Opinions needed please - Lifetime Annuity Pension Issue

Migre

Hi,

I'm a first time poster here but have a query I'd really appreciate some feedback on. I've had a look through much of the forum content but can't find a specific thread that really addresses this situation.

My Dad has a small lifetime annuity pension from a previous job he left some 20 years or so ago, with a total value in the region of £24,000 - £26,000. He turned 60 in December 2010 and started drawing a modest amount per month, in the belief that a lump sum (in the region of £8k) would also be due. After much correspondence with his pension company since then (I won't name them here in case it gets me in trouble), he became frustrated in a phone call to them in January and (rather hastily and in the heat of the moment) threatened to move his funds elsewhere. As a result he's recently received a letter from the company stating:

'We would advise that we are unable to reduce your pension or commute payments into a one off lump sum payment to you, as requested, neither can funds in this plan be transferred to another payment provider as the pension you hold is a lifetime annuity paud until your death, upon which benefits will revert to your spouse.'

Is what they're saying correct, especially relating to the not allowing a transfer to another payment provider element? We have very limited pension knowledge and, whilst utilising an IFA seems to be the prudent approach here, I'd appreciate hearing the thoughts of the learned MSE forum regulars prior to pursuing this option.

Many thanks for taking the time to read this.

Kind regards.

Mick

dunstonh

Is what they're saying correct,

Yes.

especially relating to the not allowing a transfer to another payment provider element?

Yes

We have very limited pension knowledge and, whilst utilising an IFA seems to be the prudent approach here, I'd appreciate hearing the thoughts of the learned MSE forum regulars prior to pursuing this option.

An IFA WOULD have been the prudent approach. Problem is that you need to use an IFA before you take the pension. Not after it is has been taken.

Unfortunately, what has happened is that your father has already bought the lifetime annuity. These are mostly cast in stone once taken (a few exceptions but rare). Once bought and outside of the 14 day cancellation rights period it is too late.

jamesd

While there's nothing to be done in this case, do note that lifetime annuity contracts aren't anything like modern pension products. Those can be freely moved around (except the planned NEST scheme, which still has the archaic ban on transfers in or out).

dunstonh

do note that lifetime annuity contracts aren't anything like modern pension products.

A lifetime annuity is the name of the annuity bought with the pension fund.

Migre

Thanks for the info dunstonh - much appreciated. Thanks to jamesd too - also much appreciated.

Kind regards,

Mick

jamesd

Dunstonh, thanks, I was thinking of a different product then.

dunstonh

jamesd wrote: »

Dunstonh, thanks, I was thinking of a different product then.

retirement annuity contract by any chance?

jamesd

Yes, thanks.