Royal London Pension Draw Down Difficulty

[tozerman]

I have a Royal London (formerly Cis) Pension which matures in just over 2 years (when I'm 65)
There is a reasonable amount of money in there but not huge. I want to take my 25% TFLS.

According to RL I must seek financial advice before I do this. I have spoken to Pension Wise, and I have also seen an IFA.

RL have a form which must be filled out in order to facilitate my TFLS, and signed by an appropriate IFA to say they have given me correct and independent advice.

The kicker here is that he wants 3% (£3K+) of the total pension pot as a fee for signing this form for RL. He will then manage the remaining 75% for me and invest it appropriately and charge me a yearly fee which is fine.

I have tried shopping around and most IFA's are not interested in even speaking to me..

Am I being unreasonable to think that £3K is a lot of money to sign a form ?

[alscar]

I don’t think you are the one being unreasonable especially as he will potentially get the benefit of your £75k pot charges going forward.
To put it another way asking you to take £3k from your tax free sum of £25k is extremely unreasonable.
I would be asking him to sign the form for nothing on the basis that you will then move your pot.

[Ziplobb]

If it 'matures' because you reach the age at which it its deemed to pay out why is advice required ?
If you are taking it early etc or transferring it I understand but advice just to jump through a hoop to get what you planned for originally surely cannot be right ?
Perhaps someone currently working in financial services can explain ?

[HBelder]

It may be worth speaking to RL. I think that they are legally obliged to ask if you’ve taken advice, but there is no legal obligation for them to ask you for a signature from an IFA - at least based on my experience for another pension provider.

In the meantime, this might help.

https://www.unbiased.co.uk/

[clubsport]

If they have stipulated that financial advice is required, this will have to be backed up by a signature from a current FCA approved advisor,
This is not just ensure you have taken advice, but to cover their own obligations. There is a strong posiibility they may ask you to go through a moneyhelper guidance session if they have any concerns over how the pestion will be managed in the future. Again, this covers the transferring pension company for any future issued that may arise?

£3k is about the standard "onboarding" fee for an IFA, ongoing charges are another consideration, which could well be negotiable?

From experience these unbiased and pension adviser, directories are mostly a waste of time, it only takes a few telephone conversations to see the way "the game" is played.You can see why many people manage their Sipps using low fee online platforms?

[Armitage.Shanks]

My wife took her (small) contracted out of Serps pension at 60. That was with (CIS then) Royal London. The pension pack mentioned taking IFA advice but there was no mention of having to prove it. We didn't and she arranged the pension by speaking with Royal London direct given there was no actual form to fill in and they only got their act into gear after we rang them. She took the lot and not 25%.

[craig1912]

When you say “matures” what do you mean?
What sort of pension is it? Defined contribution or defined benefit? Is there any guaranteed elements?
If it’s a straightforward DC scheme then you should not need financial advice or possibly use RLs guidance service.
Part of the issue is RL generally only deal with financial advisors not direct business.
Edit. They seem to recommend taking advice but can go through some risk questions if you don’t.

Edited by craig1912 on Wednesday 3rd July 18:17

[moonigan]

You can tell Royal London that you are.running the pension without the use of a IFA. I did the same this year with mine after I received some duff advice from the IFA that had been managing it.

Give them a bell and they will sort it. I’ve spoken to mailto: [e-mail] 0345 646 1693 who has always been really helpful.

[DT1975]

tozerman said:

He will then manage the remaining 75% for me and invest it appropriately and charge me a yearly fee which is fine.

You can manage it yourself for free even with Royal London. I manage a pension with them (Royal London 5 ) and do nothing other than change the drawdown amount (5 min call). If you let an IFA manage it you'll be facing charges of £700/ £800 a year.

As above is it a DC pension and if you want out just transfer it to a SIPP like Vanguard and take full control, take your 25% tax free now (perhaps stick it in a S&S ISA ), choose a Vanguard retirement fund for the rest...ongoing costs are much less than an IFA at 0.24% or something.

