Drawdown Pensions - What info/Control?
Discussion
I'm considering putting a soon-to-mature pension pot c20k into a drawdown pension (I already have another - turned into an annuity). My reason for looking at drawdown is to 'not put my eggs in one basket' and hope to shuffle funds around to try to increase pot size and therefore return in the longer term, and at least prevent inflation eating it away. I'm still working, so may not have to draw much (if any) out for a few years. Can anyone here (maybe someone who already has a drawdown) say what facility (possibly online) comes with a drawdown?
I'm thinking...... Do I get an 'online portal' which shows my total fund holding, funds I can switch the money to (daily?) and what each individual investment is worth on the day - that sort of facility? I'm getting a feeling (with these products and others) that it's like buying a car without even seeing a photo of it - let alone having a test drive!
I'm thinking...... Do I get an 'online portal' which shows my total fund holding, funds I can switch the money to (daily?) and what each individual investment is worth on the day - that sort of facility? I'm getting a feeling (with these products and others) that it's like buying a car without even seeing a photo of it - let alone having a test drive!
There is quite a bit of confusion within your post, which is quite natural for a confusing subject matter. I'll try and help.
Drawdown is simply and alternative to an annuity purchase.
An annuity gives you an income for life in return for you giving up 100% of the money in your pension.
Drawdown retains all the money in your pension whilst allowing you draw down an income from it in retirement. However, you need to draw down carefully so as not to eat into your capital.
There is no particular facility that comes with drawdown that is not available whilst you are growing your pension. Most providers offer online access to your fund holdings, breaking this down into individual investments and allowing you to switch funds whenever you like (but daily is not a good idea!). This is the same regardless of whether you are growing and adding to your investment(s) or drawing down an income from them.
Drawdown used to only be recommended for people with larger funds due to the costs. However, these days there are plenty of 'free' SIPPs and Pensions from which you can draw down from.
So to put it simply, all of the functionality you are seeking is available from any modern pension/SIPP regardless as to whether you are paying money into it or drawing money out of it (which is basically the only difference).
I hope that helps remove the industry jargon.
Edited to add...
Reading this back it it jumps to my mind that if you do not have such online functionality currently, then you may be in an old style pension scheme, perhaps a "With Profits" one.
If so you should contact your provider to make sure you don't have any valuable guarantees that you may lose if you moved to a drawdown arrangement.
You could, for example, have valuable guaranteed annuity rates that can't be bought today and this could change your decision making.
If you haven't though, ask your provider to switch you to a modern scheme that enables what you are looking for or consider switching to a different provider that does offer this.
Cheers
Drawdown is simply and alternative to an annuity purchase.
An annuity gives you an income for life in return for you giving up 100% of the money in your pension.
Drawdown retains all the money in your pension whilst allowing you draw down an income from it in retirement. However, you need to draw down carefully so as not to eat into your capital.
There is no particular facility that comes with drawdown that is not available whilst you are growing your pension. Most providers offer online access to your fund holdings, breaking this down into individual investments and allowing you to switch funds whenever you like (but daily is not a good idea!). This is the same regardless of whether you are growing and adding to your investment(s) or drawing down an income from them.
Drawdown used to only be recommended for people with larger funds due to the costs. However, these days there are plenty of 'free' SIPPs and Pensions from which you can draw down from.
So to put it simply, all of the functionality you are seeking is available from any modern pension/SIPP regardless as to whether you are paying money into it or drawing money out of it (which is basically the only difference).
I hope that helps remove the industry jargon.
Edited to add...
Reading this back it it jumps to my mind that if you do not have such online functionality currently, then you may be in an old style pension scheme, perhaps a "With Profits" one.
If so you should contact your provider to make sure you don't have any valuable guarantees that you may lose if you moved to a drawdown arrangement.
You could, for example, have valuable guaranteed annuity rates that can't be bought today and this could change your decision making.
If you haven't though, ask your provider to switch you to a modern scheme that enables what you are looking for or consider switching to a different provider that does offer this.
