Do I still need certificate from an IFA for Defined Benefit pension after policy term end at age 75?

paul1867

For "certificate" use "written confirmation". Prudential provide a printed form for IFA to sign which confirms that they have been consulted but, importantly, not what advise was given.

I took out a Retirement Annuity Plan(S226) in 1984 with Scottish Amicable when I was 34 with and of term end date of my 75th birthday which was in January 2025. The monthly premiums for the whole period was £30.

The policy is now managed by Prudential and they stopped taking premiums at the end of the policy term January 2025.

On my part, purely by chance, I had taken out a defined benefit (DB) pension scheme but credit to my provider at the time. By legislation I am required to obtain a written proof from an IFA stating that they have been consulted and which I then have to present to the pension provider should I wish to take the whole pot in cash.

I fully understand the beneficial nature of this policy and the enhanced pension it would obtain for me.

I also understand that should I take the whole pot in cash 75% of it would be added to my other income for that year and taxed accordingly.

As I did not need the pension, as part of my IHT planning, I kept the policy as the pot would pass to my beneficiaries’ tax free. After 75 this does not apply.

Some years ago, I wished to obtain the pot for a building project, and I first took the free advice available and the adviser agreed that the plan that I had for the money was good under my circumstances. I then made an attempt to obtain this written confirmation from an IFA which ended very unsatisfactorily and a refusal to provide the written confirmation I needed.

Now that I am past 75 and the policy has come to an end, I have asked Prudential several times if I still needed to obtain this written confirmation from an IFA to obtain the full pot in cash.

To date I have not been able to obtain a clear answer. The letters have received generic replies, and the telephone call resulted in the first person stating that I no longer need the written confirmation but when he passed me to the department for claiming my pension I was told that I needed the written confirmation. I did record the phone conversation and have a computer generated fairly accurate transcript.

I would therefore be grateful, before I tackle Prudential again, if anybody could give me definitive advice on whether after the age of 75 and the DB policy has come to an end with no further contributions being taken, if I need to consult a IFA and obtain the written confirmation before I can draw down the total pot in cash? Again, the money is to be spent on building projects.

Thank you.

flaneurs_lobster

If it's a Defined Benefit pension then there is no "pot" of money. 

DRS1

This sounds very odd.  How were you able to take out a DB plan when you pay a flat £30 per month?

And why aren't you just taking the income it will provide with any tax free lump sum?  If you did that presumably you would not need any IFA certificate (whatever that may be)

paul1867

flaneurs_lobster Many thanks for your interest and sorry that I have obviously given incorrect information. I was self-employed and the policy I have is a Retirement Annuity Plan(S226). This policy has guaranteed enhanced benefits. Does that now make sense?

DRS1

Presumably that is a guaranteed ANNUITY rate?

Does it still apply or were you required to take the annuity at a specified age?

Again I would ask why not take the annuity - especially if it has a favourable rate.

flaneurs_lobster

Ah, so a DC pension with a Guaranteed annuity rate. Might we know what this rate is? Are there other benefits?

paul1867

DRS1 Thank you for your interest. I hope my reply to flaneurs_lobster makes things clearer.
If you have a pension policy which has a guaranteed enhanced benefit one is required to obtain advise from an IFA and obtain proof from the IFA that he has been consulted should you wish to obtain the entire pot in cash. Prudential has provided a form for this, which I have referred to as a "certificate".   
It is not required for the IFA to agree with what you intend to do just that he has been consulted. No problem there then!

paul1867

DRS1 

Today at 8:59PM

Presumably that is a guaranteed ANNUITY rate?

I am not remotely an expert in this area but the policy offers a guaranteed enhanced pension rate over other policies.

Does it still apply or were you required to take the annuity at a specified age?

As I understand it from Prudential it still applies but as I say the replies I have received from Prudential have not been very clear.

Again I would ask why not take the annuity - especially if it has a favourable rate.

I am 75 and I do not need a monthly income from the policy. I can obtain a higher return by investing the “pot” in property, that I already own, and obtain a higher return and still have the capital.

paul1867

flaneurs_lobster Posts: 6,211 Forumite

Today at 9:06PM

Ah, so a DC pension with a Guaranteed annuity rate. Might we know what this rate is? Are there other benefits?


You may but I will have to look it up, IIRC it is almost double the "normal" policy rate. As I say I consider that the pot, which is small at about £76K  reducing to about £63K after taxation if taken in cash. I already own the properties but they need money spent on them before I can either let or sell them. I need the money from the pension pot in order to do this and when completed I will still have the value of the pension pot in the market value of the properties and rents would far exceed even the enhanced pension. 

Marcon

paul1867 said:

flaneurs_lobster Posts: 6,211 Forumite

Today at 9:06PM

Ah, so a DC pension with a Guaranteed annuity rate. Might we know what this rate is? Are there other benefits?


You may but I will have to look it up, IIRC it is almost double the "normal" policy rate. As I say I consider that the pot, which is small at about £76K  reducing to about £63K after taxation if taken in cash. I already own the properties but they need money spent on them before I can either let or sell them. I need the money from the pension pot in order to do this and when completed I will still have the value of the pension pot in the market value of the properties and rents would far exceed even the enhanced pension. 

Not sure why anyone is asking you for more information, when your own question was quite specific.

You have a pension scheme with 'safeguarded benefits' (the bumper GAR). Have a look at https://adviser.royallondon.com/technical-central/pensions/transfers/safeguarded-benefits/ which will explain further. The policy has a value of £30K+, so you need to receive (but not necessarily follow) advice from an adviser with the appropriate 'permissions' - that's what the bit of paper from the Pru is for.

dunstonh

As I did not need the pension, as part of my IHT planning, I kept the policy as the pot would pass to my beneficiaries’ tax free. After 75 this does not apply.

However, take the income and gift it, maybe adding a long guarantee period, and it isn't subject to IHT any more.

Some years ago, I wished to obtain the pot for a building project, and I first took the free advice available and the adviser agreed that the plan that I had for the money was good under my circumstances. I then made an attempt to obtain this written confirmation from an IFA which ended very unsatisfactorily and a refusal to provide the written confirmation I needed.

It has to be paid for advice.  Not free short guidance.  The adviser also is required to have the necessary permissions.  Most IFAs do but most FAs do not.

Now that I am past 75 and the policy has come to an end, I have asked Prudential several times if I still needed to obtain this written confirmation from an IFA to obtain the full pot in cash.

You do.

GARs are a safeguarded benefit, whatever the age and to convert the pension to flexible benefits when the value is over 30k requires advice.