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IC: Supersize your SIPP

yorkshirelad1
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IC: Supersize your SIPP

#415840

Postby yorkshirelad1 » May 28th, 2021, 1:52 pm

Useful supplement in this week's IC on SIPPs.
(IC, Fri 28 May, 2021, 14 pages incl adverts)
https://www.investorschronicle.co.uk/news/2021/05/27/supersize-your-sipp/
via Google: https://www.google.co.uk/search?q=Supersize+your+Sipp

Interesting to read the section on transfering DC schemes (https://www.investorschronicle.co.uk/managing-your-money/2021/05/27/should-i-transfer-a-workplace-dc-pension-into-a-sipp/). Having taken advice, I am starting the process of moving a DC scheme into a SIPP and consolidating several money-purchase schemes into one pot. The DC article makes no mention of the hellish hoops to jump through to move a DC scheme:
  • the DC scheme admininistrators are less than exemplary (I hope others are better): slow, endless questions, slow to respond, seemingly trying every trick in the book to frustrate the process
  • the necessary advice from an IFA is tricky: increasingly rare to find an IFA that will do this type of work, and it doesn't come cheap, seemingly due to the insurance costs in large part (discussions on these matters arise regularly on TLF)

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Re: IC: Supersize your SIPP

#415844

Postby scrumpyjack » May 28th, 2021, 1:58 pm

yorkshirelad1 wrote:Useful supplement in this week's IC on SIPPs.
(IC, Fri 28 May, 2021, 14 pages incl adverts)
https://www.investorschronicle.co.uk/news/2021/05/27/supersize-your-sipp/
via Google: https://www.google.co.uk/search?q=Supersize+your+Sipp

Interesting to read the section on transfering DC schemes (https://www.investorschronicle.co.uk/managing-your-money/2021/05/27/should-i-transfer-a-workplace-dc-pension-into-a-sipp/). Having taken advice, I am starting the process of moving a DC scheme into a SIPP and consolidating several money-purchase schemes into one pot. The DC article makes no mention of the hellish hoops to jump through to move a DC scheme:
  • the DC scheme admininistrators are less than exemplary (I hope others are better): slow, endless questions, slow to respond, seemingly trying every trick in the book to frustrate the process
  • the necessary advice from an IFA is tricky: increasingly rare to find an IFA that will do this type of work, and it doesn't come cheap, seemingly due to the insurance costs in large part (discussions on these matters arise regularly on TLF)


I thought you only needed 'advice' from an IFA to move a DB pension, not a DC one.

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Re: IC: Supersize your SIPP

#415862

Postby mc2fool » May 28th, 2021, 3:17 pm

scrumpyjack wrote:I thought you only needed 'advice' from an IFA to move a DB pension, not a DC one.

"If your transfer value is more than £30,000 and you have a Guaranteed Annuity Rate or other protected benefits, the transfer will have to be signed off by a regulated financial adviser before your pension scheme will release the money."

https://www.moneyadviceservice.org.uk/en/articles/transferring-defined-contribution-pensions

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Re: IC: Supersize your SIPP

#415889

Postby scrumpyjack » May 28th, 2021, 4:33 pm

mc2fool wrote:
scrumpyjack wrote:I thought you only needed 'advice' from an IFA to move a DB pension, not a DC one.

"If your transfer value is more than £30,000 and you have a Guaranteed Annuity Rate or other protected benefits, the transfer will have to be signed off by a regulated financial adviser before your pension scheme will release the money."

https://www.moneyadviceservice.org.uk/en/articles/transferring-defined-contribution-pensions


It would be extremely unusual to have a GAR or protected benefits with a defined contribution pension

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Re: IC: Supersize your SIPP

#415925

Postby Alaric » May 28th, 2021, 7:59 pm

scrumpyjack wrote:It would be extremely unusual to have a GAR or protected benefits with a defined contribution pension


One possibility is a plan written through an Insurance Company which offered a with profits fund as one of its options.

Another would be a hybrid plan, sometimes popular in the past with schemes switching from defined benefit, which offered some form of minimum benefit or rate of return.

I'd agree that GARs disappeared from otherwise plain investment linked contracts around 40 years ago.

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Re: IC: Supersize your SIPP

#416025

Postby scrumpyjack » May 29th, 2021, 10:53 am

ReallyVeryFoolish wrote:
Alaric wrote:
scrumpyjack wrote:It would be extremely unusual to have a GAR or protected benefits with a defined contribution pension


One possibility is a plan written through an Insurance Company which offered a with profits fund as one of its options.

Another would be a hybrid plan, sometimes popular in the past with schemes switching from defined benefit, which offered some form of minimum benefit or rate of return.