Cheers
Edited by JulianPH on Saturday 19th January 14:06
Thanks for your insight. I set up this pension 30 years ago, and it was sold on to a large provided in Norfolk (lets call them LPinN)several years ago. My other one, which I placed with another provider (not wanting my 'eggs in one basket') also went to LPinN - So my control over my pensions was already compromised!
It is indeed a with profits, and from previous experience getting info out of the LPinN isn't particularly easy. When my other pension matured I bought an annuity with another provider, and ended up in a battle with LPinN which took over 6 months to be resolved and led me to question their integrity. Not a good experience, and one which makes me think I'd prefer to move it somewhere else, whatever product I end up going for.
It is indeed a with profits, and from previous experience getting info out of the LPinN isn't particularly easy. When my other pension matured I bought an annuity with another provider, and ended up in a battle with LPinN which took over 6 months to be resolved and led me to question their integrity. Not a good experience, and one which makes me think I'd prefer to move it somewhere else, whatever product I end up going for.
I thought that might be the case. You should be able to call them and ask (equally, it should be in your annual pension statements).
Whilst they sound like a shoddy bunch they do have to give you this information. I wouldn't do anything until I knew either way.
You might want to raise this with Nik on the Intelligent Money thread above. He may have had experience dealing with this pension company that may help.
Cheers
Julian
Whilst they sound like a shoddy bunch they do have to give you this information. I wouldn't do anything until I knew either way.
You might want to raise this with Nik on the Intelligent Money thread above. He may have had experience dealing with this pension company that may help.
Cheers
Julian
Thanks for your help. The policy I have is indeed a with profits, but has no guaranteed annuity rate. Although it says in the contract they can apply a Market Value Reduction at any time, it also says they won't do that at maturity. I have also spoken with them and they have assured me they won't apply a MVR or take any charges costs (or any other sums) at maturity. The transfer value is the same if I take it to another provider or 'leave' it with them - If I 'leave' it with them I have to start a new policy as it can't be transferred from the old. They actually look very competitive for a drawdown. Interestingly my other small policy which matures in 5 years DOES have a guaranteed annuity rate, and I'm grateful you alerted me to that.
No problem and happy to have been able to help.
Drawdown shouldn't cost you a penny in charges if your money is invested with the pension provider itself. Please get back to me with further information if you would like.
Congratulations on the Guaranteed Annuity Rate (GAR)! They are not common place these days so you are very lucky in having this. It is highly unlikely that you would be able to get a better return with the same guarantee, so keep hold of this unless you receive regulated advice to to otherwise (which should be seriously questioned in most circumstances).
Cheers!
Drawdown shouldn't cost you a penny in charges if your money is invested with the pension provider itself. Please get back to me with further information if you would like.
Congratulations on the Guaranteed Annuity Rate (GAR)! They are not common place these days so you are very lucky in having this. It is highly unlikely that you would be able to get a better return with the same guarantee, so keep hold of this unless you receive regulated advice to to otherwise (which should be seriously questioned in most circumstances).
Cheers!
JulianPH said:
No problem and happy to have been able to help.
Drawdown shouldn't cost you a penny in charges if your money is invested with the pension provider itself. Please get back to me with further information if you would like.
Congratulations on the Guaranteed Annuity Rate (GAR)! They are not common place these days so you are very lucky in having this. It is highly unlikely that you would be able to get a better return with the same guarantee, so keep hold of this unless you receive regulated advice to to otherwise (which should be seriously questioned in most circumstances).
Cheers!
The GAR is shown as 5% (or in fact £50 in every £1000 Drawdown shouldn't cost you a penny in charges if your money is invested with the pension provider itself. Please get back to me with further information if you would like.
Congratulations on the Guaranteed Annuity Rate (GAR)! They are not common place these days so you are very lucky in having this. It is highly unlikely that you would be able to get a better return with the same guarantee, so keep hold of this unless you receive regulated advice to to otherwise (which should be seriously questioned in most circumstances).
Cheers!
) in the original contract. I did contact the current provider of this fund, who said they understand it's 5% for contributions up to 1997, and 3.75 for contributions made after. They are sending me 'details' of this. I'll see what I get, as my contract with the original provider says 5%, and no other rates! At least I've got 5 years to resolve it. Gassing Station | Finance | Top of Page | What's New | My Stuff