Royal London Pension - HMRC issue? Has anyone had this?

Jirving36

I am 55 + and wish to cash in this pension in full  - 25 % tax free and pay tax on the rest

Royal London said they needed to send me an 'Options Pack' first and I have waited for three weeks but not yet received

Instead I got the following email today:

‘’Thank you for reaching out to us regarding taking your money.

 

Unfortunately, the current legislation that relates to scheme specific tax-free cash does not work as intended. Please note the scheme specific tax-free cash is when you are entitled to more than 25% of your policy tax free.   This means we cannot accurately calculate the scheme specific tax-free cash for you to make an informed decision at this time. This may also result in an unauthorised payment, which would be subject to an additional tax charge.

Please note that this is not a Royal London issue and is due to the error in the HMRC legislation. We, with other pension providers are in discussions with the HMRC to ensure this is resolved quickly. As soon as Royal London have corrected guidance from HMRC, we will produce your quote as instructed‘’

Has anyone encountered this with Royal London or any other company? I have tried calling and been told very little  - basically cannot access my fund at all - cannot give me a timescale or anything as to when this 'issue' might be resolved? Seems very odd / possibly illegal to block access

dunstonh

Has anyone encountered this with Royal London or any other company? 

Its not to do with Royal London.  It is a consequence of rushed legislation.  HMRC has confirmed that follow up legislation is coming which will be retrospective.    Current guidance is to avoidusing non standard TFC until the changes are known (and a range of other things).  It does not affect standard 25% TFC though.

I am 55 + and wish to cash in this pension in full  - 25 % tax free and pay tax on the rest

You are saying 25%.  However, RL seem to believe you have protected tax free cash entitlement.    So, who is correct?

Seems very odd / possibly illegal to block access

Clearly it is not illegal.       It is not unlawful either.
It is odd in the context of what is considered mainstream but its not odd if you have protected tax free cash entitlement just after flawed legislation has been enacted that needs changing and backdating in a way that could affect you.

If you have another pension that doesn't have protected tax free cash, then use that.

Marcon

Jirving36 said:

I am 55 + and wish to cash in this pension in full  - 25 % tax free and pay tax on the rest

Royal London said they needed to send me an 'Options Pack' first and I have waited for three weeks but not yet received

Instead I got the following email today:

‘’Thank you for reaching out to us regarding taking your money.

 

Unfortunately, the current legislation that relates to scheme specific tax-free cash does not work as intended. Please note the scheme specific tax-free cash is when you are entitled to more than 25% of your policy tax free.   This means we cannot accurately calculate the scheme specific tax-free cash for you to make an informed decision at this time. This may also result in an unauthorised payment, which would be subject to an additional tax charge.

Please note that this is not a Royal London issue and is due to the error in the HMRC legislation. We, with other pension providers are in discussions with the HMRC to ensure this is resolved quickly. As soon as Royal London have corrected guidance from HMRC, we will produce your quote as instructed‘’

Has anyone encountered this with Royal London or any other company? I have tried calling and been told very little  - basically cannot access my fund at all - cannot give me a timescale or anything as to when this 'issue' might be resolved? Seems very odd / possibly illegal to block access

The danger is the possibility of creating an unauthorised payment - with unhappy tax consequences.

This issue has recently received huge publicity all over various types of media eg https://www.telegraph.co.uk/money/pensions/private-pensions/hmrc-lifetime-allowance-error-delay-taking-death-benefits/

Jirving36

thanks for the replies
I have not seen any publicity about this at all previously 
I was unaware that this old fund might have a more than 25% tax free allowance - I was happy with 25% and pay tax on the rest 
Yes I have one other pension fund but I am gathering cash for a specific purpose from old small pensions that have been dormant for years (three in total  - one I have already received) so it is annoying and delaying plans that I cannot get hold of this cash now 
(I have a current final salary pension that will cover me for actual retirement) 

xylophone

See

https://techzone.abrdn.com/public/pensions/Tech-guide-tax-free-cash#:~:text=However, there are some circumstances,sum allowance' (LSA).