AVIVA will not allow my pension funds to remain invested with them after age 75.

TerenceJeal

• I am approaching 75 years of age. I am a Spanish resident and Spanish taxpayer and I have not lived in the UK for over 30 years. 
• I have some old pension plans from the 1980s, now managed by AVIVA, worth about £50,000 total. 
• Because I am still working, I wanted to withdraw 25% of the funds now, and leave the balance for later using AVIVA's "Option 3 - Take money whenever you need to - taking lump sums from your existing pension pot."
• Aviva has refused, and insists that I must take all of the pension pot now, before I reach 75-y-o, and they will not allow me to leave any money in my pension fund. 
• Am I being treated unfairly or unethically?

Linton

You are not being treated unfairly.  Old pensions often do not support the latest pension facilities - it is uneconomic to change all the scheme rules/software/documentation etc.

Provided there are no guarantees with the pension, in particular a guaranteed annuity rate, then in principle you should be able to easily transfer the pension to a different modern scheme such as a SIPP that does support drawdown.  However whether your Spanish residency would be a problem, I do not know.  Perhaps it may be worthwhile talking to AVIVA first about transferring your pension to one of their other pension schemes that does do what you want.

TerenceJeal

Thanks, Linton. The pension plans DO support drawdown, in fact, AVIVA has written to me in Spain on several occasions with brochures that identify my retirement options, including annuity, drawdown, taking lump sums, and total withdrawal, and asking me to indicate my preference. It was only once I made the choice that they closed the door on all options except total withdrawal. 

xylophone

Perhaps you should discuss your situation with experts on pension law UK/Spain?

Example

https://www.blacktowerfm.com/residents-of-spain-with-uk-pensions/

dunstonh

AVIVA will not allow my pension funds to remain invested with them after age 75.

Correction. Aviva will not allow you to retain your current pension product after age 75.  Aviva themselves do have several pension versions that will allow age 75+.

• Aviva has refused, and insists that I must take all of the pension pot now, before I reach 75-y-o, and they will not allow me to leave any money in my pension fund. 

Which is to be expected on a product that is 40 years old and offers options that only existed at the point it was sold.

If you bought a black and white TV would you expect it to be in colour 40 years later? - that is what is happening here.

• Am I being treated unfairly or unethically?

No.  

The pension plans DO support drawdown, in fact, AVIVA has written to me in Spain on several occasions with brochures that identify my retirement options, including annuity, drawdown, taking lump sums, and total withdrawal, and asking me to indicate my preference.  It was only once I made the choice that they closed the door on all options except total withdrawal. 

The plans do not support drawdown.   You are misreading the documentation.   Telling you generic options open to you is not the same as your plan offering them.       However, it is also worth noting that Aviva does confusingly state they support drawdown when asked a vague question but when you ask do they support all drawdown options, they then state its only UFPLS that they support on legacy plans.   UFPLS is technically a drawdown option and it was easy for them to implement that on legacy plans as it just needed tweaking on the small pots and trivial lump sums software that already existed.    Whereas income drawdown would require a complete re-write costing millions or even billions of pounds.   

Ordinarily, we would say that you just transfer it to a modern plan.  However, being EU resident, that makes that extremely difficult.

Linton

TerenceJeal said:

Thanks, Linton. The pension plans DO support drawdown, in fact, AVIVA has written to me in Spain on several occasions with brochures that identify my retirement options, including annuity, drawdown, taking lump sums, and total withdrawal, and asking me to indicate my preference. It was only once I made the choice that they closed the door on all options except total withdrawal. 

Have you asked Aviva why you cannot continue keeping the pension? There was an age limit of 75 up to 2015. if I remember correcty.  I guess it is possible that these changes were not implemented.

There must be a rational explanation. Aviva would not single you out for special reatment.

TerenceJeal

Thanks Dunston. I appreciate your expertise and your comments. In fact, I wanted to simply leave the pot invested and occasionally dip into it on an ad hoc basis - nothing predetermined. In latter years, whenever AVIVA wrote to me with my pension fund statement they always accompanied it with the "retirement options" brochure. So it was not really a "vague or generic" communication, but one that was specifically linked to the personalised unit statements I was receiving.

However, I understand your point about "legacy" plans, and I can appreciate that rewriting the rules would be onerous were I to insist on a modern drawdown option for a legacy policy. Nevertheless, I was not actually requesting anything other than to allow the fund to remain invested until such time as I choose to withdraw some or all of it on a simple "leave it where it is" basis as described in the personalised fund statement correspondence. 

Now I will find myself with a sum of money that is prematurely and immediately taxable at higher rate tax in Spain, and without even the benefit of 25% of it being tax-free. AVIVA's decision will cost me around 35-40% of my fund value.  

dunstonh

Linton said:

TerenceJeal said:

Thanks, Linton. The pension plans DO support drawdown, in fact, AVIVA has written to me in Spain on several occasions with brochures that identify my retirement options, including annuity, drawdown, taking lump sums, and total withdrawal, and asking me to indicate my preference. It was only once I made the choice that they closed the door on all options except total withdrawal. 

Have you asked Aviva why you cannot continue keeping the pension? There was an age limit of 75 up to 2015. if I remember correcty.  I guess it is possible that these changes were not implemented.

There must be a rational explanation. Aviva would not single you out for special reatment.

Its the same reason they haven't recoded the software to allow drawdown.  These plans were coded on old software (often hard coded) and its not viable to pay to convert the ever reducing numbers to offer some or all of the functionality that comes in over the years.   

Age 75 becomes difficult because benefits get reclassified at that age to exempt them from the LTA test and change the death benefits.  So, its not just a case of someone finding a way to edit age 75 to make it 130. 

hence you find the vast majority of legacy plans maintain age 75 as their maximum.

In latter years, whenever AVIVA wrote to me with my pension fund statement they always accompanied it with the "retirement options" brochure. So it was not really a "vague or generic" communication, but one that was specifically linked to the personalised unit statements I was receiving.

I have seen that brochure.  They send it to IFAs when we ask for information, or a client is of an age and they copy the IFA in.   It's not personalised to the plan you have.  They are detailing the options available to you.   You have the option to retain your money in a pension.  You just dont have it with the existing pension.

However, I understand your point about "legacy" plans, and I can appreciate that rewriting the rules would be onerous were I to insist on a modern drawdown option for a legacy policy. Nevertheless, I was not actually requesting anything other than to allow the fund to remain invested until such time as I choose to withdraw some or all of it on a simple "leave it where it is" basis as described in the personalised fund statement correspondence. 

I covered that bit above in my response to Linton.  It's not as simple as just leaving it where it is.  

Now I will find myself with a sum of money that is prematurely and immediately taxable at higher rate tax in Spain, and without even the benefit of 25% of it being tax-free. AVIVA's decision will cost me around 35-40% of my fund value.  

Technically, Aviva is not stopping you from moving the pension to a modern plan that allows you to do what you want.   The EU is certainly adding to the difficulty until it decides it doesn't want to punish the UK any more.  But there are means you can still do it.