| Fees for a Pension Withdrawal Plan [message #383351] |
Di, 25 April 2006 18:56 |
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Do I have to pay someone to set up a Pension Withdrawal Plan?
The calculation required to determine the income level of between 35%
and 100% of the GAD (Government Actuaries Department) maximum is GSCE
stuff.
It seems very simple. Phone your Fund Provider when you wish to take
money out and record yearly sum on your tax return.
If I have to pay a fee, then how much would this be?
Fred
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| Re: Fees for a Pension Withdrawal Plan [message #383406 ] |
Mi, 26 April 2006 09:44 |
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It's not quite that simple.
Most standard pension plans do not allow you to take withdrawals
directly - you need to transfer pension funds to a specialist fund
withdrawal (now termed 'unsecured income') pension vehicle - this could
be a SIPP or a special Pension Fund Withdrawal contract available from
an insurance company.
Of course you will need to pay fees, as these sorts of plans are more
time-consuming and costly to administer than a standard annuity.
Generally, you pay the fund management AMCs (just like you would under
a pension plan or Unit Trust / OEIC), then you pay either an upfront
charge (say 2-3% of the transfer value), or an annual cost for the
administration.
Most competitive SIPP providers would charge you, say =A3300 to set-up a
SIPP, then probably about =A3150 p.a. to handle the fund withdrawals.
You either need to do a lot of research, or get some independent
advice.
P=2ES. The income levels are no longer in the 35 - 100% range. They now
range from =A31 p.a. to 120% of the GAD maximum.
Rgds
Neil.
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| Re: Fees for a Pension Withdrawal Plan [message #383426 ] |
Mi, 26 April 2006 11:26 |
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<neil [at] invidion.co.uk> wrote in message
news:1146037445.284587.49850 [at] y43g2000cwc.googlegroups.com...
> It's not quite that simple.
>
> Most standard pension plans do not allow you to take withdrawals
> directly - you need to transfer pension funds to a specialist fund
>withdrawal (now termed 'unsecured income') pension vehicle - this could
> be a SIPP or a special Pension Fund Withdrawal contract available from
> an insurance company.
>
> Of course you will need to pay fees, as these sorts of plans are more
> time-consuming and costly to administer than a standard annuity.
> Generally, you pay the fund management AMCs (just like you would under
> a pension plan or Unit Trust / OEIC), then you pay either an upfront
> charge (say 2-3% of the transfer value), or an annual cost for the
> administration.
>
> Most competitive SIPP providers would charge you, say £300 to set-up a
> SIPP, then probably about £150 p.a. to handle the fund withdrawals.
>
> You either need to do a lot of research, or get some independent
> advice.
This one looks good value, and considerably cheaper than the rates you quote,
although I have no experience of the company:
http://www.hargreaveslansdown.co.uk/sipp/sipp_fees.asp
--
Andy
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| Re: Fees for a Pension Withdrawal Plan [message #383431 ] |
Mi, 26 April 2006 11:57 |
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I was quoting average figures. Obviously some are higher, some are
lower.
The Hargreave Lansdown option is an Execution-Only SIPP. Therefore, if
you are confident in making your own investment decisions, then this
sort of arrangement can provide very good value. Often the additional
costs comes from costs of paying for independent advice. Some people
need it. Some people don't. Some people know a lot about investment.
Most people don't.
A while ago I constructed a calculator at:
http://www.invidion.co.uk/personal_pension_vs_sipp_calculato r.php
While not covering the charging effects Pension Fund Withdrawal per se
(although they could be factored in as other charges), it aims to
calculate the differences between the charges between a Personal
Pension (of which a Pension Fund Withdrawal vehicle is just a variant
of) and a SIPP.
I built it because I found it a bit frustrating that there seemed to be
no easy way of comparing whether a SIPP was actually better value than
a PP, or vice versa.
It can be seen that in many cases, the cost of running a SIPP like the
one in question can actually be much (often very much) lower than even
a stakeholder pension - assuming that you are not trading investments
on a daily basis and racking up lots of stockbroker commissions.
Rgds
Neil.
