Can I cash in my pension?

SummerDreams · 31 January 2014 at 6:10PM

I wondered if somebody could help me. Firstly, not sure how to begin a "New post" or a "New thread" - so just writing within a previous thread. Any advise much appreciated.

Pension Hell! My husband began invested in a Pension that over a decade and a half went from 9k to now 19k. We had a death in the family and had to bear funeral cost, also moving to new house at same time, so suddenly an unforeseen huge expense. Phoned Zurich and to our shock they tell us that we can't cash in the money, while all along in when we phoned them each year they said we could cash in the money anytime we wanted. We didn't have reason to as in reality my husband wanted this private pension but because of our difficulties thought to cash in some of this amount.

We have tried everything and Zurich just won't budge. They tell us that it is because the pension has gone above the 18k threshold and that now the only way they can give us the money is 25% in cash and the balance transferred on to another annuity Pension Provider. We told that it was their obligation to inform us about this change of law and to give my husband the choice to have decided whether he wanted to cash in his 18K before it went up to the 19k, they have failed to give us this choice and failed to inform us about any changes. After our complaint Zurich inform us that they will not give us any compensation for this and that they are not responsible to inform us about this, as the Government changed the rules in 2006 and that it was broadly advertised!

We are really desperate as we need the money. We worry that if my husband takes his pension early (he is 55 years old at the moment and working part time) that we maybe penalised for this.

Zurich has given us the address for the Ombudsman and the other advice is to hire a Financial Adviser and decide the best way forward. Can they do this? Isn't it their responsibility to tell us about the changes in the law? Shouldn't they have phoned us to say the amount has increased and that it is about to go over the £18k threshold?

Please help us we are really worries and desperate. We also needed some money for a private operation as there is a huge waiting list at the NHS.

Thank you for your time in reading this post.

dunstonh · 31 January 2014 at 7:19PM

Phoned Zurich and to our shock they tell us that we can't cash in the money

The clue is in the name of the product. Its called pension. Not savings account.

while all along in when we phoned them each year they said we could cash in the money anytime we wanted.

You have never been able to cash in a pension. Perhaps there was a misunderstanding on what was meant. They may have thought he meant commencing the retirement benefits.

We have tried everything and Zurich just won't budge.

They can't. It would be unlawful for them to do so.

We told that it was their obligation to inform us about this change of law and to give my husband the choice to have decided whether he wanted to cash in his 18K before it went up to the 19k, they have failed to give us this choice and failed to inform us about any changes.

They have no legal obligation to do that. In fact, when he took the pension out there was only a tiny triviality option and he would have passed that point a very long time ago.

After our complaint Zurich inform us that they will not give us any compensation for this and that they are not responsible to inform us about this, as the Government changed the rules in 2006 and that it was broadly advertised!

Did you really complain about them not breaking the law to suit you? Anyway, they are right and you are not due any compensation and there has been no wrong doing.

Zurich has given us the address for the Ombudsman and the other advice is to hire a Financial Adviser and decide the best way forward. Can they do this?

They are legally obliged to make you aware of the FOS. However, the FOS cannot break the law either. So, it would be a futile thing to do. Indeed, I would expect Zurich to try and get it classed as a vexatious complaint if you did it.

Isn't it their responsibility to tell us about the changes in the law?

No. And as said, its pointless as the change had no impact on your husband from when he took it out as all the Government did was to increase the limits. Not restrict it.

Shouldn't they have phoned us to say the amount has increased and that it is about to go over the £18k threshold?

That is between you and your financial adviser. Not a product provider. Were you paying a financial adviser to do that sort of tracking and advice?

Please help us we are really worries and desperate. We also needed some money for a private operation as there is a huge waiting list at the NHS.

You are going to need to look elsewhere I'm afraid. Zurich are unable to break the law to help you. They have done nothing wrong. At the point of sale, the triviality option was something like just £260pa income. That would equate to around £4000 as a fund value. The 2006 change increased it to £15000 and then over the following years it increased to £18000. So at no point has the law restricted what was possible before.

Zurich have no knowledge of your financial situation or which tax laws may or may not apply to you and are not authorised or regulated to provide financial advice. So, they cannot give you a service that they are not able to provide.

I suggest you pop over to the debt free wannabee section of this board. They have some very good people in there who can help those in financial difficulties.

Drp8713 · 31 January 2014 at 7:50PM

SummerDreams wrote: »

I wondered if somebody could help me. Firstly, not sure how to begin a "New post" or a "New thread" - so just writing within a previous thread. Any advise much appreciated.

Pension Hell! My husband began invested in a Pension that over a decade and a half went from 9k to now 19k. We had a death in the family and had to bear funeral cost, also moving to new house at same time, so suddenly an unforeseen huge expense. Phoned Zurich and to our shock they tell us that we can't cash in the money, while all along in when we phoned them each year they said we could cash in the money anytime we wanted. We didn't have reason to as in reality my husband wanted this private pension but because of our difficulties thought to cash in some of this amount.

We have tried everything and Zurich just won't budge. They tell us that it is because the pension has gone above the 18k threshold and that now the only way they can give us the money is 25% in cash and the balance transferred on to another annuity Pension Provider. We told that it was their obligation to inform us about this change of law and to give my husband the choice to have decided whether he wanted to cash in his 18K before it went up to the 19k, they have failed to give us this choice and failed to inform us about any changes. After our complaint Zurich inform us that they will not give us any compensation for this and that they are not responsible to inform us about this, as the Government changed the rules in 2006 and that it was broadly advertised!

