LEGAL AND GENERAL CASH OUT RETIREMENT PLAN - PAID TWICE IN ONE TAX YEAR

I have experienced quite a serious problem with a Legal and General Cash Out Retirement Plan.

I had a pension pot with a past employer and on retirement, instead of taking the pension pot all at once, I decided to take out a Cash Out Retirement Plan for tax reasons, an annual payment once a year for 4 years.

In the tax year 2022-2023, Legal and General paid me my annual annuity twice, the first time on 22 April 2022 and the second time on 30 March 2023.

This meant that I had to pay £3,3100 extra tax that year.

I was supposed to receive one annuity payment a year, and although I contacted L&G to find out why I received two annuity payments in 2022-2023, they won't accept any liability for my financial loss.

They told me that they received my pension pot on 14 April 2022 and set up the policy then but backdated the policy start date to 31 March 2022 for some unknown reason. They then paid me 22 days later which fell into tax year 2022-2023.  

The next year they paid me on 30 March 2023 instead of around the same time as the first years payment.

They say they cannot rectify it or change the policy start date although the start date of 31 March 2022 must be wrong as they did not receive my pension pot until 14 April 2022.

This is a lot of money to lose.

I am waiting for a final response letter from them so I can take it to the financial ombudsman.

Has anyone had a similar problem, being paid an annual annuity twice in one tax year and paying extra tax because of this?

Comments

  • dunstonh
    dunstonh Posts: 116,332 Forumite
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    They say they cannot rectify it or change the policy start date although the start date of 31 March 2022 must be wrong as they did not receive my pension pot until 14 April 2022.
    Did it come from an existing L&G policy?     

    Backdating with annuities is commonplace although it normally is linked to the date the funds hit their bank account (not the date it was processed but the date it was on the bank statement).   With in-house plan transfers, they may use an earlier valuation date, such as date the application was received as they may pre-fund an internal transfer.

    In my experience, and I have a case on the go at the moment, the date the service team tell you they received the money and the date they actually received the money is different.  Its only when it goes into force that they correct the date.   If you check the policy schedule, it should tell you the start date.

    Has anyone had a similar problem, being paid an annual annuity twice in one tax year and paying extra tax because of this?
    I suspect lots of people where its an annual payment and close to tax year end.


    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.
  • Hi there, thanks for replying!

    No the pension pot wasn't with L&G.

    The policy schedule gives a start date of 31 March 2022 so it appears they have backdated it as they wrote on 06 April to say they hadn't received the pension pot yet, they said they received it on 14 April and I wasn't paid until 22 April 2022.




  • Hoenir
    Hoenir Posts: 2,031 Forumite
    First Post Name Dropper
    Were you planning on receiving a payment in the 21/22 tax year ? 
  • dunstonh
    dunstonh Posts: 116,332 Forumite
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    edited 23 February at 11:27AM
    The policy schedule gives a start date of 31 March 2022 so it appears they have backdated it as they wrote on 06 April to say they hadn't received the pension pot yet, they said they received it on 14 April and I wasn't paid until 22 April 2022.
    Almost certainly, it will be 31st March will be the day they got the money in the bank.   Don't take any notice of what L&G say was the day they got it.    Even now they still give out the wrong day on their new business tracker. You have to wait until the policy document arrives to get the correct date.   Current new business on their tracker shows the date they received the money as being around 1-2 later than the actual money received date.    For example, I have one now that shows 8th Jan as money received but they actually got it 28th Dec and the start date to be used will be 28th Dec.

    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.
  • Hoenir said:
    Were you planning on receiving a payment in the 21/22 tax year ? 
    Hi Hoenir, good evening, thanks for replying :) 

    No I wasn't as I didn't think L&G would receive the pension pot in time. However if they did receive it on 31 March 2022 as DunstonH suggests, and if they had paid me the first instalment by 05 April 2022, my tax bill would have been £3,310 lower.

    In hindsight I shouldn't have applied 2 weeks before the start of the tax year but my pension provider gave me a deadline for transferring my pot out.
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