Financial advice

FGdsa21

Been told by my pension provider that if I take lump sums from my pension pot that, because the policy has guaranteed benefits that I would need proof of taking financial advice. The actual amount this guaranteed benefit would add to an annuity is £150 a year. 
So am I expected to pay a Financial Advisor £100's for the sake of losing £150 a year?

thx

[Deleted User]

Add at least one 0 to that, FGdsa.

Welcome to their wonderful world.

tacpot12

You can check whether the provider has correctly applied the rules by considering the information here: 
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/495377/pension-benefits-with-a-guarantee-factsheet-jan-2016.pdf

if you think they have got it wrong, you can provide your evidence, and if they don't accept it, complain to the provider, and then to the Financial Ombudsman. If you think they have got it right, your only option is to complain to your MP. 

dunstonh

So am I expected to pay a Financial Advisor £100's for the sake of losing £150 a year?

I would think you are looking over £1000 rather than £100s.

The actual amount this guaranteed benefit would add to an annuity is £150 a year. 

I suspect that is unlikely.   Because the requirement to seek advice applies only to funds with a value over £30,000, then if we assume that figure as a minimum, then £150 / £30,000 is 0.5%.   I doubt you have a GAR for 0.5%. p.a.

Has something been lost in translation?

sandsy

Does only part of your pension pot have guarantees attached? But is the provider saying you have to take advice because the full value of the pot is more than 30,000? I don't think the value can be split for the advice requirement.

garmeg

dunstonh said:

So am I expected to pay a Financial Advisor £100's for the sake of losing £150 a year?

I would think you are looking over £1000 rather than £100s.

The actual amount this guaranteed benefit would add to an annuity is £150 a year. 

I suspect that is unlikely.   Because the requirement to seek advice applies only to funds with a value over £30,000, then if we assume that figure as a minimum, then £150 / £30,000 is 0.5%.   I doubt you have a GAR for 0.5%. p.a.

Has something been lost in translation?

I think the £150 is the extra income from the GAR and not the total income, ie £1,500 with GAR or £1,350 without.

Seems a low extra amount from a GAR but without actual figures I can only conclude that there is some sort of misunderstanding here.

FGdsa21

Current value of policy £58,000
Annuity 1.....Guaranteed Income for Life £2,455.00 per annum
Annuity 2......Guaranteed Income for Life without guaranteed benefit £2,300.00 per annum

jamesd

FGdsa21 said:

Been told by my pension provider that if I take lump sums from my pension pot that, because the policy has guaranteed benefits that I would need proof of taking financial advice. The actual amount this guaranteed benefit would add to an annuity is £150 a year. 
So am I expected to pay a Financial Advisor £100's for the sake of losing £150 a year?

thx

There's no requirement to take advice before taking a 25% tax free lump sum, so you should be able to do that. Once it's done you have a few months to buy an annuity.

FGdsa21 said:

Current value of policy £58,000
Annuity 1.....Guaranteed Income for Life £2,455.00 per annum
Annuity 2......Guaranteed Income for Life without guaranteed benefit £2,300.00 per annum

Those appear to be 4.23% or 4.00% of the pot size. Are they for a level annuity? One with spousal pension after your death? Any guarantee period? In today's market 4.062 is about what could be expected from a single life level annuity.

If you have any medical of lifestyle factors that reduce life expectancy you could get an enhanced annuity paying more than a standard one.  For example, a smoker might get 4.5%, more than the guaranteed rate, and you can't be blocked from using the "open market option" to buy an annuity from somewhere else. It's also possible that this firm might apply an enhancement to increase te 4.23% rate.

FGdsa21

jamesd those figures are for a level annuity, and like I said previously approx £150 per annum guaranteed benifit.
So taking financial advice to have control of taking lump sums rather than annuity will prove to be as previous posts have said a £1,000 cost for a signed letter from a financial advisor versus losing £150 a year benefit!!! 

dunstonh

FGdsa21 said:

jamesd those figures are for a level annuity, and like I said previously approx £150 per annum guaranteed benifit.
So taking financial advice to have control of taking lump sums rather than annuity will prove to be as previous posts have said a £1,000 cost for a signed letter from a financial advisor versus losing £150 a year benefit!!! 

That assumes you find an IFA willing. Overriding a GAR is something that PI insurers ask advisers if they have done it  and request case specific details each year (cumulatively).  Many would consider not offering advice at all rather than put up with that hassle and the increased annual premiums that come with it.      Then you have insistent client data that gets requested as well.  Chances are this case would fall foul of both.   So, good chance an IFA would say thank you but no thanks.

garmeg

dunstonh said:

FGdsa21 said:

jamesd those figures are for a level annuity, and like I said previously approx £150 per annum guaranteed benifit.
So taking financial advice to have control of taking lump sums rather than annuity will prove to be as previous posts have said a £1,000 cost for a signed letter from a financial advisor versus losing £150 a year benefit!!! 

That assumes you find an IFA willing. Overriding a GAR is something that PI insurers ask advisers if they have done it  and request case specific details each year (cumulatively).  Many would consider not offering advice at all rather than put up with that hassle and the increased annual premiums that come with it.      Then you have insistent client data that gets requested as well.  Chances are this case would fall foul of both.   So, good chance an IFA would say thank you but no thanks.

A bit mean to be in this situation due to what is really a crap GAR.