The Lemon Fool

Hi,
I have a private pension of about £70,000 that I am told by my provider must be "taken" when I reach 75 in 2 years time. Unless I advise them to the contrary they will purchase an annuity for me at that date. I would prefer to take the money and invest it for the benefit of my wife who is in fact 2 years older than me.
Ideally I would like any investment to maximise income in preference to growth.
I also have a SIPP which is in drawdown and supplimenting my old age pension.
I believe that I can take 25% of the pension as a tax free lump sum. Can I invest the rest in a "sort of pension" for my wife and only pay tax on the income generated?
It's starting to become a mine field. I'm thinking I'll have to bite the bullet and seek professional advice.

Thanks for any inputs

Regards Mike

Wouldn't the simplest thing be to transfer the private pension to your SIPP and manage it all the way you want?

Scott.

swill453 wrote:Wouldn't the simplest thing be to transfer the private pension to your SIPP and manage it all the way you want?

With a SIPP already in drawdown, it would seem the simplest instruction to your current provider is that they pay 25% to you as a tax free lump sum and transfer the balance to your existing SIPP.

Alaric wrote:

swill453 wrote:Wouldn't the simplest thing be to transfer the private pension to your SIPP and manage it all the way you want?

With a SIPP already in drawdown, it would seem the simplest instruction to your current provider is that they pay 25% to you as a tax free lump sum and transfer the balance to your existing SIPP.

I think it will prove easier to transfer as an uncrystallised pension, rather than putting it into drawdown with the current provider and moving the drawdown pot.

But yes, the solution to this is to transfer your pension to a provider who allows drawdown before you reach the deadline.

Can I simply transfer the dormant pension to my SIPP without tax penalty? Both amounts would still remain within the "pension" wrapper and be subject to the same pension rules. Will the £40,000 pension annual allowance apply to this transfer?
Your suggestion of a straight transfer in, is very appealing at the moment.
Thanks for all your input.

artengill wrote:Can I simply transfer the dormant pension to my SIPP without tax penalty? Both amounts would still remain within the "pension" wrapper and be subject to the same pension rules. Will the £40,000 pension annual allowance apply to this transfer?
Your suggestion of a straight transfer in, is very appealing at the moment.
Thanks for all your input.

Yes it should be straightforward to transfer. There will be no tax penalty, and it wouldn't be restricted by the £40,000 annual allowance.

I did exactly this to consolidate smaller personal pensions into a SIPP with AJBell Youinvest.

It should be as simple as approaching your current SIPP provider and filling in the requisite form, no need for you to contact the private pension provider.

EDIT: Depending on what your money is invested in, it may be possible to transfer the investments in specie i.e. without liquidating them to cash. This isn't always an option though, and you may have a period of time "out of the market" with associated risk of missing a rise. You could also avoid a market drop of course!

Scott.

swill453 wrote:

artengill wrote:Can I simply transfer the dormant pension to my SIPP without tax penalty? Both amounts would still remain within the "pension" wrapper and be subject to the same pension rules. Will the £40,000 pension annual allowance apply to this transfer?
Your suggestion of a straight transfer in, is very appealing at the moment.
Thanks for all your input.

Yes it should be straightforward to transfer. There will be no tax penalty, and it wouldn't be restricted by the £40,000 annual allowance.

I did exactly this to consolidate smaller personal pensions into a SIPP with AJBell Youinvest.

It should be as simple as approaching your current SIPP provider and filling in the requisite form, no need for you to contact the private pension provider.

EDIT: Depending on what your money is invested in, it may be possible to transfer the investments in specie i.e. without liquidating them to cash. This isn't always an option though, and you may have a period of time "out of the market" with associated risk of missing a rise. You could also avoid a market drop of course!

Scott.

I have done this myself on three occasions, all went smoothly, your existing SIPP provider or to whom you are transferring will probably guide you through the process. I used Hargreaves Lansdown and very little effort on my part was required.

Thanks for the answers.
Very much appreciated

Regards Mike

Always annoying when a provider looks to purchase an annuity automatically, while it may have been a practical solution for many 'back in the day' but I'm not entirely sure that is still the case!

braci wrote:Always annoying when a provider looks to purchase an annuity automatically, while it may have been a practical solution for many 'back in the day' but I'm not entirely sure that is still the case!

It couldn't have anything to do with the commission they get?

I wouldn't touch them with bargepole
https://www.annuityexpertadvice.com/why ... nt-choice/

pje16 wrote:I wouldn't touch them with bargepole
https://www.annuityexpertadvice.com/why ... nt-choice/

Interesting choice of article to link to there ... esp. from a site which "is an online insurance agency that provides the widest variety of annuities in the United States." !

And just a brief read of the article reveals that "annuities" doesn't seem to have quite the same meaning there as here -- indeed the article is about "Why Annuities Are A Poor Investment Choice", although their home page does claim to "Find the best annuities to grow your savings".

Methinks you need to find a UK centric site for support for not touching UK annuities with the proverbial bargepole.