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| Re: Fees for a Pension Withdrawal Plan [message #383433 ] |
Mi, 26 April 2006 12:17 |
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Also, in regard to your first point, most drawdown administrators pay
out withdrawal income on a PAYE basis - therefore, they usually deduct
22% at source, unless you notify them that you are a non-taxpayer.
If you are a higher-rate taxpayer, you will have to settle the
difference on your next tax return.
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| Re: Fees for a Pension Withdrawal Plan [message #383434 ] |
Mi, 26 April 2006 12:39 |
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frebak [at] hotmail.com wrote:
>Do I have to pay someone to set up a Pension Withdrawal Plan?
Yes
>The calculation required to determine the income level of between 35%
>and 100% of the GAD (Government Actuaries Department) maximum is GSCE
>stuff.
< URL:http://www.fsa.gov.uk/consumer/pensions/4_changes/income _withdrawal.html>
< URL:http://www.fsa.gov.uk/consumer/pensions/4_changes/income _withdrawal.html>
<URL:http://www.sippdeal.co.uk/keyfeatures.aspx> explains the
background. Unsecured pension (USP) is what your refer to as a Pension
Withdrawal Plan (different providers have different names just to
confuse the issue). This continues until you're 75.
If you still don't want to purchase an annuity then you need to join a
religious grouping such as the Plymouth Brethren, which will enable
you to use an alternatively secured pension (ASP) until death.
< URL:http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2 006/04/19/cmnann19.xml&sSheet=/money/2006/04/19/ixperson .html>
>It seems very simple. Phone your Fund Provider when you wish to take
>money out and record yearly sum on your tax return.
It is. Rip off financial providers deliberately make things sound
complicated in an attempt to justify their fees. Percentage charges
are a good warning sign. The paperwork costs the same whether it's
£100,000 or £1,000,000.
>If I have to pay a fee, then how much would this be?
Ask them, but as a benchmark; £150.
Out of interest which provider is it ? and when you know, how much do
they charge for USP or transfer out (including any Market Value
Adjustment - MVA).
Here's the charges for one of the most flexible and best value for
money SIPPs on the market and the one that I happen to use. Depending
upon what your pension provider charges, it may be worth your while to
transfer it to this, although if your providers rips your off on a USP
setup fee then they're liable to rip you off on a transfer out as
well.
"Establishment & administration
Establishment £100 (£50 if member under age 18) Special Offer - Free
until 30/09/2006
Annual administration Free
Transfer in from another registered pension scheme £50
Single contribution £15 per single contribution
Regular contribution £15 to establish or vary a direct debit
Transfer out to another registered pension scheme* £50
Repayment of excess contribution £25
..
..
..
Benefits
Set up unsecured pension (USP), including paying any lump sum benefits
£150
Set up alternatively secured pension (ASP) at age 75 £150
Pension payment £10 per instalment
USP and ASP Reviews £75 per review
Payment of death benefits Time cost basis
Annuity purchase £75
Insufficient funds e.g. to pay benefits or charges £25"
<URL:http://www.sippdeal.co.uk/charges.aspx>
There's a good pensions forum here
<URL:http://boards.fool.co.uk/Messages.asp?bid=50065> and SIPP forum
here <URL:http://boards.fool.co.uk/Messages.asp?bid=51267>. To which
Andy Bell, the SIPPdeal managing director contributes
<URL:http://boards.fool.co.uk/Profile.asp?uid=15058072>.
hth
Daytona
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| Re: Fees for a Pension Withdrawal Plan [message #383437 ] |
Mi, 26 April 2006 12:49 |
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neil [at] invidion.co.uk wrote:
>A while ago I constructed a calculator at:
> http://www.invidion.co.uk/personal_pension_vs_sipp_calculato r.php
An excellent website Neil ! I must investigate further when I've some
more time.
Thanks
Daytona
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| Re: Fees for a Pension Withdrawal Plan [message #383438 ] |
Mi, 26 April 2006 12:52 |
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Even these sort of charges can have significant effect if the fund is
below is a minimum threshold.
One fact that was ommitted was the size of the pension funds in
question.
In many cases, it is dangerous to completely rule out buying an
annuity.
