Greater than 25% Tax-Free apportioned across two pensions concern

Pegleg2001

To the pension gurus here, a complex scenario and looking for some insights based on similar scenarios...

I had an company Equitable Life Pension setup in 1995. Although it wasn’t the same class of pension that caused EL to get into severe difficulties in around 2000, I decided that I would still transfer out to a SIPP just to be safe. This was in 2001 when it was valued at around £30k.

I have a separate Executive Pension with Zurich (originally Allied Dunbar) and upon investigation it allows for a Tax-free amount greater than today’s 25%. I asked them what this percentage is and they have recently written to me and advised that it is approximately 50% tax free which is nice. In their calculations (somewhat convoluted with reference to A-Day and various recalibrations of the LTA) I note that they make reference to the Equitable Life Pension as well. I presume there must have been some apportioning of the tax-free percentage across the two pensions, maybe?

I’m wondering how broadly the Zurich tax-free calculations have been impacted by this connection to the EL Pension? For example, if the EL Pension had never existed would the tax free percentage be great than the 50%? I’ve informed Zurich that the EQ Pension no longer exists but it is still accounted for in their calcs as far as I can tell.

Final question..

Also, I notice that Equitable Life executed the transfer without any reference to “losing valuable benefits” such as the enhanced tax-free portion. I have taken this up with them as I have likely been financially disadvantaged executing the transfer but they they have basically said “sorry guv, it was your choice - take it to the ombudsman”.

I believe this is not 100% fair because if I was doing the same today, they probably wouldn’t execute such a transfer without warning of a) loss of valuable benefits and/or b) only after I had spoken to an IFA. At the time they were probably not obligated to issue such warnings, but all the same how tough would this have been!

kidmugsy

Pegleg2001 wrote: »

I had an company Equitable Life Pension setup in 1995. ...
I have a separate Executive Pension with Zurich (originally Allied Dunbar)

Was it the same employer in each case?

Pegleg2001 wrote: »

Equitable Life executed the transfer without any reference to “losing valuable benefits” such as the enhanced tax-free portion. I have taken this up with them as I have likely been financially disadvantaged executing the transfer but they they have basically said “sorry guv, it was your choice - take it to the ombudsman”.

I believe this is not 100% fair because if I was doing the same today, they probably wouldn’t execute such a transfer without warning of a) loss of valuable benefits and/or b) only after I had spoken to an IFA. At the time they were probably not obligated to issue such warnings, but all the same how tough would this have been!

You should sue the firm you transferred to on grounds of allowing you to mis-buy their pension. Or you could be a man and accept your own responsibility for your decision, good or bad.

Pegleg2001

kidmugsy wrote: »

Was it the same employer in each case?

Yes, same employer.


You should sue the firm you transferred to on grounds of allowing you to mis-buy their pension. Or you could be a man and accept your own responsibility for your decision, good or bad.

Yes, was a bit naive of me. Chin has just taken one.

dunstonh

Also, I notice that Equitable Life executed the transfer without any reference to “losing valuable benefits” such as the enhanced tax-free portion. I have taken this up with them as I have likely been financially disadvantaged executing the transfer but they they have basically said “sorry guv, it was your choice - take it to the ombudsman”.

Eq Life are not there to give you advice. If they receive a request to transfer the pension, they are legally obliged to follow through on that. When you DIY, you are taking on the responsibility for knowing what you are doing.

I believe this is not 100% fair because if I was doing the same today, they probably wouldn’t execute such a transfer without warning of a) loss of valuable benefits and/or b) only after I had spoken to an IFA.

enhanced tax-free cash is not a safeguarded benefit. So, you are wrong.

It is very fair. You are responsible for your actions when you DIY. They have done nothing wrong.

Pegleg2001

Thanks for the prompt responses KM and DH.

I guesss I was driven by fear at the time what with EL in trouble - and shouldn’t have acted in haste and certainly should have researched deeply.

Any thoughts on the tax-free question? Would any apportionment be recalculated when one of the pensions ceases to be? They were with the same employer.