Pension Pot @ 55

PeeWee6

Hi 

Little bit of advice please. I am 55 and would like to cash in a small pension I have.  Its with Royal London (formerly CIS pension).  I have been in touch with a financial advisor who has said they wont sign forms that RL require for me to cash the pot in as the GAR is a 'huge benefit'. 

I just received from Royal London information that states 'We currently estimate that the taxable yearly income you could receive without the GAR is higher than the GAR would provide' 

I rang RL customer services to query this to be told that they needed to talk to one of their advisors who would ring me back.  I'm still waiting.   

When I contact them on Monday what questions do I need to ask?

TIA x

LHW99

Was the adviser an FA or IFA? (IFA is best)

Did you get paid advice, or was it a quick "look at paper"? Unless it was a full advice session, I suspect the adviser would be under no obligation to sign forms, even if they thought it would be advisable.

If you are still waiting on a call-back from an RL "adviser" you should perhaps ask why they didn't call as promised /  what timescale this call-back would be?

xylophone

 SEE
https://assets.publishing.service.gov.uk/media/5a80b577ed915d74e33fbf54/pension-benefits-with-a-guarantee-factsheet-jan-2016.pdf


https://adviser.royallondon.com/technical-central/pensions/transfers/safeguarded-benefits/#:~:text=Safeguarded benefits are defined as,GARs in the above list.

westv

It might be useful to know what the actual GAR rate is and its terms.

PeeWee6

Hi the financial advisor came in person took all my details etc, they are authorised and accredited by the FCA.

The GAR is 6% of approx £40k when I turn 60. It is payable for life, has a 5 year guarantee period

They I rang early Friday afternoon and said I would receive a call back within the hour.  

westv

A 6% (I assume single life and level) GAR isn't quite as appealing now as it might have been several years ago.
But that might change in 5 years time.

xylophone

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

Guaranteed Annuity Rates

There is one significant exception to the requirement for a pension transfer specialist, and it is where the advice is on conversions or transfers in respect of pension policies with a guaranteed annuity rate (GAR).

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..

If RL has confirmed that advice is required then you must obtain it.

However, you are not compelled to follow it.

If an Adviser accepts you as a client and does the work for which you have paid him, then he must sign the advice given declaration, whether that advice is positive or negative.

https://forums.moneysavingexpert.com/discussion/comment/74819622/#Comment_74819622

dunstonh

Little bit of advice please. I am 55 and would like to cash in a small pension I have.  Its with Royal London (formerly CIS pension).  I have been in touch with a financial advisor who has said they wont sign forms that RL require for me to cash the pot in as the GAR is a 'huge benefit'. 

I had one of these recently.  It may have been you!!! (although the one I looked at was a bit higher in value and they were older)

Seriously though, an adviser cant just sign the form.  They have to go through the full advice process, which is time consuming and it comes with significant liability and cost of the adviser firm.  The adviser firm will have to declare overridden GARs in detail (not cumulative figures but the whole scenario of each and every one) with each PI insurance renewal which increase the premiums every single year for the firm whilst it still exists.

So, its often not viable from a cost point of view for an adviser to do it.

CIS GARs are not that great.    The old non-protected rights versions are a little better in your mid 60s but the ex protected rights GARs are not very good.  Overriding them as part of an "at retirement" scenario where there are other pensions can often be justified.  Cashing in at 55 is a different issue altogether.

I rang RL customer services to query this to be told that they needed to talk to one of their advisors who would ring me back.  I'm still waiting.   

RL do not have advisers.   None of the staff hold advising permissions.  So, they wont be able to give you advice.   The best they can do is repeat what you have already been told.  i.e. you need an adviser to sign the form if you wish to access the pension flexibly.

Did you get paid advice, or was it a quick "look at paper"? Unless it was a full advice session, I suspect the adviser would be under no obligation to sign forms, even if they thought it would be advisable.

The ex CIS GARs are actually fairly easy to justify overriding in your 60s.   However, cashing in a pension at 55 is not going to see many IFAs want to get involved with that.   Rarely is it a good idea to cash in a pension age 55.   So, you end up with double trouble in terms of liability i.e. overriding a GAR plus cashing in at 55.  Both things have to be declared to PI insurers and they don't like either.

However, if an IFA is willing to give the advice and the advice is not to do it then the form should still be signed as all it asks is that the advice has been given.