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My provider will buy an annuity if I don't act!

Posted: September 28th, 2020, 4:58 pm
by artengill
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

Re: My provider will buy an annuity if I don't act!

Posted: September 28th, 2020, 5:05 pm
by swill453
Wouldn't the simplest thing be to transfer the private pension to your SIPP and manage it all the way you want?

Scott.

Re: My provider will buy an annuity if I don't act!

Posted: September 28th, 2020, 6:05 pm
by Alaric
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.

Re: My provider will buy an annuity if I don't act!

Posted: September 28th, 2020, 9:49 pm
by Chrysalis
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.

Re: My provider will buy an annuity if I don't act!

Posted: September 29th, 2020, 4:04 pm
by artengill
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.

Re: My provider will buy an annuity if I don't act!

Posted: September 29th, 2020, 4:10 pm
by swill453
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.

Re: My provider will buy an annuity if I don't act!

Posted: September 29th, 2020, 10:14 pm
by SoBo65
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.

Re: My provider will buy an annuity if I don't act!

Posted: October 9th, 2020, 11:20 am
by artengill
Thanks for the answers.
Very much appreciated

Regards Mike