Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Bhoddhisatva,scotia,Anonymous,Cornytiv34, for Donating to support the site

Pension wise appointment

Including Financial Independence and Retiring Early (FIRE)
bots33
Posts: 26
Joined: November 6th, 2016, 12:51 pm
Has thanked: 24 times
Been thanked: 13 times

Pension wise appointment

#400906

Postby bots33 » April 1st, 2021, 5:18 pm

Hi all

I had my pension wise appointment earlier today and found it extremely helpful when looking at my options for my SIPP (I turn 55 next month). The lady was very thorough in reviewing the 6 options
1. Leave as is
2. Buy an annuity
3. Flexi access drawdown
4. UFPLS (otherwise known as "chunks")
5. Cash in the whole pot
6. A mix of the above (but Flexi & chunks are mutually exclusive - it's one or the other)

What I took from it:
* Unless you leave the money in your SIPP, the money moves from an investment product, to a pension product, with associated rules and regs. Although the SIPP wrapper still appears so it can appear that nothing has changed.
* Money Purchase Annual Allowance (MPAA) kicks in when you receive any taxable income from a pension product (apart from lifetime annuities)
So a flex access drawdown, where you only take the 25% tax free monies and keep the rest in drawdown, still allows you to contribute up to £40k (or your earnings) into your SIPP
* Need to ask SIPP provider about any guarantees associated with investments
* A significant benefit to pensions is protection from inheritance tax, but need to check providers do have your beneficiary's details correct
* If you die, your beneficiaries have 2 years to apply for drawdown / access to keep this tax free status
* You can take £500 each tax year out of your SIPP to pay for an IFA for advice (up to three times)
* Flexible drawdown can be done by yourself, or with an IFA, or via set investment pathways, but need to check what your provider allows
* Be wary of scammers - providers will never ask for your bank accounts over the phone or email

Shortly after the appointment I got a report with key facts and helpful questions to ask a SIPP provider around the 6 options.

Would definitely recommend using this service

https://www.pensionwise.gov.uk/en








https://www.pensionwise.gov.uk/en

bluedonkey
Lemon Quarter
Posts: 1789
Joined: November 13th, 2016, 3:41 pm
Has thanked: 1389 times
Been thanked: 652 times

Re: Pension wise appointment

#400915

Postby bluedonkey » April 1st, 2021, 5:44 pm

bots33 wrote:Hi all

I had my pension wise appointment earlier today and found it extremely helpful when looking at my options for my SIPP (I turn 55 next month). The lady was very thorough in reviewing the 6 options
1. Leave as is
2. Buy an annuity
3. Flexi access drawdown
4. UFPLS (otherwise known as "chunks")
5. Cash in the whole pot
6. A mix of the above (but Flexi & chunks are mutually exclusive - it's one or the other)

What I took from it:
* Unless you leave the money in your SIPP, the money moves from an investment product, to a pension product, with associated rules and regs. Although the SIPP wrapper still appears so it can appear that nothing has changed.

My bold - can you elaborate on this?

How easy was it to get an appointment?

swill453
Lemon Half
Posts: 7962
Joined: November 4th, 2016, 6:11 pm
Has thanked: 984 times
Been thanked: 3643 times

Re: Pension wise appointment

#401059

Postby swill453 » April 2nd, 2021, 11:20 am

bots33 wrote:Hi all

I had my pension wise appointment earlier today and found it extremely helpful when looking at my options for my SIPP (I turn 55 next month). The lady was very thorough in reviewing the 6 options
1. Leave as is
2. Buy an annuity
3. Flexi access drawdown
4. UFPLS (otherwise known as "chunks")
5. Cash in the whole pot
6. A mix of the above (but Flexi & chunks are mutually exclusive - it's one or the other)

Option 6 isn't really telling the whole picture. When they talk about "Flexi access drawdown", they only consider crystallising the entire pension pot and taking the 25% tax free. That's why there wouldn't be anything to take "chunks" from (UFPLS payments).

However it's entirely possible to only crystallise a portion of the pot. This would leave you free to take flexi access drawdown payments from that part (if you want), and also UFPLS payments from the uncrystallised part.

I can see a scenario where that might be useful for me - take a tax-free amount to fill up my ISA each year, but still use UFPLS for normal spending.

Of course eventually the whole pot will be crystallised, but for me that would be a few years off.

The fact that Pensionwise don't consider this would cause me a little concern.

Scott.

swill453
Lemon Half
Posts: 7962
Joined: November 4th, 2016, 6:11 pm
Has thanked: 984 times
Been thanked: 3643 times

Re: Pension wise appointment

#401061

Postby swill453 » April 2nd, 2021, 11:21 am

bluedonkey wrote:
bots33 wrote:What I took from it:
* Unless you leave the money in your SIPP, the money moves from an investment product, to a pension product, with associated rules and regs. Although the SIPP wrapper still appears so it can appear that nothing has changed.

My bold - can you elaborate on this?

I don't understand this either. What would be the practical implications of this "movement"?

Scott.

bots33
Posts: 26
Joined: November 6th, 2016, 12:51 pm
Has thanked: 24 times
Been thanked: 13 times

Re: Pension wise appointment

#401178

Postby bots33 » April 2nd, 2021, 5:48 pm

It was very easy to make an appointment via the website.

The lady mentioned when you decide to take an option beyond 1 (leave it alone), then the product changes to a pension, rather than investment, and subject to pension regulations. She noted that SIPP providers will still show funds under their brand, and that causes confusion for investors since it appears there's no change to the underlying investments.

Hope that makes sense.

Regards

bots

swill453
Lemon Half
Posts: 7962
Joined: November 4th, 2016, 6:11 pm
Has thanked: 984 times
Been thanked: 3643 times

Re: Pension wise appointment

#401187

Postby swill453 » April 2nd, 2021, 6:29 pm

bots33 wrote:The lady mentioned when you decide to take an option beyond 1 (leave it alone), then the product changes to a pension, rather than investment, and subject to pension regulations. She noted that SIPP providers will still show funds under their brand, and that causes confusion for investors since it appears there's no change to the underlying investments.

Hope that makes sense.

I'm afraid it doesn't, because there isn't any change to the underlying investments.

(And prior to "taking an option" it's already subject to pension regulations.)

Scott.

Darka
Lemon Slice
Posts: 773
Joined: November 4th, 2016, 2:18 pm
Has thanked: 1819 times
Been thanked: 704 times

Re: Pension wise appointment

#401205

Postby Darka » April 2nd, 2021, 7:31 pm

Here are the options provided by AJBell (where my SIPP is invested):

https://www.youinvest.co.uk/pensions-an ... ur-pension

For all POST access options (except an annuity which is obviously different) it correctly states:

Do I control the investments in the pension fund?
Yes. You decide how to invest the pension fund and what income to take

I believe the lady at Pension Wise doesn't understand SIPP's that well, which for an pensions adviser isn't ideal.

Additionally:
For personal pensions such as SIPPs there are three main options for accessing your pension – pension drawdown, taking lump sums or buying an annuity. You have the freedom to choose one option or mix and match. You don’t have to use all your pension fund in one go, so you can choose one option now for part of your fund and leave the rest to decide later – it is flexible.


Return to “Retirement Investing (inc FIRE)”

Who is online

Users browsing this forum: No registered users and 11 guests