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No choice other than to purchase Annuity

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2

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  • kantblue
    kantblue Posts: 31 Forumite
    Sixth Anniversary 10 Posts
    To all,
    Alibert, yes I agree it wouldn't have made any change to my decision to transfer out at the time - however I had made my plans for retirement on the basis I could take the remainder as a drawdown now I am retiring so it does have an impact.

    DunstonH, I had wondered about that but here is what the broker said to me at the time:
    Often, in order to secure your enhanced tax free cash benefits, providers require that you secure an annuity with the balance. This restriction often makes the enhanced tax free cash not worth taking. However, I have checked and, you are not restricted to having to take an annuity with Royal London after taking the enhanced tax free cash. You will still be able to transfer the balance and take it as drawdown, if that is the best advice at the time.
    In conversation with him he was fully aware of the differences between buying an annuity with RL or shopping around - of course this doesn't rule out misinterpretation - equally I just want to see in writing where the annuity requirement is stated.

    I have been sent a form from RL for my signature which says I am transferring the 50% balance to an Open Market Option but also mentions annuity's

    The policy is called 'Retirement Solutions Individual Plan' if that helps.

    It may well be that I (and my broker) was given bad or faulty information, or there may have been misinterpretation, but I'm not making any assumptions - I don't have any terms and conditions in my paperwork, just statements - this policy was originally a Norwich Union one, which has been through several iterations - Scottish Life etc before ending with Royal London, hence I don't have any T&Cs?

    Kantblue
  • kantblue
    kantblue Posts: 31 Forumite
    Sixth Anniversary 10 Posts
    edited 4 June 2018 at 6:41PM
    Hi Bostornerimus

    You make a good point - but in the case of pensions I find the complexities pretty overwhelming - though no fault of my own I have ended up with 4 pension pots all of which seem to have different rules and most of them started out with different companies in the first place.

    My original pension was with Norwich Union which has been sold on several times, one of them was with HSBC who of course, got out of the pensions market (soon after they said they were in it for the long haul) and we were then switched to Re-Assure with no choice in the matter. This scheme turned out to be not legally compliant in the UK so my company had to move it again.

    What I do know is that I don't want to purchase an annuity unless I have too - there is some confusion with the advice I have been given so I feel I have to investigate why even if it doesn't get me anywhere :)

    Kantblue

    PS - I rather like the phrase "middle mad adviser"
  • Dox
    Dox Posts: 3,116 Forumite
    1,000 Posts Third Anniversary Name Dropper
    ..leaving your finances in the control of an middle mad adviser can lead to unexpected surprises. Personal agency when it comes to your own money is vitally important so you know exactly what you have and can plan accordingly. Use an adviser to advise, don't let them become a controller.

    That assumes you know what you're doing/dealing with. The vast majority of people don't know where to begin (who can blame them!), let alone where they are going.
  • xylophone
    xylophone Posts: 45,609 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    The policy is called 'Retirement Solutions Individual Plan' if that helps.

    https://adviser.royallondon.com/globalassets/docs/adviser/key-features/14kfi40-individual-plan-key-features.pdf

    But the above is dated 2017 and refers to a standard 25% PCLS and a drawdown option.

    Presumably your plan was taken out a number of years ago - did you look at the first link in my post above?

    Was my policy written on or before 30/06/88?
    Do I have a long length of service with my employer?
    Is my pension called a:

    - Retirement Annuity Contract (RAC)?
    - Retirement Annuity Policy (RAP)?
    - Deferred Annuity Contract?
    - Section 226?
    - Executive Pension Plan?
    If you find that you do have more than a 25% tax-free lump sum entitlement then your retirement income options may be a little more restricted, so our specialists will need to discuss some important considerations with you.

    For instance, if you wish to access your tax-free cash then you will generally have to withdraw it as one lump sum, as you will not have the option to take it in smaller instalments. Furthermore, you will only have the option of a lifetime annuity and be unable to move your pension fund to flexi-access drawdown or arrange a fixed-term annuity.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Can we assume that there's no Guaranteed Annuity Rate available?
    Free the dunston one next time too.
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
    Sixth Anniversary 1,000 Posts Name Dropper
    kantblue wrote: »
    Hi Bostornerimus

    You make a good point - but in the case of pensions I find the complexities pretty overwhelming - though no fault of my own I have ended up with 4 pension pots all of which seem to have different rules and most of them started out with different companies in the first place.

    My original pension was with Norwich Union which has been sold on several times, one of them was with HSBC who of course, got out of the pensions market (soon after they said they were in it for the long haul) and we were then switched to Re-Assure with no choice in the matter. This scheme turned out to be not legally compliant in the UK so my company had to move it again.

    What I do know is that I don't want to purchase an annuity unless I have too - there is some confusion with the advice I have been given so I feel I have to investigate why even if it doesn't get me anywhere :)

    Kantblue

    PS - I rather like the phrase "middle mad adviser"

    My comment wan't meant as a criticism more as a comment about the complexity of some pension structures and the way many people are unaware of their exact terms. So they fall back on an adviser and as you've discovered that can be a mixed blessing.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • wallpaperman
    wallpaperman Posts: 86 Forumite
    Part of the Furniture
    edited 5 June 2018 at 12:17PM
    Generally with these older occupational pension schemes with more than 25% tax-free cash, there is little flexibility as you have been found out.


    Have you checked into the possibility of transferring the full fund to a provider who has a Section 32 that can be used after for drawdown? This would protect the higher tax-free cash and the rest could you be used for drawdown (just make sure the new provider can offer this).


    Royal London do not sell Section 32's any more, but I believe there are at least 2 well known pension providers who do.


    Has your IFA looked into this, they should really have thought of this option already?
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Some people are enthusiastic advocates of the idea that people at about retirement age should consider holding about 50% in equities and 50% in bonds. The annuity would be like a perpetual bond, thus removing longevity risk and the risks involved in duration, calls, and so forth, at the price of indivisibility and illiquidity. The TFLS could be bunged into equity in as tax-efficient a way as you can find.

    So even if you are stuck with this it wouldn't be a disaster. Irksome, though, if you had other plans.
    Free the dunston one next time too.
  • xylophone
    xylophone Posts: 45,609 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Have you checked into the possibility of transferring the full fund to a provider who has a Section 32 that can be used after for drawdown?

    https://adviser.royallondon.com/technical-central/pensions/Pension-protection/tax-free-cash-protection-on-transfer/

    The conditions
    There are two main types of transfer where tax-free cash of more than 25% would be protected - a block transfer and a transfer where the scheme is being wound-up. The conditions that must be met are as follows.


    Looking at the above, the OP may not be able to fulfil the conditions?
  • wallpaperman
    wallpaperman Posts: 86 Forumite
    Part of the Furniture
    xylophone wrote: »
    https://adviser.royallondon.com/technical-central/pensions/Pension-protection/tax-free-cash-protection-on-transfer/

    The conditions
    There are two main types of transfer where tax-free cash of more than 25% would be protected - a block transfer and a transfer where the scheme is being wound-up. The conditions that must be met are as follows.


    Looking at the above, the OP may not be able to fulfil the conditions?



    The OP suggested it is a 'Retirement Solutions Individual Plan' which would make me think it was part of a wound-up occupational pension scheme.

    If this is the case, it is now essentially a Section 32 (or at least holds the same characteristics as one), therefore a transfer from this to a Section 32 with another provider would protect the higher tax-free cash.

    The important point is that the new provider needs to be able to put the balance into drawdown, so they would need to check this, but I am sure that a couple of providers can do this.
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