MSE News: Pension inheritance tax to be axed

jem16

atush wrote: »

somehow I thought James Hay were giving the advice here. At least to the Father. Does this not give them a duty of care to the spouse?

There's no mention of advice being given to the father. If there was this would not automatically extend to the mother and advice would only be given if requested and paid for I assume.

Did they not suggest she get advice?

I have no idea. All the OP says is that his mother did not seek advice.

MartinW6

Hi guys,


James Hay didn't give advice to my father (dad was in hospital for a few months before he passed in early April - unconscious for the most part). When mum received the forms from James Hay (asking her whether she wished to take a lump sum or monthly income), there was no mention of any potential changes to the Death Tax. I realise the onus isn't on James Hay to give advice, but I would have thought that - in these circumstances - they might be a little more pro-active. Also, when mum spoke with James Hay they stated that, if she didn't take the lump sum, and subsequently passed away, the entire private pension would be lost. Again, no mention of potential changes. I realise I'm probably being naïve, but I work in the software industry for the police, where important information needs to be disseminated/circulated to those that need to know, immediately. This all seems a little... remiss.


I feel like contacting James Hay and complaining, but at the same time I realise it's partly my fault. So unless you guys think it'll make a difference, I'm just going to have accept the situation and move on.

zagfles

MartinW6 wrote: »

Hi guys,


James Hay didn't give advice to my father (dad was in hospital for a few months before he passed in early April - unconscious for the most part). When mum received the forms from James Hay (asking her whether she wished to take a lump sum or monthly income), there was no mention of any potential changes to the Death Tax. I realise the onus isn't on James Hay to give advice, but I would have thought that - in these circumstances - they might be a little more pro-active.

Yes, they should have explained the options and tax treatment of them. There's a difference between giving advice and telling people what the options are. Spelling out the options and rules is not advice, otherwise this web page on the HL site wouldn't be allowed:
http://www.hl.co.uk/pensions/income-drawdown/what-happens-when-i-die

and nor would this forum board either!!

Also, when mum spoke with James Hay they stated that, if she didn't take the lump sum, and subsequently passed away, the entire private pension would be lost.

I'm pretty sure that's wrong. If the pension is in drawdown then I believe it's treated just the same as you Dad's - ie can be inherited by a dependant at marginal rates or a non depndant as a lump sum with a 55% tax charge.

Again, no mention of potential changes. I realise I'm probably being naïve, but I work in the software industry for the police, where important information needs to be disseminated/circulated to those that need to know, immediately. This all seems a little... remiss.


I feel like contacting James Hay and complaining, but at the same time I realise it's partly my fault. So unless you guys think it'll make a difference, I'm just going to have accept the situation and move on.

It's worth writing to them to complain, particularly as it seems they gave you incorrect info on the phone. (wait for someone to confirm/correct me on the point above).

And remember, for things like this - ask here! We'd have told you the options and rules.

atush

Yes, that was incorrect advice that the pension would be lost.

I would write and complain.

What date did they write to your mum originally?

As a side note, you found us now for advice, why not ask us back then?

MartinW6

Well, I've found the form which James Hay sent to my mother, and it clearly states all the options available to her (although it doesn't state that if she were to decline taking the lump sum and passed away, that it would be lost - that was done verbally). The form explains all the CURRENT tax implications, but doesn't make mention of the proposed changes for 2015. Nor does it suggest that my mother seek financial advice. How hard would it have been to add a note stating something like the following?...


"Note that the government is proposing changes to the taxation applied to lump sum draw-downs as of April, 2015. We would recommend seeking financial advice."


Again, probably being naïve but surely something that can have a huge impact on the draw-down amount could at least have been referenced?


Also, mum's decision to take the lump sum was partly out of concern that, if she were to pass, that the private pension would be lost entirely. I feel like we were given inaccurate information which led to a very poor decision.

MartinW6

atush wrote: »

Yes, that was incorrect advice that the pension would be lost.

I would write and complain.

What date did they write to your mum originally?

As a side note, you found us now for advice, why not ask us back then?

They wrote to mum back April 25th (two weeks after dad passed).


as for not coming here first - it was an emotional time; we'd lost dad and were mentally and physically exhausted. I'm an only child, had a distraught mother to look after, my own emotions to deal with, a funeral to organise, probate to take care of (mum and my aunt were meant to act as Executors, but both declined, leaving the duty to me), etc... not making excuses, or trying for sympathy, just trying to justify (to myself, probably) why I didn't come here first. There just seemed to be so much to do; I should have taken time out to think things through before advising my mother.


Aside from that, I'd like to say 'thank you' to everyone who's responded. I appreciate all of your advice.

dunstonh

I realise the onus isn't on James Hay to give advice, but I would have thought that - in these circumstances - they might be a little more pro-active.

