Aunts AVC pension - so difficult to cash in.

MrReaman5000

My aunt has dementia and I manage her financial affairs with an LPA.  She was a civil servant and retired at 55 due to ill health and is now 66. Since then she's been getting regular payments from her civil service pension and recently has started getting her state pension.

She also paid into an AVC which over the years ended up being managed by Aviva. It's worth around £50K in the pot.  I've tried so many times to start taking money from this pension for her, but it just seems impossible.  I received the retirement options pack from Aviva and due to my aunts ill health, we think taking 25% lump sum initially and then each year a certain percentage of the remaining pot as draw down until it's gone.  First of all Aviva said that wasn't possible when the pension was being managed under an LPA and said we could only take an annuity. We don't want to do this as my aunt probably won't live long enough to get the full benefit from what has been paid in.  I waited for them to send details of this but it never arrived.

I just called again today and discussed taking regular drawdown again and they said now that would be fine, but she would have to apply for a Transitional Tax-Free Amount certificate before they could do anything. I've not heard of one of these and so looking it up, I'm still no clearer.  It seems I have to apply to HMRC to get the certificate and provide evidence that my aunt has never taken any other pension tax free amounts, I think.  The problem is I have no idea if she has or not. She wouldn't know either as she doesn't even know what day it is let alone what she did with her financial affairs 10 years ago!

I just don't know what the best thing to do it with being able to access this money for my aunt.  Any help would be appreciated as to what to do next.  Would a financial advisory be able to help with this at all?

dunstonh

  First of all Aviva said that wasn't possible when the pension was being managed under an LPA and said we could only take an annuity.

The LPA shouldn't make any difference.  Are you sure that was the reason and not functionality?  Aviva have extended the availability of drawdown to a number of their older plans in recent times.     

I just called again today and discussed taking regular drawdown again and they said now that would be fine, but she would have to apply for a Transitional Tax-Free Amount certificate before they could do anything

That should not be necessary unless the total tax-free cash will exceed £268,275 across this, any previous, and any other schemes. Or she got up to 100% lifetime allowance use (or would exceed it with this - LTA doesn't exist any more, but it's still relevant).   

 It seems I have to apply to HMRC to get the certificate and provide evidence that my aunt has never taken any other pension tax free amounts, I think. 

No.  You apply to Aviva giving them all the historical evidence of past lifetime allowance use along with evidence of how much tax-free cash was paid.

Something in the way things were discussed with Aviva has prompted this.  However, it seems unlikely to be needed based on what you have said. 

Would a financial advisory be able to help with this at all?

yes

daveyjp

I'd forget any concept of ruling out taking an annuity on the basis it may not pay out what has been paid in.  Its not what you want to do, its what is in the best interest of your aunt.

An annuity is to provide a regular income for life and in your aunt's circumstances a 'fire and forget' option may well be exactly what is required.  It also removes the possibility of lump sums being taken and not spent to leave a legacy to benefit others.

MrReaman5000

dunstonh said:

  First of all Aviva said that wasn't possible when the pension was being managed under an LPA and said we could only take an annuity.

The LPA shouldn't make any difference.  Are you sure that was the reason and not functionality?  Aviva have extended the availability of drawdown to a number of their older plans in recent times.     

I just called again today and discussed taking regular drawdown again and they said now that would be fine, but she would have to apply for a Transitional Tax-Free Amount certificate before they could do anything

That should not be necessary unless the total tax-free cash will exceed £268,275 across this, any previous, and any other schemes. Or she got up to 100% lifetime allowance use (or would exceed it with this - LTA doesn't exist any more, but it's still relevant).   

 It seems I have to apply to HMRC to get the certificate and provide evidence that my aunt has never taken any other pension tax free amounts, I think. 

No.  You apply to Aviva giving them all the historical evidence of past lifetime allowance use along with evidence of how much tax-free cash was paid.

Something in the way things were discussed with Aviva has prompted this.  However, it seems unlikely to be needed based on what you have said. 

Would a financial advisory be able to help with this at all?

yes

They said the drawdown had to be managed online only, so wouldn't be able to be done with an LPA as it would be in my aunts name. It made no sense to me as I would be doing it anyway, but they really seem to be making it up at the minute.

Reading about this certificate, she has never had a pension worth over £268K, let alone tax free cash over this amount, so I don't see how it's relevant.  I don't know if the lady at Aviva raised this certificate because her first question was has my aunt every received anything from previous pensions and all I said was that she was receiving her civil service pension, but I didn't know if she had ever received a 25% tax free lump sum previously.

I asked the lady at Aviva specifically how do I get a certificate and she said apply to HMRC, so I obviously need to give them another call.  They are very frustrating to deal with, especially as I'm not sure on all the details of my aunts past financial affairs.

Regarding the annuity, I've looked at what she would get and it would seem about £600 a month would be possible, but this would mean she'd have to live around another 7 years to get the full benefit, which isn't looking very likely at the moment unfortunately.

squirrelpie

There's what seems to be a useful explanation of TTFACs at https://adviser.royallondon.com/technical-central/pensions/benefit-options/transitional-tax-free-amount-certificates/

LHW99

If you decide to seek advice, an independent adviser who is a member of SOLLA is worth looking for

https://societyoflaterlifeadvisers.co.uk/

Novice_investor101

The online only drawdown at Aviva suggestion means that the pension your aunt currently holds doesn’t offer drawdown. Instead what they do is transfer the money into a SIPP on their DIY platform & the drawing down all has to be done online by the policyholder. They don’t give online access to POA’s. Rather silly of them to suggest it as an option if your aunt isn’t capable of managing her own SIPP. 

However, it does raise the question about whether the AVC can be transferred out to another provider who will allow drawdown via a POA. A financial advisor should be able to arrange this too, after giving advice, & facilitate the drawdowns. 

Note, the comment above regarding making decisions which are in the best interests of your aunt for her well being. How is drawdown better for her current circumstances than taking an annuity? Annuities now offer value protection & other add on’s that mean the “pot” isn’t totally  lost if she passes sooner than expected. 

xylophone

https://www.hl.co.uk/support/life-events/supporting-someone-else

I wonder would it be worth considering transferring the pension to  a SIPP with eg Hargreaves Lansdown?

This would give the flexibility required?