Prudential not allowing pension drawdown under £25k??

[mccrackenj]

Dear PH finance bods:

My sister has a small pension with Prudential, and has just passed 60. Total value of her pot is under £25k. She wants to take the 25% tax free lump sum now and other lump sums over the next couple of years or so.

Although there is absolutely no mention of it anywhere in any of the literature she has received, she has been told over the phone by Prudential that the only options open to her are withdrawal of the entire amount now, which means paying tax at 20% on the 75% taxable portion immediately, or converting the entire lot into an annuity now, which is no good to her.

Is this correct? Can Prudential impose this £25,000 threshold?

Thanks

J McC

[PurpleMoonlight]

Yes it can.

Maybe look to transfer to a cheap SIPP instead, eg Hargreaves Lansdown.

[CaptainSlow]

PurpleMoonlight said:

Yes it can.

Maybe look to transfer to a cheap SIPP instead, eg Hargreaves Lansdown.

Which is an option 3...did the Pru not mention this?

[mccrackenj]

Thanks for replies PM & CS.

Moving to HL a good shout, assuming they don't have a lower limit too, I'll have to ask them.

I don't know exactly what conversations she had, only about the £25k threshold. To say my sister is not financially sophisticated would be an understatement.

I'd prefer her to move, take 25% tax free and invest the rest, but her financial situation/age/health is such that she may benefit more from simply withdrawing the lot, taking the tax hit, and spending it over the next couple of years. That's certainly what she wants to do.

I'll try to persuade her of the merits of moving to HL, but I expect resistance - she doesn't want more letters from financial institutions about things she doesn't understand! The joys of being the younger brother who "understands this stuff". (I wish!)

At the end of the day though, it's her money - and I may just have to let her do the "wrong" thing.