Feeling pressured by prudential, help

mighty_hammers

I have read repeatedly that you do not have to rush your decision on 06.4.15, I am over 55 and the Pru have repeatedly written to me over the last 4 weeks and the latest letter says I must speak to them or risk loosing money and key changes could be made to the way my pension currently works. Problem is I can not get through, left my phone number for call back several times & even customer service have asked me to hang up because they can not get through. My pension has been frozen for 18 years due to financial reason and I currently pay into a work pension, so I was quite happy to wait till others customers were helped, but I now feel uneasy by their letters. Do I need to make an immediate decision?

PeacefulWaters

You might end up with funds invested in a low to no return investment.

Poor show from Pru.

subgoofy

Just think it over.It is your turn to make a decision

redbuzzard

Haven't they given you any clues?

If you are happy with the new flexibilities and what goes with that, then the deadline may be immaterial to you. On the other hand, if you want to use the current capped drawdown option in particular, then you must do it before 6 April.

The point for me at least is that by going into capped drawdown now - this week actually - I retain the £40,000 (currently) annual allowance (AA). Capped drawdown ("GAD" limited) will not be available after 5 April, so if you want to withdraw money from your pension after that date then you will trigger the new "Money Purchase Annual Allowance" (MPAA) which will effectively put an upper limit on future annual pension contributions of £10,000 p.a.

EDIT: To be clear - if you do not envisage that you will ever have annual pension contributions of more than £10,000 in future, then on this point I don't think you need worry about the deadline. (I might never need the higher allowance myself - but I am self-employed and have no idea how much or little I will earn in future).

That's general - clearly I cannot know whether that is why the Pru are chasing you or whether there is some other reason.

From Pru's help centre:

Clients retiring before April 2015

dunstonh

My pension has been frozen for 18 years due to financial reason

The term frozen cannot apply to money purchase schemes. It cant apply to the old Prudential occupational pension either. Is this a personal pension with Pru or an occupational pension?

Do I need to make an immediate decision?

You havent told us anything about what you are doing, what type of pension you have and what the potential issues are. We need more info.

xylophone

You might find a call to the Pensions Advisory Service helpful?

http://www.pensionsadvisoryservice.org.uk/

mighty_hammers

It is a personnel pension taken out to finish at the time of my then mortgage at 55. worth about 40k

redbuzzard

mighty_hammers wrote: »

It is a personal pension taken out to finish at the time of my then mortgage at 55. worth about 40k

In that case I suspect that the subject of their nagging is their guidance that I have already linked above.

But the only way to be sure is to ask them.

dunstonh

If it had a selected age of 55 and you are over 55 then they would write to you 2 or 3 times in the lead up to 55. Then ask you about deferral if you did nothing at 55 and then will automatically put it in annual deferral (typically) after that.

that isnt nagging. it is following instructions you gave (or didnt give hence the defaults).

jamesd

Dunstonh has explained one potential issue: they may be set up to sell you an annuity by default at some specific age and if you do not respond they may go ahead with that, to your very considerable financial loss.

It is also possible that they are thinking of the pending change from percentage-based charging to mandatory use of unbundled charging for existing customers and want to tell you about a switch to unbundled that regulations will compel them to do no later than a year or so from now.

One remedy to that if you can't check the details and can't make contact is to send them a letter telling them not to make any purchases or investment changes without explicit prior consent from you. Also good to ask them to tell you why they are insisting that you contact them, whether it is routine telling you about welcome changes that apply to all or whether it is something specific to your own product and if so, what that is.

jamesd

There is one other potentially substantial and time-critical decision that you could make: starting capped income drawdown. The ability to start new capped income drawdown plans ends on 6 April 2015. After that it's flexi-access drawdown instead but money can still be added to existing capped drawdown pots.

The difference is that with capped income drawdown you can take out the GAD limit amount of income without triggering a cut in your annual pension contribution allowance from £40,000 to £10,000. The GAD limit is typically in the range of 5-8% of the pension pot size at normal retirement ages. Taking even a penny out of a flexi-access drawdown pot triggers the cut. For both you get the usual tax free 25% lump sum first.

The income from drawdown can be recycled into new pension contributions, so not starting drawdown can be quite costly for those who would be affected by a reduced contribution limit. Where salary sacrifice is being used for pension contributions the gains from saved NI can further increase the benefit.

It doesn't matter how much is put into capped drawdown, even a Pound will do. what matters is getting it done before the option goes away.