section 226..do aviva have this correct?

bobbymotors

I have a couple of old section 226 pensions with Aviva and am fortunate to have other income so do not need an annuity. The pot is about £50,000 total.


However I have been told by Aviva that section 226 policies are not covered by the new pension regulations and I will have to wait until I am 60 (15 months time) to get my standard 25% lump sum and then a pension.


I asked to just transfer the 226 policies to another fund which would be covered by the new regulations to be told that a 226 policy could only be transferred to another 226 fund: however since 226 funds were superseded in 1988 I cannot see how that is possible: after some deliberation nor could they and just said I am stuck with them.


I also have a couple of similar 226 policies with another company who have a completely different stance and are happy to send me a cash out pack if I want one, and on the ‘phone they immediately said ‘yes, this counts as a defined contribution pension’


However since these policies have a guaranteed annuity rate of almost 10% I want to keep them.


Are Aviva correct in this stance as there must be thousands of these 226 policies around owned by people of my age.


thank you in advance

kidmugsy

bobbymotors wrote: »

However since these policies have a guaranteed annuity rate of almost 10% I want to keep them.

What, the ones with Aviva or the other ones?

dunstonh

However I have been told by Aviva that section 226 policies are not covered by the new pension regulations and I will have to wait until I am 60 (15 months time) to get my standard 25% lump sum and then a pension.

No it is not correct. Section 226s can excercise the same options as a personal pension and since 2006, the minimum age on a S226 RAC was reduced from 60 to 55.

However, it is unlikely a S226 RAC would offer many or even any of the new options available. Likely needing transferring to a modern plan that can.

asked to just transfer the 226 policies to another fund which would be covered by the new regulations to be told that a 226 policy could only be transferred to another 226 fund:

That is wrong. its free to move to a personal pension.

bobbymotors

No the Aviva ones do not have a 10% annuity rate, only about 4.5%


I thought they were wrong, but they have even written to me to say I cannot have any benefits until I'm 60, and even then only a 25% drawdown plus annuity.


I said that it had all changed to 55 but they said on my plan it said 60 so that was that.


Is there any relevant law I can quote at them as they just seem to be obstructive and it appears to be anything except write a cheque out!

bobbymotors

When I suggested moving the pots to a standard fund I was told I could not do so unless I saw an IFA first.


I contacted an IFA who said that due to his compliance rules it wouldn't be worth it as it might cost up to £1000


it seems ludicrous that I can't get my own money!

philwal_2

As mentioned above the funds can be moved to an alternate product either within aviva or another provider. The ifa quoting 1000 is not far off the mark as 2% is pretty standard

kidmugsy

I transferred an S226 to a SIPP free a few years ago. Not from Aviva though.

bobbymotors

thanks for replies so far..


I need to call Aviva and quote some rules and regulations at them!


Firstly I don't believe I am compelled to consult an IFA if I simply want to transfer the pot(s) into another fund, so why are they saying I do?


Why can't I just transfer the pot(s) myself on an execution only basis?


What would the name of the new pension fund that I need to transfer the pot(s) to?


Under what regulation or law are they wrong by saying I cannot take any benefits until 60 and even then only 25% drawdown and a tiny annuity?

xylophone

http://www.fca.org.uk/firms/financial-services-products/investments/pension-transfers/when-transfer-required

It would not appear that there should be any difficulty about transferring a S226 to another type of pension- it does not require advice from an IFA with Pensions Transfer qualification?

bobbymotors

thank you xylophone that's very helpful

dunstonh

Give Aviva another call and ask again.

Tell them that the rules they are quoting ended in April 2006 and complain that they are giving duff information. That should hopefully put you beyond the front line and get to speak to someone in back office that knows a bit more.