Neil.
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| Re: Fees for a Pension Withdrawal Plan [message #383446 ] |
Mi, 26 April 2006 13:13 |
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Daytona <me [at] privacy.net> wrote:
>< URL:http://www.fsa.gov.uk/consumer/pensions/4_changes/income _withdrawal.html>
>< URL:http://www.fsa.gov.uk/consumer/pensions/4_changes/income _withdrawal.html>
Whoops ! I meant to post the GAD link -
<URL:http://www.gad.gov.uk>
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| Re: Fees for a Pension Withdrawal Plan [message #383479 ] |
Mi, 26 April 2006 18:39 |
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On Wed, 26 Apr 2006 11:39:59 +0100, Daytona <me [at] privacy.net> wrote:
><URL:http://www.sippdeal.co.uk/keyfeatures.aspx> explains the
>background. Unsecured pension (USP) is what your refer to as a Pension
>Withdrawal Plan (different providers have different names just to
>confuse the issue). This continues until you're 75.
>
>If you still don't want to purchase an annuity then you need to join a
>religious grouping such as the Plymouth Brethren, which will enable
>you to use an alternatively secured pension (ASP) until death.
>
>< URL:http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2 006/04/19/cmnann19.xml&sSheet=/money/2006/04/19/ixperson .html>
>
I knew that was the case prior to the recent changes, but I had an IFA
round here yesterday selling SIPPs to me and my wife. He made no
mention whatsoever of this problem at age 75, he said our children
could be enrolled in the same scheme and the fund would be passed on
to them (as a pension fund) at the second death of myself/wife.
Presumably buying an annuity at 75 would yield a really good bonanza
pension given the short life expectancy at that age. Does it really
happen? What annual pension could a male, 75 , expect to get by
purchasing £200k's worth of annuity?
I fail to see why the Gov. is so hooked on getting people's private
pension moeys into annuities come hell or high water.one would almost
begin to suspect that their motives are not protecting the interests
of the pensioner, first and foremost. ;-)
DG
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| Re: Fees for a Pension Withdrawal Plan [message #383572 ] |
Do, 27 April 2006 12:51 |
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"Derek ^" <usenet [at] miniac.demon.co.uk> wrote in message
news:up4v42p34d6udch3nfkd0cgse8v0ldktvn [at] 4ax.com...
> I knew that was the case prior to the recent changes, but I had an IFA
> round here yesterday selling SIPPs to me and my wife. He made no
> mention whatsoever of this problem at age 75, he said our children
> could be enrolled in the same scheme and the fund would be passed on
> to them (as a pension fund) at the second death of myself/wife.
>
> Presumably buying an annuity at 75 would yield a really good bonanza
> pension given the short life expectancy at that age. Does it really
> happen? What annual pension could a male, 75 , expect to get by
> purchasing £200k's worth of annuity?
Not much over 10%. It will be based on the life expectancy of someone who has
*already* reached 75, this will be considerably higher than the average life
expectancy (as the average life expectancy includes people who died before 75).
I think for a man it's about 10 years, so with a level annuity and a gilt interest
rate of 4%, this only gets an annuity at 12.1%. Add in guarantees, RPI increases
and/or spouse's pension and it'll be even lower.
> I fail to see why the Gov. is so hooked on getting people's private
> pension moeys into annuities come hell or high water.one would almost
> begin to suspect that their motives are not protecting the interests
> of the pensioner, first and foremost. ;-)
Of course they aren't. They are protecting their own interests, they don't want the
pensioner to run out of money and so have to claim means tested benefits.
--
Andy
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| Re: Fees for a Pension Withdrawal Plan [message #383575 ] |
Do, 27 April 2006 13:16 |
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Derek ^ <usenet [at] miniac.demon.co.uk> wrote:
>On Wed, 26 Apr 2006 11:39:59 +0100, Daytona <me [at] privacy.net> wrote:
>
>
>><URL:http://www.sippdeal.co.uk/keyfeatures.aspx> explains the
>>background. Unsecured pension (USP) is what your refer to as a Pension
>>Withdrawal Plan (different providers have different names just to
>>confuse the issue). This continues until you're 75.