We are really desperate as we need the money. We worry that if my husband takes his pension early (he is 55 years old at the moment and working part time) that we maybe penalised for this.

Zurich has given us the address for the Ombudsman and the other advice is to hire a Financial Adviser and decide the best way forward. Can they do this? Isn't it their responsibility to tell us about the changes in the law? Shouldn't they have phoned us to say the amount has increased and that it is about to go over the £18k threshold?

Please help us we are really worries and desperate. We also needed some money for a private operation as there is a huge waiting list at the NHS.

Thank you for your time in reading this post.

I'm sorry but you don't seem to understand the purpose of trivial commutation. It's not a selling point of a pension that you are supposed to be kept up to date on.

It's a rule put in place by HMRC to make small pensions easier to administer and to stop people having pointless tiny pensions paid to them each month. It's not so you can use a pension as a savings account.

The fact you complained because you don't understand and feel you were wronged is a bit silly. The Ombudsman will tell you to stop wasting his time. Your husband isn't even 60 which is one of the conditions.

atush · 1 February 2014 at 9:27AM

as your husband is 55, then yes he can commence this private pension, and take 25% of the 19K as a tax free sum. and start an income from the remainder.

As for the wisdom of moving home when you need an operation so badly you are unable to wait for the NHS, that is a matter of your own making. You were probably unwise to pay for a funeral you could not afford either. The estate could have paid or a funeral grant from the govt if the individual died penniless.

So make sure your GP gets you to see a consultant so you can go on the NHS waiting list if the 25% TFLS is insufficient to pay.

rizla_king · 12 February 2014 at 2:05PM

Post 486 :spam:

stephen0002002 · 19 February 2014 at 2:03PM

If this has been asked before apologies ~ please redirect me.

Aged 57 with 2 Private pensions and a works pension on the go. Private pension been paying 20 years. Initial private pention (3yrs) deffered as part of the miss-selling situation do not pay into this now - probably left hanging there. (They made up what I would have recieved in the works scheme and put me back into that works scheme).

Second private pension still going - paying for 15yrs approx (£100 month).

Was considering taking the private pension (shortly) rather than wait until (say) until I'm 61-62 to retire. Obv this would reduce the private pension payments I'm paid but wondering if its worth doing anyway ? with a lump sum I might even be able to pay off remaining (or some of) mortgage (4 years to go). Just wondering if taking at least 1 of the private pension(s) early is a no-brainer to consider - or stay as I am and wait another 4-5 years odd.

Any thoughts welcome, thank you for your time.

atush · 19 February 2014 at 3:08PM

Do you need the income now? What is your mtg rate? When did you intend to retire? 61 or 62 (62 and you have a whole year to save those mtg payments?

You would be taxed on the pension income, so best to not take any until you actually need it?

And if your mtg rate is low like mine is, you'd be better off keeping the pension going until you need it as if it is sensibly invested it vould do better than your mtg rate.

And yes, this is the wrong place for your Q, posting your own thread on the pension forum might get you more replies.

fitzy2 · 3 July 2014 at 9:21AM

Hi All,

This is my first post to this forum, so my apologies if this question has already been asked and/or answered.
Following on from the budget changes regarding trivial commutation, I would appreciate some advice. I have an old personal pension that I have not contributed to for a number of years and the value is approx. £18,900 and I am 56 years old. My partner also has a similar pension fund with an approx. value of £23K and she is aged 57. Ideally, what we would like to do is to the 25% tax free lump sum now, but we do not want to purchase an annuity. Essentially, we would use the triviality rules that come into force next year to access the remaining balance of these funds. I should say that our main pension provision is coming from another pension provision but this is a defined benefit scheme (local authority final salary) which I believe has different rules to the defined contribution pensions. Is this possible and if so could someone be good enough to point me in the right direction? Many thanks in advance for your assistance.

jem16 · 3 July 2014 at 9:26AM

fitzy2 wrote: »

Hi All,

This is my first post to this forum, so my apologies if this question has already been asked and/or answered.
Following on from the budget changes regarding trivial commutation, I would appreciate some advice. I have an old personal pension that I have not contributed to for a number of years and the value is approx. £18,900 and I am 56 years old. My partner also has a similar pension fund with an approx. value of £23K and she is aged 57. Ideally, what we would like to do is to the 25% tax free lump sum now, but we do not want to purchase an annuity. Essentially, we would use the triviality rules that come into force next year to access the remaining balance of these funds. I should say that our main pension provision is coming from another pension provision but this is a defined benefit scheme (local authority final salary) which I believe has different rules to the defined contribution pensions. Is this possible and if so could someone be good enough to point me in the right direction? Many thanks in advance for your assistance.

It's not new triviality rules that are coming in next April but simply new rules allowing you to take your pension as a lump sum.

You can do what you want to do now by transferring to a provider which offers capped drawdown.

dunstonh · 3 July 2014 at 9:35AM

Following on from the budget changes regarding trivial commutation

Triviality rules apply to over 60s. You are both under 60, so the increase in the trivial amount does not apply to you as you fail to qualify based on age.

Ideally, what we would like to do is to the 25% tax free lump sum now, but we do not want to purchase an annuity.

The transaction is called capped drawdown. You would need to transfer to a pension that offers capped drawdown.

Be aware that taking the 75% next year will mean the full remaining pension fund value will be added to your income in that year and you will pay the highest rate applicable.

Can I cash in my pension?

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