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Allied Dunbar Pension - Early Encashment Penalty Due To Ill Health.

Hi. In September 2003 my father in law, then 56, was diagnosed with Kidney Cancer.

Following his diagnosis he decided to vest the monies from his Allied Dunbar personal persion, however because the personal pension (a Retirement Annuity Contract - RAC) had a set minimum retirement age of 60 he was told by Allied Dunbar that even though he was in severely bad health he would be penalised for taking these benefits early.

After weighing up the pros and cons he decided to take the benefits anyway, which he then bought an enhanced life annuity with but in doing so paid a penalty of £2228. My question is can this money be claimed back, like with the reclaiming bank charges revolution that's going on at the moment!?

Thankfully he's still alive, and in remission, after treatment but it has always bugged me that he paid this penalty, after all it's not his fault he was ill, and to penalise him for taking the benefits early under these circumstances seemed well harsh.

Any professional advisers or people with similar experiences got any good news for him and me?! :confused:

Comments

  • dunstonh
    dunstonh Posts: 118,613 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    My question is can this money be claimed back, like with the reclaiming bank charges revolution that's going on at the moment!?

    There is nothing unlawful with pension transfer penalties.
    it has always bugged me that he paid this penalty, after all it's not his fault he was ill, and to penalise him for taking the benefits early under these circumstances seemed well harsh.

    He should have taken out insurance if that sort of thing was a concern.

    The type of pension he had was pre 1988 and had for more restrictive rules than those exist today. Ironically, most of those rules were abolished in 2006 making Retirement Annuity Contracts almost the same as personal pensions. The charging structures for these also reflect the era that they started and the typical costs for running these products before the days of computers.

    You wont get the charges back. They were quite valid and still charged to this day.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    It's not helpful that the company is the notorious Allied Crowbar.

    Other companies might have been more likely to overlook the letter of the contract because of the tragic nature of the case, especially if they thought the matter might get into the press..
    Trying to keep it simple...;)
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