>>
>>If you still don't want to purchase an annuity then you need to join a
>>religious grouping such as the Plymouth Brethren, which will enable
>>you to use an alternatively secured pension (ASP) until death.
>>
>>< URL:http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2 006/04/19/cmnann19.xml&sSheet=/money/2006/04/19/ixperson .html>
>>
>
>I knew that was the case prior to the recent changes,
It still is AFAIK
>but I had an IFA
>round here yesterday selling SIPPs to me and my wife.
I wouldn't sign up to anything without double checking their
recommendations here or on TMF.
What charges does there recommended SIPP have ?
>He made no
>mention whatsoever of this problem at age 75,
Getting an annuity probably isn't regarded as a problem to many. Did
you say that you didn't want an annuity ?
>he said our children
>could be enrolled in the same scheme and the fund would be passed on
>to them (as a pension fund) at the second death of myself/wife.
I'm aware of these family schemes but don't know the details.
>Presumably buying an annuity at 75 would yield a really good bonanza
>pension given the short life expectancy at that age. Does it really
>happen?
9 years 4 months according to the latest actuarial tables -
<URL:http://www.invidion.co.uk/countdown_to_death.php>
>What annual pension could a male, 75 , expect to get by
>purchasing £200k's worth of annuity?
What specification of annuity ?
>I fail to see why the Gov. is so hooked on getting people's private
>pension moeys into annuities come hell or high water.one would almost
>begin to suspect that their motives are not protecting the interests
>of the pensioner, first and foremost. ;-)
They consider the needs of pensioners with the state pension, S2P and
the minimum income guarantee. It's just plain common sense for them to
lay off a proportion of the risk on to commercial companies. People
would only winge and vote out any party that raised taxes sufficiently
to take on the role that pension/annuity companies have now.
Governments are bad at business because the talents an MP requires
(looking busy whilst doing nothing and arguing) are not the talents
required to run businesses efficiently. Therefore it makes sense to
restrict them to providing basic minimum services rather than allowing
them to attempt and fail to run more grandiose schemes (of which there
are numerous examples).
Daytona
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| Re: Fees for a Pension Withdrawal Plan [message #383591 ] |
Do, 27 April 2006 16:14 |
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Hi,
I just wan't to come back and clarify a point regarding the ASI
(Alternatively Secured Income).
I believed before April that anyone could now defer buying an annuity
indefinitely. However, the small print that was creeping out started to
confuse me, and I checked it out further.
It seems that although the motivation for ASI is to allow certain
religious believers to avoid annuity purchase, it is effectively open
to anybody who wants it. The flip side is that if you go down this
route, the funds used for ASI will be included as part of the members
estate and probably subject to IHT - but the remainder can still be
passed down, which it would not with an annuity.
However, if anyone believes that I am wrong here, please let me know /
point me to the evidence ....
Rgds
Neil.
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| Re: Fees for a Pension Withdrawal Plan [message #383620 ] |
Do, 27 April 2006 21:57 |
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On Thu, 27 Apr 2006 11:51:10 +0100, "Andy Pandy"
<spam8times [at] wonderful.spam.invalid> wrote:
>
>"Derek ^" <usenet [at] miniac.demon.co.uk> wrote in message
>news:up4v42p34d6udch3nfkd0cgse8v0ldktvn [at] 4ax.com...
>>
>> Presumably buying an annuity at 75 would yield a really good bonanza
>> pension given the short life expectancy at that age. Does it really
>> happen? What annual pension could a male, 75 , expect to get by
>> purchasing £200k's worth of annuity?
>
>Not much over 10%. It will be based on the life expectancy of someone who has
>*already* reached 75, this will be considerably higher than the average life
>expectancy (as the average life expectancy includes people who died before 75).
See
http://www.annuity-bureau.co.uk/Annuity+Rates/Current+annuit y+rates/
--
Terry Harper
URL: http://www.btinternet.com/~terry.harper/
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| Re: Fees for a Pension Withdrawal Plan [message #383656 ] |
Fr, 28 April 2006 14:09 |
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> Derek ^ wrote:
> >Presumably buying an annuity at 75 would yield
> >a really good bonanza pension given the short life
> >expectancy at that age. Does it really happen?
