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Original poster

I have two small pensions I want to cash in.

32 replies

FinallyFluid · 13/03/2021 11:13

One was just used as a savings vehicle and is only about £2,000, so I can get that out easily enough.

The other is a final salary which is worth £38,000

Because it is worth over £30,000, I need to take advice.

I totally get the need to advise people that when it is gone, it is gone, but we are in the lucky position that this is not needed in our long term goals. We had forgotten that the final salary one might even be worth that much.

I have not enjoyed good health over the last five years, and whilst I could ostensibly live as long as my mother (82,)or her sister (90) I would like to use the money on city breaks etc. In essence I would rather have a lump sum at 57, than an extra £100 a month once I hit 65. (If I hit 65)

We are mortgage free and if no nursing care is required for my mother will also get an inheritance there, nice but thankfully not required.

My question is how much on average should I expect to pay for the advice ?

We have an FA, and I am waiting for her to come back to me with a price from her firm, but I would be grateful for a ball park figure from others.

TIA

OP posts:
billyt · 13/03/2021 11:22

Don't forget tax on anything you draw down above 25% per tax year.

Although, your FA will confirm this

Lollypop701 · 13/03/2021 11:33

The 25% is lifetime allowance so not per year year. A final pension guarantees you an amount per year, and can be very valuable as pensions are very expensive. Make sure you really understand what you are cashing in.

Original poster
FinallyFluid · 13/03/2021 11:47

Lollypop701

Thank you, I absolutely do understand what I am doing, we will have a
guaranteed income of in excess of 45 pa, a savings pot after we pay tax on it of 150k, the small final salary is not worth much on a monthly basis and I certainly don't want to wait another eight years for it.

When you have sat in a consultants office and heard the words I am very sorry twice in five years, (thankfully both primaries and they appear to have been dispatched) having plans in place for old age are important, but I feel the need to be able to travel in Europe (city breaks) in the covid free(reduced) future.

OP posts:

Interested in this thread?

Then you might like threads about these subjects:

General money Retirement & pensions
Oldsu · 13/03/2021 11:59

You may not need a FA, I thought you did and I was unhappy about having to pay one, when I took my private pension last month, I went through pensionwise who put me on to the money advice service, I put my pot into the annuity comparison page and got a list of providers and rates, I clicked on the best one, I then got a call from a company, who after a lengthy lifestyle and health interview sent my quotes including a flexible draw down scheme, I asked whether or not I would need a independent FA, I was told it may be necessary if my pension was complicated but straight forward ones like mine didn't need one he did say however that some schemes are only accessed through a FA so I still had a choice to go down that route if I wanted to. There was a fee but it was paid to the company by the chosen pension provider and not by me, the fee was deducted from my pot amount and wasn't very much. My pension pot holder had a provider that they were linked to however when I got my quotes that provider was giving very poor rates and a lot less than the provider I went with, all in all I am happy with my pension and the advice I got. I really don't think I would have got a better deal if I paid for extra advice. Maybe try pensionwise yourself they don't give advice as such they can give you options and point you in the right direction.

GenderApostate19 · 13/03/2021 12:11

Private pensions are not the same as final salary schemes Oldsu.
For an FS scheme, you have to transfer it in order to draw it down, there are very few advisors with the insurance indemnity needed to advise on such transfers - that’s what makes it expensive, plus there are very few firms who will actually take the transfer - AJ Bell do iirc.
You are probably looking at £5k in advisor fees - get some initial advice on the moneysaving expert Pension forum.

Original poster
FinallyFluid · 13/03/2021 12:12

Thank you for that, will investigate that on Monday.

OP posts:
Original poster
FinallyFluid · 13/03/2021 12:13

GenderA

It is the poss £5k that I am trying to reduce down as much as possible.

Better in my pocket. Grin

OP posts:
GenderApostate19 · 13/03/2021 12:36

Are you a tax payer? If so then taking a full lump sum might push you into higher rate tax?
Even if you aren’t, it would probably be better to do transfer into a SIPP and then use UPFLS and get £16k tax free for a couple of years.

jfrbokok · 13/03/2021 12:51

You say "we will have". What will you have in your own name? Work out of you can survive on purely your own pensions, not those with your partner.

jfrbokok · 13/03/2021 12:51

.. as partners can leave or die!

LunaHeather · 13/03/2021 12:53

Sorry if I am being dense but why do you need an adviser?

Surely the Ts&Cs will tell you what you need to know?

I'm not a fan of pensions, can you tell 😂

I hope you enjoy the things you can do with the cash.

GenderApostate19 · 13/03/2021 13:01

Because it’s the law, Luna.
For the vast majority of people, transferring out of Final salary schemes are a BAD idea, it’s a guaranteed income for life with benefits for your spouse should you die.

