'The Chancellor's pension changes are both wonderful and horrid' blog discussion

lmm1503

I am in financial difficulties & have just tried
To release a sum if around £5000 from my
Pension with Scottish Equitable. After 2 weeks
I have recvd a letter today saying they willnot
Have forms available until 2015 & get back to
Them then! I have. Around £21k in the pension.
Can I do anything to get funds???

Annie1960

lmm1503 wrote: »

I am in financial difficulties & have just tried
To release a sum if around £5000 from my
Pension with Scottish Equitable. After 2 weeks
I have recvd a letter today saying they willnot
Have forms available until 2015 & get back to
Them then! I have. Around £21k in the pension.
Can I do anything to get funds???

How old are you? At present, the limit for 'trivial commutation', i.e. taking all you pension pot as cash is £18,000. This assumes you are at least 55 years old. From 27 March 2014 this limit will go up to £30,000.

There are many online explanations of this, see for example:

http://www.telegraph.co.uk/finance/personalfinance/pensions/10710606/Budget-2014-How-will-the-new-pensions-system-work.html

Annie1960

The issue is that the budget changes come into effect against a background of the new state pension. In future, the state pension will be more generous, and there will be much less scope for claiming benefits as well as the state pension.

This means that, if individuals choose to spend their whole private pension pot on whatever they want, they should still have a state pension that will meet their basic ongoing needs.

I don't think the government would have brought in the new budget changes if the old pension system was still in place.

However, that does seem to leave a year between 2015 and 2016 when people retiring will be on the old pension, and will still have the opportunity to spend all of their private pension pot.

easilyparted

I have an annuity which brings me about £850,month guaranteed until 2016.
I understand you can now withdraw the capital from the provider and invest as you wish. Am I correct and is this at the discretion of the pension provider?

Wilt000

Hi,
I have searched the web but cannot find an answer!
I am 55 years of age, and have contacted my pension provider about my DC pension. I have asked them to provide details and forms required to enable me to take advantage of the new reforms being bought in April 2015.
I do understand that pension companies are being inundated with requests at this time, but I wanted my request to be put on record ASAP. I also understand that the new changes have not yet received Royal ascent.
The reply I received states that "I can confirm that the proposed changes as per the 2014 Budget will only apply if adopted by the Scheme. The Trustees have not reached a decision on the proposed changes"
My question is: Will the budget changes be compulsory by law on the trustees of pension savings, or will they be lawfully able to refuse to adopt the changes?

Pennywise

I work closely with two IFAs, working under different supervisory firms and both are saying that they're being told that they have to do a proper review and advice for people wanting to take their entire pension funds to prove it's "right for them" i.e. that they either have adequate alternative provision or are likely to have a short life expectancy or need it to clear debts that can't be cleared any other way. It's been made clear to them that they can't even do "execution only" for people for whom taking it all as a lump sum isn't wise and that they could be liable for compensation from anyone they arrange it for even on an execution only basis. Both think it will be of limited use given the constraints they're being told to work under. Sounds like a case of the law saying one thing (i.e. that it's allowed) but in reality it's not that simple due to other regulations (i.e. what's best for the client) with risk of the IFA being sued when it goes wrong and the client ends up in financial difficulties!

flobbalobbalob

My letter from Virgin tells me Pension providers do not have to provide all the options. They plan to provide only the option to take the whole fund as one lump sum.

If I want, for example to withdraw multiple smaller sums, they tell me I have to transfer my pension savings to another provider that will allow it.

Where does that leave the reforms. If all providers do the same the reforms are impotent.

Surely a reform needs backing up with a law to force providers to comply

agarnett

flobbalobbalob wrote: »

My letter from Virgin tells me Pension providers do not have to provide all the options. They plan to provide only the option to take the whole fund as one lump sum.

If I want, for example to withdraw multiple smaller sums, they tell me I have to transfer my pension savings to another provider that will allow it.

Where does that leave the reforms. If all providers do the same the reforms are impotent.

Surely a reform needs backing up with a law to force providers to comply

I agree. If the pension providers were better at doing the job of providing proper husbandry of funds in their trust and in achieving good pensions, then the reforms would not have been necessary.

They've had their chance. Now make them pay up exactly as advertised by the government, or if refusing, state exactly how much (as a minimum) that an untransfered plan will produce at retirement, at death, and to dependants. Now.

Too many of these providers have been getting away with declaring too little, and too infrequently, and even deliberately misleading information about our pensions in their care.

They've been playing this game of "we can't tell you because of the variable factors" far too long and getting away with it whilst continuing to take huge slugs from our funds in annual management charges and other fees. They have those worked out alright ... :mad:

neil1960

For those of us with db schemes the changes are horrid. My scheme from the company I left a few years ago has a huge shortfall and has made several penalising changes over the last several years, such as freezing salaries for pension calculations & blocking early retirement applications. This means the only way I can access my pension is by transferring it to another scheme providing income or drawdown. This I would like to do & have been provided with a CETV (cash equivalent transfer value) of over £200k. However I am not deemed to be adult or responsible enough to do this without an IFA's advice at a cost of around £2k. After having initial discussions with IFA's the consensess is that their calculations would show that I would be worse off doing this assuming I live to 84ish (This I already knew) therefore they will advise me not to transfer. No pension company that I know of will accept a transfer going against this advice so I'm stuffed. As I'm currently self employed with little income, my only option is to close my business, sign on as unemployed & try to find another job.

flobbalobbalob

I understand your frustration, but usually it is a bad decision to loose DB benefits and providers seem either wary of litigation or are trying to get their last cut of your fund.

It seems a bit drastic to close your business for 1% of your fund. But if your determined I think Hargreaves Lansdown would accept a transfer.