pension cashing in

BGK

Help we are going around in circles.
We wife has a pension which is now with Royal London, it was with The CO_OP she wishes to cash in.
It matured 10 years ago, we found the documents in the loft recently.
It is a Defined contribution (DC) pension, Royal London will not allow her to cash in this pension without an IFA input, for which we have been quoted prices of upto £1500.
We have both been retired now for approx 6 years.
My question is are they able to compel her to seek this advice and can they with hold her money.
Fingers crossed someone has an answer.

Silvertabby

As it's an old pension, it's likely it has a GAR (guaranteed annuity rate). If so, then this could be a valuable benefit that your wife can't discard with RL being confident that she knows what she is giving up - hence the requirement for advice.

Your wife should speak to RL to ask if the GAR is indeed the reason for needing financial advice.

Aegis

If they're requiring that she takes advice, it's likely to be because there are safeguarded rights within the pension and the balance is in excess of £30,000. If this is the case, there is no way around this, as the requirement is mandatory for schemes where guarantees of some description apply, as people often overlook or under-value these benefits.


You may wish to ask them why advice is needed. If they say it is not for the above reasons, then it may be an internal policy that could be fixed by transferring to an alternative scheme.

dunstonh

It matured 10 years ago, we found the documents in the loft recently.

When you say it matured 10 years ago, that would mean the pension no longer exists and an annuity was bought. However, what you say in the post suggets it has not matured and is still in force.

My question is are they able to compel her to seek this advice and can they with hold her money.

Yes they can if the value is above £30,000 and has safeguarded benefits. That is until advice has been sought and an adviser has signed as saying they have provided the advice. At that point, they can do the transaction.

Why do you want to cash the pension in? Many people doing so have no good reason and dont realise the consequences. Putting it in a bank account, for example, is usually a very bad idea.

Going against a guaranteed annuity rate is a very high risk transaction for an IFA. Indeed, we had a PI insurance renewal through a few months ago and they asked for details on each case where we had advised against not taking the GAR. It increases the PI insurance cost. So, its not something an IFA is likely to take lightly or do at low cost.

want_to_save

I think what you mean is that it went past the plan retirement date 10 years ago. Best advice would be instead of just asking them to cash in ask them for an annuity quotation of what they would provide. That would provide you with a guaranteed income which would be more beneficial if it has a guaranteed annuity rate or some kind of safeguarded benefit than cashing in and paying undue tax

BGK

Thank you for the replies all very helpful.
We have been retired for some years now, this pension is a bonus pot.
My wife is 73 next B/D and has health issues so she is thinking she would like the lump sum to do with what she will whilst she can.

xylophone

You have asked RL what type of policy this is?

Does it have a Guaranteed Annuity Rate?

Or is it by any chance a S32 policy?

AnotherJoe

BGK wrote: »

My wife is 73 next B/D and has health issues so she is thinking she would like the lump sum to do with what she will whilst she can.

Even then, if she can get a quote for what the payment may be, that could be turned into a lump sum via a loan which you pay off via the pension

Albermarle

If you decide to actually take the pension , rather than cashing it in , then the fact your wife is 73 with health issues, will mean that the annual pension offered will be significantly higher than if she had taken it 10 years ago. Plus you should be given the option of taking 25% as a tax free lump sum ( with of course a lower annual pension. )

newatc

Even if you went down the annuity route then presumably you will still get the 25% tax free so there will be a lump sum immediately with the bonus of monthly payments.