IFA and my 25% tax free lump sum

ader42

xylophone said:

 the latest is that Aviva are asking for a letter from his Financial Advisor (without saying what the contents of said letter might be). 

They might not have specified what the adviser should say but presumably they have given the reason why they consider that advice is required?

No, it’s merely a list of things they want providing, from memory, HMRC scheme reference, email address of new scheme, other contact details and a “letter from your financial advisor, on company headed paper”. I’d go so far as say that they didn’t even state that advice was required, presumably just a letter of some sort saying that he was their client. No indication whatsoever that the letter was to take liability for the transfer or for the FA to approve of the transfer, but I did personally assume the latter (having read previously of others requiring FA “permission” to transfer).

Aviva have been completely farcical to be honest. Twice they have given him compensation for taking so long to pull their finger out and do anything of note over the past months, at one point they told him the policy didn’t exist despite him having just received a statement and balance from them the week prior. 

I think dunstonh is right, it’s likely to do with the liability and safeguarded benefits to which my friend remains oblivious as he can’t find any of his old paperwork for this pension and Aviva can’t provide any, so we can’t even see if he has a GAR.

Aviva won’t (it seems) offer a drawdown option - hence their suggestion of a transfer to another provider! 

Thanks for the replies, maybe they have been a little instructive to the OP too.

xylophone

I think dunstonh is right, it’s likely to do with the liability and safeguarded benefits to which my friend remains oblivious as he can’t find any of his old paperwork for this pension and Aviva can’t provide any, so we can’t even see if he has a GAR.

Your friend has no policy documents at all?

And Aviva know nothing about the policy they administer?

Yet an (annual?) statement is provided?

And how can an advisor advise on the transfer of a pension without any information about what benefits it might provide?

https://techzone.abrdn.com/public/pensions/Tech-guide-pension-transfers-dc

dunstonh

No, it’s merely a list of things they want providing, from memory, HMRC scheme reference, email address of new scheme, other contact details and a “letter from your financial advisor, on company headed paper”. I’d go so far as say that they didn’t even state that advice was required, presumably just a letter of some sort saying that he was their client. 

That sounds more like an anti-fraud check.  i.e. checking you have spoken to an IFA or pensionwise.

Aviva have been completely farcical to be honest. Twice they have given him compensation for taking so long to pull their finger out and do anything of note over the past months, at one point they told him the policy didn’t exist despite him having just received a statement and balance from them the week prior. 

Which Aviva is it?
Aviva (ex CGNU) are very fast.  
Aviva (ex FP) a bit more sluggish
Aviva (ex AXA) quite sluggish.
Aviva (workplace) average
Aviva (platform) - processing is fine but customer service is a bit slow

Both the ex FP and ex AXA business is still operated out of the old legacy offices on the old software.  Aviva haven't go them integrated yet.    The different offices of Aviva cannot see the policies of the other offices.  So, if you contact the wrong one first, they won't be able to find the policy.

Aviva won’t (it seems) offer a drawdown option - hence their suggestion of a transfer to another provider! 

It would cost close to a billion, if not more, to bring all legacy policies up to modern standards.   Aviva will have hundreds of legacy products, possibly thousands, by the time you include all the legacy companies and the hybrid schemes.   Each one would need to be recoded but there may only be 300 policyholders left on a version.   So, its cheaper to let it be transferred out than it is to code functionality.

xylophone

The friend has a recent statement.

It appears to have arrived in the post.

I cannot imagine that there was no indication of  whence the letter came.

Therefore there is a return address.

Can the friend not write to the return address and request a "retirement pack" which would give  him details of what options are available under the policy?

He would then at least have the information on which to base a decision on the next steps.

Re "safeguarded benefits",  he should see

https://techzone.abrdn.com/public/pensions/death-benefit-nominations#:~:text=Inherited drawdown allows pension wealth,the beneficiary's estate for IHT.

In particular re PCLS

4.3 Scheme specific protected tax-free lump sums

Members who had a right to more than 25% tax-free cash on 6 April 2006 may still have their tax-free cash entitlement protected. However, as this relates to a lump sum rather than a secure retirement income, it does not constitute a safeguarded benefit, provided that there are no other safeguarded benefits attached to the policy.

ader42

Thanks all, I saw said friend today and he showed me the last letter from them investigating his complaint and their decision to provide him the most recent compensation. That letter does state along the lines of the wrong department therefore that department having no knowledge of said policy. While chatting he told me it used to be AXA so it is clearly ex-AXA. 

He also showed me a further forward looking illustration he has found from 5 years ago which states his with profits fund has GARs (but not what these GARs are), so I suggested to him that he should try to get all the scheme information before going ahead (if he can), but he seems insistent on trying to transfer asap without finding out about the GARs.

