Prudential refusing to set up Drawdown policy due to no income?

Mark247365

I hope someone can offer me assistance and advice in what I see as a non sensical response from Prudential in my attempt at accessing my pension that was set up for when I hit 60, which I now have!

After speaking to Prudential about the option of withdrawing my pension on a Drawdown basis, within one phonecall I was first informed they did not offer that option and then within a separate phonecall told they did.

To access my pension in such a manner, I was told I would have to speak to one of their recommended M&G financial advisors before that process could begin, but afer spending numerous weeks getting to the stage where that phone appointment took place, within 
300mins he then drops a bombshell.

After answering numerous questions regarding my current financial situation, he informs me that due to me having no current income, that first, he couldn't recommend proceeding with a Drawdown policy, then second, guaranteed me that Prudential would reject such a request anyway.

The phone appointment was then terminated as he stated there was no point in proceeding and showed his own frustration alongside mine, as he wouldn't be able to earn his fee for submitting my request. 

So then, my mother died in November 2020 with me having been her full time non professional carer relying mainly on a DWP Carers Allowance for many years as I looked after her during her failing health. After Probate, I currently have savings in my bank account linked directly to my late mother's estate, along with the fact that once her house is sold, the proceeds of that estate are to be shared between my brother and I. 

Along with telling the advisor all of the above, as well as indicating my firm intention was to secure future income by eventually purchasing an overseas holiday Buy To Let property, the financial advisor still refused to recommend me for Drawdown repeatedly stating that due to me having no current income as well as new government guidelines, Prudential would reject the request. My Pension pot would have given me income until I was in the position to increase that potential by buying an overseas holiday Buy To Let.

So, with all of this unravelling, I spoke to numerous friends and relatives, none of which understand how I'm effectively being refused access to what is in fact, my Pension pot, my money - especially as at no stage since letters exchanged and phone calls took place dating back to November 2021, did anyone raise this non sensical condition for accessing my money!

I would kindly appreciate any helpful advice as it seems I will now have to look into transferring my Pension pot out of Prudential over to a provider who will allow me to set up a Drawdown policy.

In the meantime, thank you in advance of any help. Take care and stay safe! 

Mark

Albermarle

For the first part, it is common that older pensions do not offer a drawdown option, and that to start drawdown you first have to transfer to a more modern pension. This can be with the same provider, or you can transfer to a different provider.
The Pru will not transfer you to a new pension without you speaking ( and paying ) a financial advisor.
There would be nothing to stop you instead transferring to a provider, who does not require you to take financial advice (so no cost), although you would then have to decide what to invest in, and manage the drawdown yourself.

A far as the second part, regarding the 'no income' issue I do not know enough about the subject, so best to wait for more comments from better informed posters on the subject. 

Malthusian

Does the pension have "safeguarded rights" worth more than £30,000? If it does you would need to take regulated advice in order transfer it (which does not have to be from Pru / M&G). It sounds unlikely (I would expect the Pru / M&G adviser to mention it) but doesn't hurt to check.

If not there is no requirement to use Pru or take advice from them, you can simply transfer the pension to somebody that offers the option that you want.

After Probate, I currently have savings in my bank account linked directly to my late mother's estate, along with the fact that once her house is sold, the proceeds of that estate are to be shared between my brother and I.

You should really at least move it into a separate account in case you go under a bus. It would save your representatives doing some forensic accountancy to work out which is your money and which belongs to the estate, and would protect you from any unwarranted accusations about having the estate's money resting in your account.

You may find you need a separate estate account to receive the house proceeds in any case.

Along with telling the advisor all of the above, as well as indicating my firm intention was to secure future income by eventually purchasing an overseas holiday Buy To Let property

That sounds like an extremely high risk retirement strategy. Are you certain you want the hassle of maintaining an overseas rental property, dealing with tenants and contractors, understanding the local regulations for landlords, paying foreign taxes etc? Being a landlord in a foreign country is a lot more complicated than opening a drawdown pension in the UK.

Albermarle said: A far as the second part, regarding the 'no income' issue I do not know enough about the subject, so best to wait for more comments from better informed posters on the subject. 

I think the issue here is that:

• Pru won't offer their drawdown pension on a DIY basis.
• Pru won't advise the OP to go into drawdown. (Tied advisers like Pru's are more likely to apply blanket policies like "no alternative sources of income = please go away" compared to an IFA looking at your individual circumstances.)
  

So he needs to go elsewhere. Which is normal.

dunstonh

After speaking to Prudential about the option of withdrawing my pension on a Drawdown basis, within one phonecall I was first informed they did not offer that option and then within a separate phonecall told they did.

