Legality regarding IFA ...

webtrekker

Hi,

I'll keep this short.

I'm 63 now and have a pension pot valued at around £50,000 with Royal London (previously CIS).

I understand that to take the lot as a lump sum I first have to see, and pay for, a Financial Advisor.

• Is this a LEGAL requirement and, if so, can anyone point me to the law this comes under?
• I don't have the money to pay for financial advice until I receive my lump sum. Are Royal London LEGALLY allowed to withhold MY money?
• Has anyone here managed to get a lump sum over £30,000 WITHOUT needing to see a Financial Advisor?

This is really boiling my p**s and I don't see why I should have to PAY for advice I don't want.


Any help would be much appreciated. Thanks.

jem16

webtrekker wrote: »

Hi,

I'll keep this short.

I'm 63 now and have a pension pot valued at around £50,000 with Royal London (previously CIS).

I understand that to take the lot as a lump sum I first have to see, and pay for, a Financial Advisor.

Has Royal London told you that you need to see an IFA first?

There is no need for an IFA if your pot has not guarantees of any sort. If there are guarantees then you do and it may well be in your best interests to do so as you may be giving up valuable guarantees.

If no guarantees then you can do as you wish but you may have to move provider to allow it.

This is really boiling my p**s and I don't see why I should have to PAY for advice I don't want.

You may not want it, but that's not to say you don't need it. You will be paying more tax than is necessary if you take it all in one lump sum. Do you have a specific need for the whole lot?

macca1974

You only need an IFA to sign it off if you have a final salary pension scheme or one with protected benefits (guaranteed annuity rates etc). If you have one of these then you will need to fine an adviser to sign it off which might be a challenge.

CIS though I would have thought is probably a defined contribution scheme, so in theory you should be able to cash it all in if you want to. However, the pension companies aren't obliged to facilitate this, so if Royal London are saying that they won't then you'd need to transfer it to a provider that would allow you to do so. There are a fair few of these around, (Hargreaves Landsown for example although I think that they charge a small fee). So you would just need to establish it is a dc scheme and then transfer and you can then cash it in.

Don't forget though that you'll be taxed on it, and depending on what your income is, it might be worthwhile to spread the payments over a couple of tax years so you don't pay too much higher rate tax.

A lot of advisers wouldn't be interested in providing advice on this type of thing anyway as its often not that great an idea, but each to their own.

BTW, I've never heard the phrase "boiling my p**s before", I quite like it.

webtrekker

Thanks for the quick reply jem16.

My wife also had a pension with Royal London (CIS), taken out at the same time as mine. She cashed it in earlier this year (worth 32,000) and had such a fight over whether she needed financial advice or not. We contacted CAB and others and eventually sent in a complaint to the Ombudsman. In the meantime Royal London paid out, but we had a letter recently saying they shouldn't have done that but that it wasn't in anyone's interest to ask for the money back!

So, basically, I'm expecting the same treatment.

My point is, guarantees or not, I DO NOT want financial advice from anyone. I have my own personal reasons for needing to take my pension now and that has nothing to do with Royal London or anyone for that matter. It's MY money.

I understand about the tax side of it but needs must I'm afraid. I certainly don't want to be giving hundreds or thousands away for unwanted financial 'advice.'

webtrekker

Cheers macca1974. Some food for thought there. I certainly need to find out if it is a DC pension first, or whether GAR comes into the equation.

Really, it's the principle of the thing. Unless there is a specific LAW requiring me to seek financial advice, then I don't see why I should, especially as I'm expected to pay so much for it.

bmm78

Section 48 of the Pension Schemes Act 2015 covers the transfer of safeguarded to flexible benefits, and requires advice to be taken if the value of the benefits is greater than £30k.

If your plan contains safeguarded benefits, and you want to "cash in" or transfer to a drawdown arrangement, it is a legal requirement to obtain advice if the value is over £30k.

There is no legal requirement to obtain advice unless the above applies.

jem16

webtrekker wrote: »

I certainly need to find out if it is a DC pension first,

Unlikely to be DB unless you worked at Royal London or CIS. However the fact that you don't know is a little worrying for someone that doesn't want advice.

or whether GAR comes into the equation.

There could be other guarantees/benefits as well.

Really, it's the principle of the thing. Unless there is a specific LAW requiring me to seek financial advice, then I don't see why I should, especially as I'm expected to pay so much for it.

It is law under the Pensions Act.

webtrekker

Thanks bmm78.

So there IS a law then, but it revolves around guarantees.Thanks for that. I'll get in touch with my provider and find out exactly what's what regarding my pension.

Daniel54

bmm78 wrote: »

Section 48 of the Pension Schemes Act 2015 covers the transfer of safeguarded to flexible benefits, and requires advice to be taken if the value of the benefits is greater than £30k.
.

Link to the relevant Section for the OP's reference

http://www.legislation.gov.uk/ukpga/2015/8/section/48/enacted

webtrekker

I can see where you're coming from jem16, and my knowledge is definitely sketchy, but when you have money in a fund and you NEED that money now, regardless of how much you may 'suffer' later on then you don't need financial advice of any kind, least of all pay for it.

This whole thing is wrong, and is just intended to line the pockets of the financiers.

webtrekker

Thank yo u Daniel54. I've bookmarked that page.