I think the fact that the annuity quotes / illustration they gave him seemed pretty poor to him that he thinks he’d prefer flexible drawdown. I did tell him some GARs from the 80s/90s were a lot higher than are available today so he might be discarding something valuable if he doesn’t find out the full facts.

xylophone

but he seems insistent on trying to transfer asap without finding out about the GARs.

He needs to do some reading.

See link in my post above.  https://www.gov.uk/government/publications/pension-benefits-with-a-guarantee-and-the-advice-requirement/pension-benefits-with-a-guarantee-and-the-advice-requirement

This factsheet is intended to help pension scheme providers determine:

• whether certain types of pension benefits which contain a promise, including those with a guaranteed annuity rate (GAR), are safeguarded benefits for the purposes of the new advice requirement

• when the exception to the requirement to take independent advice for those with safeguarded benefits worth £30,000 or less applies

The factsheet summarises the principles for determining whether or not certain benefits with guarantees fall within the definition of safeguarded benefits. However, it is not intended as a substitute for legal advice.

3.1 Guaranteed annuity rates

Pension policies with GARs are the most common type of safeguarded benefit which is not a salary-related benefit under an occupational scheme.

Guarantees of this nature typically exist as an option, with the member free to choose to purchase an annuity from another provider, to take benefits as a lump sum, or to transfer to a drawdown product from another provider, and there may be multiple different guaranteed annuity rates available to the member at different ages. However, the benefits are safeguarded because the member has a right to convert their pot into an income in accordance with conversion factor(s) which are known during the accumulation phase.

The benefits are safeguarded even if the guaranteed annuity rate promised is below the rates currently being offered on the open market. This is because the open market rates may fall below the guaranteed annuity rate before the guarantee expires.

A pension plan with a GAR that expires at a specific point in the future (for example when the member turns 60) is a safeguarded benefit until the GAR expires. A pension plan with multiple GARs expiring at different specific points in the future is a safeguarded benefit until all the GARs have expired, at which point it ceases to be safeguarded, provided that there are no other safeguards attaching to the benefits.

Re adviser qualifications

 https://www.mandg.com/wealth/adviser-services/tech-matters/pensions/pension-transfers/pension-transfers-conversions#:~:text=Although GARs are safeguarded benefits,adviser with investment advice permission.

Although GARs are safeguarded benefits, the FCA do not require these cases to be checked by a pension transfer specialist. The firm advising must have the full or limited transfer permission but the advice can be provided by an adviser with investment advice permission. This is because an adviser with the investment advice permission, but not the pension transfer and opt-out permission, must still prominently highlight the value of the GAR to their client (the firm still needs to hold transfer permissions). The adviser should do this as part of the suitability assessment report for their client.

As of 1 October 2020 the FCA have clarified the rules for Guaranteed Annuity Rates to include a minimum guaranteed income (a contract feature most often seen in Retirement Annuity Contracts (RACs)).

Below might be useful.

https://adviserbook.co.uk/

xylophone

Also see

https://connect.avivab2b.co.uk/adviser/resources/product-support/investment-centre/ex-friends-life-funds/#m-tabs-py1jC

Does this relate to his policy?

If your policy number starts with the prefix:  E, E7, EE, EP, ES, ET, ME, FJ, FE, FK, J

Executive pension

0345 366 1644

Email : tandemservicing@avivaservicing.co.uk

Postal address

Aviva
PO Box 582
Bristol
BS34 9FX

dunstonh

He also showed me a further forward looking illustration he has found from 5 years ago which states his with profits fund has GARs (but not what these GARs are), so I suggested to him that he should try to get all the scheme information before going ahead (if he can), but he seems insistent on trying to transfer asap without finding out about the GARs.

With GARs and a fund over 30,000, advice will be mandatory.  No complaint to Aviva will change that.

I think the fact that the annuity quotes / illustration they gave him seemed pretty poor to him that he thinks he’d prefer flexible drawdown. I did tell him some GARs from the 80s/90s were a lot higher than are available today so he might be discarding something valuable if he doesn’t find out the full facts.

Many GARs are good. Some are not so good.    Statement projections usually do not include the GAR in the annuity section.   You usually need details on the terms of the GAR.

ader42

Even more helpful guys, thanks.

Yes the fund is well above £30k.

I understand more about the multiple GARs now (e.g. x% at age 60, y% at age 65 etc), he waited until he was 60 to try and get his hands on it as it had a bonus that kicked in then (his words). 

I think he’ll be getting asked about his financial advisor again by the sound of it, hopefully to his ultimate benefit. 

xylophone

I think he’ll be getting asked about his financial advisor again by the sound of it, hopefully to his ultimate benefit. 

You might refer him to  this page on the forum?