The problem is that advice and no advice is fairly black and white. The FOS generally take the few that if there is a hint of advice then it becomes an advice transaction and expectation of advice standards would be required. So, firms with no advice arm tend to go out of their way to avoid anything that could be seen to be advice or opinion and tell you that you should seek advice if you need it.

Also, when mum spoke with James Hay they stated that, if she didn't take the lump sum, and subsequently passed away, the entire private pension would be lost. Again, no mention of potential changes.

Their staff members may not be aware of hypothetical changes that were under consultation and not yet passed into legislation.

I realise I'm probably being naïve, but I work in the software industry for the police, where important information needs to be disseminated/circulated to those that need to know, immediately. This all seems a little... remiss.

The software industry doesnt have an ombudsman or regulator that treats transactions as non-advised and advised and has different regulatory requirements between the two.

I feel like contacting James Hay and complaining

What have they actually done wrong? A potential bit of misinformation which actually could be correct in some cases but doesn't actually change any outcome. i.e. had that not been said, it wouldnt have changed what your mum did.

James Hay are pretty good from a service point of view and they would listen to any complaint made but as it stands, I am struggling to see anything wrong here (apart from the way firms deal with FCA guidelines and FOS decisions which is inevitable given the way the system is). You cant complain about advice given when no advice was given. Unless advice was given when it should not have been given.

The problem is that you seem to be saying that they should have given advice but they are not authorised to give advice. Had they given the advice you say you wanted them to give they would be in breach.

jem16

MartinW6 wrote: »

Hi guys,


James Hay didn't give advice to my father (dad was in hospital for a few months before he passed in early April - unconscious for the most part). When mum received the forms from James Hay (asking her whether she wished to take a lump sum or monthly income), there was no mention of any potential changes to the Death Tax.

The problem here is that James Hay gave you the options that were available at the time. The option of taking a lump sum at marginal tax rates wasn't available at that time and although they had been mentioned in the Budget there was very little actual information on it so I wouldn't have expected them to mention it back in April 2014.

I realise the onus isn't on James Hay to give advice, but I would have thought that - in these circumstances - they might be a little more pro-active.

Would it have been possible to say that you didn't want to inherit the SIPP in April 2014 and leave it till April 2015? I'm not sure that could happen.

Also, when mum spoke with James Hay they stated that, if she didn't take the lump sum, and subsequently passed away, the entire private pension would be lost.

As far as I'm aware if your Mum had chosen to take the income as opposed to a lump sum, then on her death the fund could be passed on to another beneficiary. In the absence of beneficiaries (which is probably the case here), the entire fund passes to the estate minus a 55% tax charge (as it stands just now).

So it's not lost altogether and if James Hay said that then I would probably complain on that basis.

However what written evidence do you have of all of this as that is what may count here? If the paperwork shows that your Mum was given the options available at the time and no mention is made of the options available on her death, then you may not get anywhere as no advice was sought.

Unfortunately not seeking advice may prove to be the biggest stumbling block in any claim but it's probably worth checking out. To be honest though I can't see it getting anywhere as James Hay gave you the options available at the time.

Your_Hero

MartinW6 wrote: »

Well, I've found the form which James Hay sent to my mother, and it clearly states all the options available to her (although it doesn't state that if she were to decline taking the lump sum and passed away, that it would be lost - that was done verbally). The form explains all the CURRENT tax implications, but doesn't make mention of the proposed changes for 2015. Nor does it suggest that my mother seek financial advice.

They are only obliged to state the current tax implications because this is fact and law. Any potential changes in the future is subject to consultation and can be changed so it's hard to take the view that James Hay's has a responsibility here. Although I do sympathise with you, I don't feel James Hay are to blame for it particularly as your options were clearly stated on the letter.

"Note that the government is proposing changes to the taxation applied to lump sum draw-downs as of April, 2015. We would recommend seeking financial advice."

Would have been ideal and I would have expected a standard paragraph prompting you to seek advice somewhere in the letter or other documents.

Also, mum's decision to take the lump sum was partly out of concern that, if she were to pass, that the private pension would be lost entirely. I feel like we were given inaccurate information which led to a very poor decision.

You can see if the information provided verbally is recorded and perhaps go from there.

zagfles

dunstonh wrote: »

What have they actually done wrong? A potential bit of misinformation which actually could be correct in some cases but doesn't actually change any outcome. i.e. had that not been said, it wouldnt have changed what your mum did.

They said if she continued drawdown and she died the pot would be lost. That's incorrect and does seem to have swung the decision. Well worth complaining.

For future reference, and for other readers, the HL website is pretty good at explaining the rules around such things in plain English, and they do tend to mention forthcoming changes.