Aviva - Tax Free Sum 5 March at 5:15PM in Pensions, annuities & retirement planning 7 replies 311 views

Hal17

I was speaking with a friend this morning who has very recently retired. I understand he has a pension with Aviva value £100K and had requested to take £25K tax free and leave the balance of £75K in drawdown.

He told me that he received a sum £75K into his bank on Thursday. He has absolutely no understanding why this has happened, and he has been trying to call Aviva to discuss. He has no real understanding of pensions and I am very concerned if he inadvertently provided the wrong instructions to Aviva. Is this something that can be rectified? 

molerat

It could likely only be corrected if it is clear that Aviva did something other than clearly instructed.

A £100K pension totally withdrawn would give a lump sum of around £68K into the bank.

Hal17

Thanks Molerat, I am really hoping that the error is with Aviva.

He said that he definitely requested a split of 25% & 75%. I am worried that he may have made an error on the paperwork and requested 75% & 25%!

Albermarle

It sounds like  a mistake, especially if it is exactly £75K that arrived in his account.
You can not take £75K tax free from a £100K pension. If it was the £75K taxable part then the tax free would have automatically come with it . So would have been £100K minus some tax on the £75K part.

Marcon

Hal17 said:

Thanks Molerat, I am really hoping that the error is with Aviva.

He said that he definitely requested a split of 25% & 75%. I am worried that he may have made an error on the paperwork and requested 75% & 25%!

Fingers crossed he has a copy of the paperwork...? What does it say? (If not, ask Aviva for a copy.)

dunstonh

He said that he definitely requested a split of 25% & 75%. 

if you word it that way, then it sounds like UFPLS and that a full withdrawal  (or partial withdrawal of £x)

He told me that he received a sum £75K into his bank on Thursday. 

It is statically unlikely that he had exactly £100,000.   So, if he has received £75,000 then it sounds like they have crystallised £100,000.      However, the tax free cash usually arrives at the same time.

And if this was his first taxable withdrawal, it wouldnt be exactly £75k on a £100k crystallisation as he would be taxed on it.

So, something is not right.

Hal17

Thank you all for your replies, I really do appreciate that. I know it is difficult to guess what has happened with the limited information he has given me.

I will ensure he speaks with Aviva however long he has to wait on the phone. Also I will try and get some paperwork to see if I can find what may have happened? Thanks again.

Saltayr

I crystalized my Aviva Workplace Retirement Account in September last year. There were a number of stages from initial enquiry phone call, completing a form clearly laying out my request for the PCLS but leaving the remainder untouched (not drawing down any income) receiving an illustration and (after acceptance) a lifetime allowance certificate. All the approvals were done electronically via Docusign and it was a pretty seamless process.

Your friend should be able to see the illustration and LTAC in their document library if they login to Aviva if they followed the same process.