Letsrunabath · 13/03/2021 13:07

Watching

LunaHeather · 13/03/2021 13:11

@GenderApostate19

Because it’s the law, Luna. For the vast majority of people, transferring out of Final salary schemes are a BAD idea, it’s a guaranteed income for life with benefits for your spouse should you die.
You mean you go through the FA of the pension company? You pay for advice in cashing in your own pension?
Oldsu · 13/03/2021 13:14

@GenderApostate19

Private pensions are not the same as final salary schemes Oldsu. For an FS scheme, you have to transfer it in order to draw it down, there are very few advisors with the insurance indemnity needed to advise on such transfers - that’s what makes it expensive, plus there are very few firms who will actually take the transfer - AJ Bell do iirc. You are probably looking at £5k in advisor fees - get some initial advice on the moneysaving expert Pension forum.
Ah thank you - never had one of them
Kpo58 · 13/03/2021 13:23

If the finally salary scheme is with the LGPS, then you wouldn't be allowed to take it all as cash.

It would be worth checking with your provider that you could if you wished to take it as cash can do so. Otherwise you will be wasting money on a financial consultant for nothing.

Hopeisnotastrategy · 13/03/2021 13:35

@GenderApostate19

Private pensions are not the same as final salary schemes Oldsu. For an FS scheme, you have to transfer it in order to draw it down, there are very few advisors with the insurance indemnity needed to advise on such transfers - that’s what makes it expensive, plus there are very few firms who will actually take the transfer - AJ Bell do iirc. You are probably looking at £5k in advisor fees - get some initial advice on the moneysaving expert Pension forum.
I did this with a small DB pot worth just under £31,000 - so very annoying to have to pay for advice as it was only just over the £30k threshold.

It is hard to find a FA suitably qualified to do this, and yes they do have to have good indemnity insurance so it is not cheap. However, I paid my FA 5%.

When I subsequently decided to do the same with another larger DB pension pot I paid 3% as an established client.

It is not a good idea for most people but your reasons sound very reasonable.

Be aware that even if your FA advises against it, you are still at liberty to proceed - you just need to demonstrate you have taken specialist advice.

Hopeisnotastrategy · 13/03/2021 13:39

@Kpo58

If the finally salary scheme is with the LGPS, then you wouldn't be allowed to take it all as cash.

It would be worth checking with your provider that you could if you wished to take it as cash can do so. Otherwise you will be wasting money on a financial consultant for nothing.

My larger pot was an LGPS one. You can transfer it to another provider and are then free to treat it like a private pension and draw down as you like. Both Royal London and Standard Life will accept these transfers, I'm sure there are other providers who will as well.
Hopeisnotastrategy · 13/03/2021 13:42

Obviously the OP should draw it down in the most tax effective method for her, but if she wants to spend it travelling she is unlikely to want it all at once anyway.

Hopeisnotastrategy · 13/03/2021 13:47

It is worth shopping around OP. Bear in mind you do not necessarily have to use an advisor local to you. That may save you some money, especially if you live in the London area. However whoever you use, obviously check them out carefully.

GenderApostate19 · 13/03/2021 15:13

Luna - it’s to stop people cashing in a potentially valuable retirement income without understanding the implications. The vast majority of people will be advised not to do it but if you are ‘insistent’ it can be done, even against the advice.
The thing with final salary schemes, like Teachers/local government etc. is that you don’t have an ‘individual’ pension pot so if you wanted to transfer it to get your hands on the money, a commutation value has to be worked out by the trustees of the scheme. I will have a very small LGPS pension that will pay out about £200 a month, it cost me very little in terms of contributions, if I had to ‘buy’ that income privately it would cost me £50k or more. The transfer value would probably only cover 15 years income.

Most people just don’t understand pensions, especially final salary ones.

FrogFairy · 13/03/2021 15:15

I have recently done this.

I found a FA qualified to deal with DB pensions and paid £4K for his services - my DB pension had a CETV value of over £250k. I am delighted that I have now been able to retire (Ill health here too) with a tax free cash lump sum, fixed annuity providing an income until I get to State Pension plus a lump sum paid out to cover another annuity to top up my SP.

I understand why it is frowned on to leave a DB pension but in my circumstances it was the right thing for me to do.

LunaHeather · 13/03/2021 15:17

"Luna - it’s to stop people cashing in a potentially valuable retirement income without understanding the implications."

Paying for that seems mad though it's a great way to raise money for those in the business.

Never had a final salary pension, or even a pension situation that's worth much, so never had to think about it. But it seems wrong people have to pay to make that choice.

FaceyRomford · 13/03/2021 15:46

FWIW the legal requirement to obtain advice applies to pensions consultants as well. Damn annoying to have to pay £4K (in my case) to a business rival to be told something that, professionally speaking, you are perfectly well aware of. However, so many people have had their pensions "liberated" (i.e. stolen) that the Govt. decided it had to get heavy.

LunaHeather · 13/03/2021 16:55

@FaceyRomford

FWIW the legal requirement to obtain advice applies to pensions consultants as well. Damn annoying to have to pay £4K (in my case) to a business rival to be told something that, professionally speaking, you are perfectly well aware of. However, so many people have had their pensions "liberated" (i.e. stolen) that the Govt. decided it had to get heavy.
Interesting

I have a SIPP which I ignore and don't factor into future calculations. So if I wanted to take out money in future, even after 58 or whatever it will be, I'd be having to pay someone to take out the cash?