I'd agree that GARs disappeared from otherwise plain investment linked contracts around 40 years ago.

Yes, there's a lot of them about. I recently became aware of one where a relative had to take financial advice to move such a DC pension pot to a SIPP. It came as a surprise, but apparently it's quite common where companies moved away from DB pension plans.

RVF


Yes I had a GAR with Equitable Life, which was taken away. When I eventually got out I did not need 'advice' as it had turned into a plain vanilla DC though I could only get out without further penalty when I reached retirement age.

Dod101
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Re: IC: Supersize your SIPP

#416028

Postby Dod101 » May 29th, 2021, 11:01 am

Life was so much simpler when I retired and a couple of years later transferred a couple of personal pensions with insurers to a SIPP. That was about 25 years ago. I wonder really how much benefit the costly hoops are giving these days? I long ago concluded that I knew about as much as most IFAs anyway.

Dod

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Re: IC: Supersize your SIPP

#416056

Postby mc2fool » May 29th, 2021, 12:51 pm

Dod101 wrote:Life was so much simpler when I retired and a couple of years later transferred a couple of personal pensions with insurers to a SIPP. That was about 25 years ago.

Really? The pension freedoms only came about in 2015. AIUI before that the only option with a DC pension was to turn it into an annuity. :?

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Re: IC: Supersize your SIPP

#416060

Postby Alaric » May 29th, 2021, 1:23 pm

mc2fool wrote:Really? The pension freedoms only came about in 2015. AIUI before that the only option with a DC pension was to turn it into an annuity. :?


There were various more restricted forms of drawdown available before 2015, quite possibly dating as far back as the introduction of "Personal Pensions" in 1988. It was a somewhat specialist product perhaps only being available to high net worth individuals through financial advisers. In any event, you could also transfer from a DC scheme to a SIPP before retirement.

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Re: IC: Supersize your SIPP

#416061

Postby mc2fool » May 29th, 2021, 1:29 pm

Alaric wrote:
mc2fool wrote:Really? The pension freedoms only came about in 2015. AIUI before that the only option with a DC pension was to turn it into an annuity. :?

There were various more restricted forms of drawdown available before 2015, quite possibly dating as far back as the introduction of "Personal Pensions" in 1988. It was a somewhat specialist product perhaps only being available to high net worth individuals through financial advisers. In any event, you could also transfer from a DC scheme to a SIPP before retirement.

But then only use that SIPP to buy an annuity at retirement?

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Re: IC: Supersize your SIPP

#416063

Postby Alaric » May 29th, 2021, 1:36 pm

mc2fool wrote:But then only use that SIPP to buy an annuity at retirement?


Putting the SIPP into drawdown would have been one of the available retirement options. Combining drawdown with a SIPP made sense because of the ability to tailor the investment mix to support a regular income.

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Re: IC: Supersize your SIPP

#416081

Postby Dod101 » May 29th, 2021, 3:00 pm

mc2fool wrote:
Dod101 wrote:Life was so much simpler when I retired and a couple of years later transferred a couple of personal pensions with insurers to a SIPP. That was about 25 years ago.

Really? The pension freedoms only came about in 2015. AIUI before that the only option with a DC pension was to turn it into an annuity. :?


Yes. I had two personal pensions, one was with Clerical Medical and the other was with Standard Life, both very good mutual life insurance companies in their day.

I transferred both to a SIPP certainly before,and maybe quite a bit before 2000. I know; I did it. This had nothing to do with so called pension freedoms. And as a matter of fact I did not put it into drawdown until 2006 when I moved to my present house. To help with various refurbishments I took the tax free 25% at that time and have occasionally taken some money out of it since then, but it is not in what I would call 'active' drawdown in that I do not draw living expenses from it.

The mechanism for doing so was to open a SIPP with Suffolk Life if you want the details, get a valuation from both life insurers, and then ask them to transfer the value to Suffolk LIfe. No one else involved and certainly no IFA.

Dod

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Re: IC: Supersize your SIPP

#416086

Postby Dod101 » May 29th, 2021, 3:09 pm

mc2fool wrote:
Alaric wrote:
mc2fool wrote:Really? The pension freedoms only came about in 2015. AIUI before that the only option with a DC pension was to turn it into an annuity. :?

There were various more restricted forms of drawdown available before 2015, quite possibly dating as far back as the introduction of "Personal Pensions" in 1988. It was a somewhat specialist product perhaps only being available to high net worth individuals through financial advisers. In any event, you could also transfer from a DC scheme to a SIPP before retirement.

But then only use that SIPP to buy an annuity at retirement?



No, See my response above.