>
"Daytona" wrote
> 9 years 4 months according to the latest actuarial tables -
> <URL:http://www.invidion.co.uk/countdown_to_death.php>
I notice it says: "...the most recently available
actuarial tables for the United Kingdom"...
I wonder if Neil would care to indicate exactly
which table was used for the calculator - does
it use annuitant mortality, or life office pensioner
mortality (if so, 'Normal' or 'Combined'?), or
the mortality of retirement annuitants (if so,
'Vested' or 'Combined'?), or of personal
pensioners (again, 'Vested' or 'Combined'?) ... ?
I assume it uses one of the '00' (CMI) tables?
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| Re: Fees for a Pension Withdrawal Plan [message #383664 ] |
Fr, 28 April 2006 18:34 |
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> Derek ^ wrote:
> >Presumably buying an annuity at 75 would yield
> >a really good bonanza pension given the short life
> >expectancy at that age. Does it really happen?
>
"Daytona" wrote
> 9 years 4 months according to the latest actuarial tables -
> <URL:http://www.invidion.co.uk/countdown_to_death.php>
Well I've just done some quick calculations
using the latest actuarial tables, and the life
expectancy for a 75 year old averages about
11 yrs 3 mths. None of the recent tables
give a life expectancy as low as 9yrs 4mths...
[Eg Male immediate annuitants 11.27 yrs,
male personal pensioners as high as 12.54 yrs!]
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| Re: Fees for a Pension Withdrawal Plan [message #383706 ] |
Sa, 29 April 2006 10:45 |
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"Tim" <me [at] home.uk> wrote in message news:o5ednU_vbdmI2c_ZRVny2Q [at] bt.com...
>> Derek ^ wrote:
>> >Presumably buying an annuity at 75 would yield
>> >a really good bonanza pension given the short life
>> >expectancy at that age. Does it really happen?
>>
> "Daytona" wrote
>> 9 years 4 months according to the latest actuarial tables -
>> <URL:http://www.invidion.co.uk/countdown_to_death.php>
>
> Well I've just done some quick calculations
> using the latest actuarial tables, and the life
> expectancy for a 75 year old averages about
> 11 yrs 3 mths. None of the recent tables
> give a life expectancy as low as 9yrs 4mths...
>
> [Eg Male immediate annuitants 11.27 yrs,
> male personal pensioners as high as 12.54 yrs!]
>
Are your tables also on the net? They sound preferable to Daytona's :-)
I like the disclaimer at the bottom of the page though;
"The figures projected by the calculator are only for guidance purposes, and
are by no means guaranteed."
I wonder who they reckon would sue them if they were wrong?
--
Tumbleweed
email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
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| Re: Fees for a Pension Withdrawal Plan [message #383710 ] |
Sa, 29 April 2006 11:11 |
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> >> Derek ^ wrote:
> >> >Presumably buying an annuity at 75 would yield
> >> >a really good bonanza pension given the short life
> >> >expectancy at that age. Does it really happen?
> >>
> > "Daytona" wrote
> >> 9 years 4 months according to the latest actuarial tables -
> >> <URL:http://www.invidion.co.uk/countdown_to_death.php>
> >
> "Tim" wrote
> > Well I've just done some quick calculations
> > using the latest actuarial tables, and the life
> > expectancy for a 75 year old averages about
> > 11 yrs 3 mths. None of the recent tables
> > give a life expectancy as low as 9yrs 4mths...
> >
> > [Eg Male immediate annuitants 11.27 yrs,
> > male personal pensioners as high as 12.54 yrs!]
> >
"Tumbleweed" wrote
> Are your tables also on the net?
They are for actuaries ;-), but they are so
"super-new" that they haven't yet been officially
"published" (should be in next few months).
"Tumbleweed" wrote
> They sound preferable to Daytona's :-)
:-) ... and I've just realised that I didn't allow for any
projection of improving mortality into the future, so
more realistic life expectancies will be even longer! :-))
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