s a really old scheme you could have an entitlement to more than 25% of the fund as PCLS (tax free cash), it’s very unlikely, but possible.

In short, you may be able to achieve this without advice… I’m not saying that’s the best approach.

 

[Stevo1987]

Took mine at 55, bought a Porsche 718 Boxster, lifelong dream.

I transferred 2 final salary and a small private pension into a drawdown pension. IFA has to do due diligence first which is costly as has to be outsourced, set up costs were high initially, but we agreed a lower fee. From then on, no fees for taking the 25% or further drawdowns, but obviously ongoing fees for IFA and investment managers.

If taking your 25% from a final salary pension I don't think there are any fees, my fees were for moving my pensions, set up etc.

Was a no brainer for me, no kids/wife so my final salary pensions would have died with me, now the money goes to whoever I wish.
Personally, I'd seek professional, independent advice, normally an initial chat is free.

I have two final salary pensions and the IFA I went to didn't recommend transferring them (which I think is the default answer these days). I am still interested in doing it though.

 

[True-Blue]

Took mine at 55, bought a Porsche 718 Boxster, lifelong dream.

I transferred 2 final salary and a small private pension into a drawdown pension. IFA has to do due diligence first which is costly as has to be outsourced, set up costs were high initially, but we agreed a lower fee. From then on, no fees for taking the 25% or further drawdowns, but obviously ongoing fees for IFA and investment managers.

If taking your 25% from a final salary pension I don't think there are any fees, my fees were for moving my pensions, set up etc.

Was a no brainer for me, no kids/wife so my final salary pensions would have died with me, now the money goes to whoever I wish.
Personally, I'd seek professional, independent advice, normally an initial chat is free.

I have two final salary pensions and the IFA I went to didn't recommend transferring them (which I think is the default answer these days). I am still interested in doing it though.

It’s become the default answer if you’re not already 55, or very close.

This is because the insurers have got cold feet, and don’t want the risk of underwriting the advice.

 

[Pondy]

I know that my major pension cannot be drawn down at 55 without it triggering an annuity, which I don't want. So that one has to be dealt with. The other two I will have to enquire.
My issue is with this 'adviser' doing a small amount of work, mainly writing to my providers and finding out their policies (which I can quite easily do myself) for 3%. Bollox to that. I don't like giving my money away for anything that I can do myself.

The IFA I spoke to kept bleating on about some 'platform' that was brilliant for my purposes (more likely a brilliant commission for him). He also spent most of the conversation saying how well he is doing from going this route, when his circumstances are completely different to mine. I don't trust any of them TBH.

 

[Mr Tidy]

I thought the recommendation not to move workplace pensions to private was because while you were still working your employer would be contributing to the workplace version, but not the private alternative.

And I think some IFAs in the past had to pay compensation for recommending transfers as a result. Transfers to private schemes would definitely have been a bad idea for me as my workplace schemes were non-contributory. :lol:

Anyway like Scubaregs I have no wife or kids so I took the tax-free 25% from 3 workplace pensions as soon as I could with no fees - that got me started on Z4 ownership and cleared the mortgage!

Good luck getting it sorted without paying your "advisor"/leech.