Dod

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Re: IC: Supersize your SIPP

#416109

Postby Watis » May 29th, 2021, 5:56 pm

ReallyVeryFoolish wrote:
(I had a misspelling case backing the 90's with a DB pension Mrs RVF transferred out into a DC pension).

RVF


How ironic that 'misspelling' is the very word that has been misspelled!

Gotta love autocorrect. . .

Watis

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Re: IC: Supersize your SIPP

#416117

Postby ursaminortaur » May 29th, 2021, 6:44 pm

Dod101 wrote:
mc2fool wrote:
Alaric wrote:There were various more restricted forms of drawdown available before 2015, quite possibly dating as far back as the introduction of "Personal Pensions" in 1988. It was a somewhat specialist product perhaps only being available to high net worth individuals through financial advisers. In any event, you could also transfer from a DC scheme to a SIPP before retirement.

But then only use that SIPP to buy an annuity at retirement?



No, See my response above.

Dod



Alternatively Secured pensions (ASPs) were introduced at A-day in 2006 which allowed you to remain in drawdown after age 75. Up until then you had had to buy an annuity at age 75. These were apparently introduced after lobbying from the Plymouth Brethren who had religious objections to annuities as they saw them as a form of gambling. Shortly after the ASPs introduction the government tried to roll-back on this by saying that the ASP was only meant to be used by the Brethren. However legislating for that would have amounted to religious discrimination so after some huffing and puffing they were forced to concede that anyone could use it. Both drawdown before age 75 (USP) and after 75 (ASP) were at that time subject to restrictions based upon GAD tables as to how much you could take out with more strict restrictions applying to ASPs than USPs.

http://news.bbc.co.uk/1/hi/business/5399998.stm

The curious affair of the ASP

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Re: IC: Supersize your SIPP

#416118

Postby Dod101 » May 29th, 2021, 6:51 pm

I had forgotten all that. SIPPs when you think about it have had a period of realtive stability since the legislation you are writing about. For some time the rules seemed to change every year.

Dod

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Re: IC: Supersize your SIPP

#416119

Postby wanderer » May 29th, 2021, 7:40 pm

ursaminortaur wrote:
http://news.bbc.co.uk/1/hi/business/5399998.stm

The curious affair of the ASP


Thanks for that. It's fascinating to read about how the way most people now access their pensions came about almost by accident! Avoiding having to buy an annuity and being able to flexibly access our own savings has been such a great thing for the general public and ended the racket being run by the insurance companies!

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Re: IC: Supersize your SIPP

#416121

Postby scrumpyjack » May 29th, 2021, 7:48 pm

Yes now you mention it I do recall how the Plymouth Brethren forced HMG to open up pensions! We have a lot to thank them for.

In 2006 I thought long and hard about what to do and decided to take enhanced protection even though I was only about half the proposed limit and it would mean I could never pay another penny into my pension. Most of it was with Equitable Life which seemed a good idea at the time (oh dear!). Anyway I got it out of ELAS, somewhat diminished, in 2013 when I hit 65 and managed it myself. In retrospect so lucky that I took enhanced protection as it has quadrupled so it is certainly supersized now!

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Re: IC: Supersize your SIPP

#416151

Postby xxd09 » May 30th, 2021, 12:16 am

I have same story-saving for some years with “reputable” insurance companies including Equitable Life
Having discovered these companies costs or rather being unable to discover them-I transferred from NPI,Norwich Union and Scottish Widows into a SIPP all by myself!
Equitable Life were sticky but someone on this board in a previous incarnation ie during the Motley Fool days mentioned that if you were retired then the pension monies were automatically released
My wife and I “retired “ immediately and the pension monies were instantly forthcoming
The loophole was closed pretty soon after but we were long gone
Done my and my wife’s SIPPS from then on-run my investments passed a IFA once or twice and they confirmed I was OK
Well over 20 years ago now -worked out for me
Shows how useful these boards are
xxd09

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Re: IC: Supersize your SIPP

#416158

Postby Dod101 » May 30th, 2021, 7:20 am

wanderer wrote:
ursaminortaur wrote:
http://news.bbc.co.uk/1/hi/business/5399998.stm

The curious affair of the ASP


Thanks for that. It's fascinating to read about how the way most people now access their pensions came about almost by accident! Avoiding having to buy an annuity and being able to flexibly access our own savings has been such a great thing for the general public and ended the racket being run by the insurance companies!


I do not think it was 'a racket being run by insurance companies'. ('racket' a dishonest or illegal activity.) I agree with the rest of your sentiments though.

Even Equitable Life was not running a racket; they were simply hugely over optimistic and ultimately incompetent which was a great shame because for years the Directors ran a good company. On the whole, the public has reacted quite responsibly to the freedoms which they now have.

Dod


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