Pension administrator has screwed up

Vendee

I have a small DB and DC pension, both administered by "Capita". I recently retired early and requested forms to start taking my pension.

I decided to go for option 2A on the forms which was:- Monthly pension payment and a tax free lump sum amounting to 25% of the combined DB & DC pot. This effectively means the tax free portion amounts to 65% of the DC pot. The options for the remaining 35% of the DC pot were:- Annuity purchase, transfer to another provider or taxable lump sum (UFPLS).

I completed the forms selecting 2A, monthly payment, big tax free lump and smaller taxable lump. Capita then contacted me saying that they had made a mistake with the forms they sent me. Apparently I couldn't take the residual part of the pot as taxable cash. I could only purchase an annuity or transfer out. On the new forms they have sent me there is also a "2B option that was missing from the original forms.

I'm really not happy with Capita. Are they right in saying that I can't take the residual part of my DC pot in cash and pay the tax on it?

Thanks.

AnotherJoe

As i read it, they are saying they cant send you the residual sum, so you'll have to transfer it to someone else who will.

simonineaston

My sympathies... this sort of mistake is very upsetting for the end user, ie you! And I don't mind betting it stems from the low level of experience and knowledge lodged in the Capita staff, who, probably, have simply misread their online scripts. Very annoying. A similar thing happended to me a few years ago, when I swapped jobs and took the trouble to check with three separate HR teams to make sure my voluntary pension contributuons were transfereable under the exact circumstances of my move to the new job. "Yes!" they all said, "No problems!! Go for it." and it turned out they were all wrong and I was unable to continue to make the additional contributions. Fortunately for me, my financial circumstances changed in a way that has meant the avcs are no longer a high priority, but the fact remains that I was given duff advice that could have had serious consequences by low level admin. staff, with no redress whatsoever!

sandsy

AnotherJoe wrote: »

As i read it, they are saying they cant send you the residual sum, so you'll have to transfer it to someone else who will.

This is how I would read it too. They are unable to administer an UFPLS payment on behalf of the scheme so you need to transfer the funds somewhere that can do such a payment.

It's up to the scheme whether to permit these payments, so whilst Capita may have been at fault is telling you they could do it initially, they don't have the right to make that payment.

Vendee

sandsy wrote: »

This is how I would read it too. They are unable to administer an UFPLS payment on behalf of the scheme so you need to transfer the funds somewhere that can do such a payment.

It's up to the scheme whether to permit these payments, so whilst Capita may have been at fault is telling you they could do it initially, they don't have the right to make that payment.

I thought it was the government who dictated what you can do with your money.... not the scheme?

OldBeanz

Vendee wrote: »

I thought it was the government who dictated what you can do with your money.... not the scheme?

The Government dictates what you can and cannot do with a pension. It does not compel any company to offer all the permitted options which appears to be the case here.