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PENSION LIBERATION

I desperately need your help, please!

I took my pension before the law changed so had a tax-free lump sum and had to agree to an annuity - LifeTime Allowance etc. Unhappy!

The law changed but I didn't realise that the rules were backdated. The Financial Advisor that the provider pays has never been in touch with me.

I am now 73 (dob 18.2.1950), single, with no savings or assets and in severe financial difficulty. Other than my annuity I only have State Pension and Housing and Council Tax benefit.

My annuity provider (Prudential) says that they don't support pension liberation. 

Two questions - if it's law how can they refuse? - what on earth can I do now?
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Comments

  • SVaz
    SVaz Posts: 354 Forumite
    100 Posts First Anniversary
    There was talk of changing the rules to become able to reverse annuities,  it never came into law I’m afraid.

  • Silvertabby
    Silvertabby Posts: 9,702 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper Photogenic
    edited 2 October 2023 at 12:05PM
    I desperately need your help, please!

    I took my pension before the law changed so had a tax-free lump sum and had to agree to an annuity - LifeTime Allowance etc. Unhappy!

    The law changed but I didn't realise that the rules were backdated. The Financial Advisor that the provider pays has never been in touch with me.

    I am now 73 (dob 18.2.1950), single, with no savings or assets and in severe financial difficulty. Other than my annuity I only have State Pension and Housing and Council Tax benefit.

    My annuity provider (Prudential) says that they don't support pension liberation. 

    Two questions - if it's law how can they refuse? - what on earth can I do now?
    I'm sorry, but you have misunderstood.  Pension freedoms (not liberation - that's something quite different and usually well dodgy) only applied to DC pension savings that had not been used to buy annuities.

    There was some talk of extending pension freedoms to existing annuities, which may be what you are thinking of, but it never materialised due to the complications involved and the almost certainty that it wouldn't be in the pensioners best interests.

    I'm sorry that you find yourself in this situation, but I'm afraid that cashing in your annuity is a non- starter.  Have you checked that you are getting all the benefits you are entitled to?  Perhaps you could pop over to the benefits boards - we have some very knowledgeable people on there who may be able to help you.
  • Malthusian
    Malthusian Posts: 11,053 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper Photogenic
    I took my pension before the law changed so had a tax-free lump sum and had to agree to an annuity - LifeTime Allowance etc. Unhappy!
    Unless this was before the mid-90s you didn't have to buy an annuity to take the tax free lump sum. That said, until 2015 Income Drawdown was an obscure option, and the regulator took the view that it was only suitable for people with at least £100,000 in their pension and other sources of secure income. So it doesn't sound surprising that it wasn't recommended.
    The law changed but I didn't realise that the rules were backdated.

    They weren't.

    The Financial Advisor that the provider pays has never been in touch with me.

    That is not surprising. The financial adviser almost certainly hasn't been paid by the provider since the annuity was set up. Fees / commission for lifetime annuities are paid up front. There isn't anything you can do with lifetime annuities so ongoing advice is not usually required.

    Two questions - if it's law how can they refuse? - what on earth can I do now?

    It isn't law. There was very briefly some talk in 2015 that people might be allowed to cash in annuities. For very good reason it never went anywhere. It would very likely have made your financial problems worse.

    The Debt-Free Wannabe board is likely to be your best bet - even if you aren't in debt, the regulars there have more experience in helping people in financial difficulties. You may also want to try the Benefits board to make sure you are receiving all the benefits you are entitled to.

    As a semantic point, "pension freedoms" were a reform which applied to defined contribution pensions. You have an annuity so pension freedoms have nothing to do with it. 

    "Pension liberationis a scam where a scammer convinces a mark to transfer a pension into a fake scheme, on a promise that they will help the mark access their pension before they are legally allowed to (i.e. before 55 under current rules). The scammer then steals their money. Pension liberation also does not apply to you (thankfully) as annuities cannot be transferred, which means they can't be stolen. 

  • DullGreyGuy
    DullGreyGuy Posts: 15,568 Forumite
    10,000 Posts Second Anniversary Name Dropper
    Are you sure you mean Pension Liberation? Maybe mean Pension Freedoms instead from 2015?

    It didn't have a retroactive effect of allowing those that had already started drawing their pension to unwind the transaction and allow you to do something else. Its effects were only for those who still held a DC pension pot.

    The law didn't require insurers to offer all types of products, nor does it necessarily override all the terms of the scheme. For those who hadn't started drawing their pension the option was to transfer it to a provider that did support the activities that the person wanted to do but its a moot point as you bought your annuity before the law changes. 
  • dunstonh
    dunstonh Posts: 118,549 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    edited 2 October 2023 at 12:37PM
    My annuity provider (Prudential) says that they don't support pension liberation. 
    Pension liberation is the name for fraud where people have been scammed out of money trying to get access before age 55.

    I took my pension before the law changed so had a tax-free lump sum and had to agree to an annuity - LifeTime Allowance etc. Unhappy!
    You are aged 73.   You haven't been required to buy an annuity before age 75 for decades.  The pension freedom options got rid of the age 75 rule.    So, you didn't have to buy an annuity.

    The law changed but I didn't realise that the rules were backdated. The Financial Advisor that the provider pays has never been in touch with me.
    Commission ceased for new business by the end of 2012.  Providers have not been allowed to pay advisers for any pension related products since before then.    A lifetime annuity doesn't pay any ongoing amount to an adviser.  It is a one off transaction.

    Two questions - if it's law how can they refuse? - what on earth can I do now?
    Its not law.     George Osborne did say they were looking into whether you could exit an annuity and get some of your fund back but it was found to be commercially unviable and the vast majority of people would be left worse off.  So, it never came in.

    The lifetime annuity you bought is cast in stone once purchased.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • SVaz
    SVaz Posts: 354 Forumite
    100 Posts First Anniversary
    My Sister in Law was absolutely told she HAD to buy an annuity 15 years ago with the proceeds of the pension sharing order from her divorce.  It would have been far better for her to have it in a Sipp. 
     She lost so much in the way of benefits due to the annuity income of £120 a month,  she would have been £70 a week better off without it.  
  • dunstonh
    dunstonh Posts: 118,549 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    edited 2 October 2023 at 12:36PM
    My Sister in Law was absolutely told she HAD to buy an annuity 15 years ago with the proceeds of the pension sharing order from her divorce
    Who told her that?
    Are you sure it is an annuity and not a scheme pension?  (the latter would make sense. The former does not)


    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • SVaz
    SVaz Posts: 354 Forumite
    100 Posts First Anniversary
    She told my wife that it’s an annuity,  her divorce Solicitor set her up with an advisor.  Probably not an IFA though.  It was around £50k according to my wife.  Not nearly enough given that her ex’s pension was worth around £300k.  
  • Malthusian
    Malthusian Posts: 11,053 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper Photogenic
    SVaz said:
    She told my wife that it’s an annuity,  her divorce Solicitor set her up with an advisor.  Probably not an IFA though.  It was around £50k according to my wife.  
    And she bought an annuity at 2.88% per year, in 2008, when annuity rates were still at their peak? (A 65 year old man could get around 7.5%pa for a single level annuity at that time.)
    Technically possble if she'd bought an inflation-linked annuity, it just doesn't sound very likely. If it was a Pension Sharing Order she wasn't compelled to buy an annuity. It does sound more like an earmarking order for a scheme pension.
    Not nearly enough given that her ex’s pension was worth around £300k.  

    Doesn't mean it was an unfair split if she took other assets away from the divorce, such as the home. And if it was unfair, the question becomes why her solicitor advised her to sign the papers.

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