We're doing this now with my wifes Barclays DC pension - Vanguard SIPP. Vanguard will do everything.

Edited by DT1975 on Wednesday 3rd July 21:17

[Armitage.Shanks]

craig1912 said:

Edit. They seem to recommend taking advice but can go through some risk questions if you don’t.

Correct and reminded me they went through the risk questions on the phone ebfore actioning the request.

[phpe]

Just contact RL directly, as noted here

[tozerman]

craig1912 said:

When you say “matures” what do you mean?
What sort of pension is it? Defined contribution or defined benefit? Is there any guaranteed elements?
If it’s a straightforward DC scheme then you should not need financial advice or possibly use RLs guidance service.
Part of the issue is RL generally only deal with financial advisors not direct business.
Edit. They seem to recommend taking advice but can go through some risk questions if you don’t.

Edited by craig1912 on Wednesday 3rd July 18:17

Thank you for your post.
When I started the pension about 40 years ago I set it up to "finish/mature" when I'm 65.

The pension is split into 2 ! I opted out of serps many years ago (cis man told me to do this). After several more years he advised me to opt back in again.
It also contains a GAR "guaranteed annuity rate"

I think I need to call them again and have a conversation

[Mr Pointy]

tozerman said:

It also contains a GAR "guaranteed annuity rate"

I think I need to call them again and have a conversation

Be very careful that you don't lose any valuable benefits by taking a lump sum early.

[tozerman]

DT1975 said:

As above is it a DC pension and if you want out just transfer it to a SIPP like Vanguard and take full control, take your 25% tax free now (perhaps stick it in a S&S ISA )

Edited by DT1975 on Wednesday 3rd July 21:17

It is not a DC scheme (not a company pension) It is a SIPP pension that only myself has ever paid into..

Interesting you mention Vanguard ! I have been looking at Pension Bee.. are they the same king of thing ?

[craig1912]

tozerman said:

Thank you for your post.
When I started the pension about 40 years ago I set it up to "finish/mature" when I'm 65.

The pension is split into 2 ! I opted out of serps many years ago (cis man told me to do this). After several more years he advised me to opt back in again.
It also contains a GAR "guaranteed annuity rate"

I think I need to call them again and have a conversation

It sounds as though there is a “protected rights” element and with it also having a guaranteed annuity rate maybe why RL are insisting on you taking advice. A guaranteed annuity rate can be very valuable and giving it up for cash may not be advisable.

[tozerman]

Mr Pointy said:

Be very careful that you don't lose any valuable benefits by taking a lump sum early.

Agree 100%. My understanding is that the GAR simply means a higher Annuity sum than if I didn't have a GAR.

[craig1912]

tozerman said:

Interesting you mention Vanguard ! I have been looking at Pension Bee.. are they the same king of thing ?

Similar yes as is A J Bell, but the guaranteed annuity rate may mean a transfer is diffficult without you proving you have taken advice.

….ps the RL CIS pension isn’t a SIPP it’s a individual Personal Pension- similiar but not the same!

Edited by craig1912 on Thursday 4th July 12:18

[Mazinbrum]

tozerman said:

Mr Pointy said:

Be very careful that you don't lose any valuable benefits by taking a lump sum early.

Agree 100%. My understanding is that the GAR simply means a higher Annuity sum than if I didn't have a GAR.

My wife is in the process of moving a FSAVC with Royal London, she is having to get it signed off by a financial advisor we know because it has a GAR, right pain in the arse and unnecessary expense!

[Simpo Two]

tozerman said:

The kicker here is that he wants 3% (£3K+) of the total pension pot as a fee for signing this form for RL. He will then manage the remaining 75% for me and invest it appropriately and charge me a yearly fee which is fine.

Much of the £3K is to cover his butt in case you later decide to take him to the FOS for bad advice.

As for 'managing' the remaining 75% and charging you a yearly fee on top, that's a separate matter IMHO. I really must remember to charge all my old customers an annual fee back-dated to 1991.