Prudential offer all drawdown options on their modern plan.
However, they do not offer all drawdown options on their legacy plans.  Depending on the age of the plan they may not offer any drawdown options.    Most offer some options (typically UFPLS - some fully only. some partial)

To access my pension in such a manner, I was told I would have to speak to one of their recommended M&G financial advisors before that process could begin, but afer spending numerous weeks getting to the stage where that phone appointment took place, within 300mins he then drops a bombshell.

This is where they attempt to transfer you onto their modern plan.  Not a great idea.   I have seen several done this way and in each case, the platform charge, fund charges and adviser charges were higher than they could have got via an IFA.

After answering numerous questions regarding my current financial situation, he informs me that due to me having no current income, that first, he couldn't recommend proceeding with a Drawdown policy, then second, guaranteed me that Prudential would reject such a request anyway.

The problem with dealing with restricted FAs is that they have restrictions.  Hence why they are called FAs and not IFAs.

Drawdown is a higher risk advice transaction.   So, restricted firms will often put in place restrictions in areas of higher risk to try and mitigate the risk.       So, in this case, you appear to be hitting a restriction.

Along with telling the advisor all of the above, as well as indicating my firm intention was to secure future income by eventually purchasing an overseas holiday Buy To Let property, the financial advisor still refused to recommend me for Drawdown repeatedly stating that due to me having no current income as well as new government guidelines, Prudential would reject the request.

There are no Government guidelines. So, that is a bit of BS.  However, the rest of it means you are still hitting their restrictions.

So, with all of this unravelling, I spoke to numerous friends and relatives, none of which understand how I'm effectively being refused access to what is in fact, my Pension pot, my money - especially as at no stage since letters exchanged and phone calls took place dating back to November 2021, did anyone raise this non sensical condition for accessing my money!

You are not being refused access.     You employed a restricted FA to give you advice and that restricted FA refuses to provide advice if you fall outside of their criteria.   

I would kindly appreciate any helpful advice as it seems I will now have to look into transferring my Pension pot out of Prudential over to a provider who will allow me to set up a Drawdown policy.

Pretty much all providers that offer drawdown will.    Only those that require a restricted FA to sell the plan would not.

However, as an IFA, I would also be on guard with someone with no income telling me their plan was to draw the bulk of the pension to purchase an overseas holiday let.       Double taxation, currency fluctuations.  No existing overseas property letting, let alone UK property letting.   Scam risk (a number of these old overseas property scams from pension money have morphed into getting people to draw their money out first and then putting it into the overseas property).  

So, if you are willing to do it despite it probably being highly unsuitable to do so, then you will need to DIY.

barnstar2077

As with previous comments the most alarming thing is the overseas holiday let!  Please do your homework, and perhaps discuss the idea with trusted friends and family before you take on such a potentially massive liability / scam. 

Marcon

dunstonh said:

Along with telling the advisor all of the above, as well as indicating my firm intention was to secure future income by eventually purchasing an overseas holiday Buy To Let property, the financial advisor still refused to recommend me for Drawdown repeatedly stating that due to me having no current income as well as new government guidelines, Prudential would reject the request.

There are no Government guidelines. So, that is a bit of BS.  However, the rest of it means you are still hitting their restrictions.

Suspect there may have been a bit of confusion between 'government' and 'FCA'. Whether it was at OP's end or the FA's it's impossible to know!

xylophone

However, as an IFA, I would also be on guard with someone with no income telling me their plan was to draw the bulk of the pension to purchase an overseas holiday let. 

I can't see where the OP has said this. He says

Along with telling the advisor all of the above, as well as indicating my firm intention was to secure future income by eventually purchasing an overseas holiday Buy To Let property, 

It appears that he is to benefit from a half share in his late mother's estate - perhaps it is these funds that he would eventually use to buy the property?

However, as other posters have said, he would do well to consider very carefully and take expert independent advice before going down this path.

It is not easy to be a landlord in one's own neighbourhood - just imagining trying to manage a property in another part of the world raises the hair on the back of my neck.

xylophone

with me having been her full time non professional carer relying mainly on a DWP Carers Allowance for many years as I looked after her during her failing health.

OP, have you obtained a state pension forecast?

https://www.gov.uk/check-state-pension

as it seems I will now have to look into transferring my Pension pot out of Prudential over to a provider who will allow me to set up a Drawdown policy.

This would seem to be the case.

You have a wide choice of providers - you need either to do your research and proceed on a DIY basis or take the advice of an independent financial adviser who will consider your situation and  look to provide a solution best suited to your circumstances.

https://moneytothemasses.com/saving-for-your-future/pensions/the-best-cheapest-sipps-low-cost-diy-pensions

You might try here

https://adviserbook.co.uk/

Tick "confirmed independent" and other options when the menu comes up.