Cashing In An Annuity Pension

Headlamp

I recently discovered a small pension pot taken out by my father on my behalf around 40 years ago. It is with the Pru and following a long conversation have decided to cash it all in, as I need the money (c.£50k) for home improvements. 

They have asked me to get a Financial Adviser to sign an Appropriate Advice Form, to show that I have taken independent financial advice. My existing adviser is tied to a firm and his company rules prohibit him from signing it. Other financial advisers I have spoken to also refuse to sign because it has a guaranteed annuity (£3k/year) & cashing it in would not be good advice. 

I have stated that I am willing to sign any waiver, aware of the tax implications, and that I have other sources of income for retirement. 

Has anyone had similar issues, and how was it resolved or is there a licenced financial adviser willing to sign the form, naturally after a conversation, for a small fee? 

I don't want to transfer the pot elsewhere, just gain access to this money. Thanks 

flaneurs_lobster

Headlamp said:

Has anyone had similar issues, and how was it resolved or is there a licenced financial adviser willing to sign the form, naturally after a conversation, for a small fee? 

There's plenty of threads here that have covered this issue ad nauseum if you'd care to look.

Others will give more details but one point, that "small fee" is likely to be around 10% of your fund.

dunstonh

They have asked me to get a Financial Adviser to sign an Appropriate Advice Form, to show that I have taken independent financial advice. My existing adviser is tied to a firm and his company rules prohibit him from signing it. Other financial advisers I have spoken to also refuse to sign because it has a guaranteed annuity (£3k/year) & cashing it in would not be good advice. 

Overriding a GAR is a very high risk transaction unless it is because the open market option (another anunity from a different provider) can improve the terms further.   Most cannot be beaten apart from some ex CIS (now Royal London) ones.

Adviser firms have to report each year to their PI insurers (or prospective PI insurers) how many GAR overrides they have done to access flexibly.  Not just in number but in description and reasoning.      The info needs to be repeated each year that the firm is in business.  Compounding of cases over the years increases admin and costs as well as increasing the PI premiums.     So it also creates an annual cost long after you have done your transaction and stopped paying for it.

I have stated that I am willing to sign any waiver, aware of the tax implications, and that I have other sources of income for retirement. 

You are not allowed to sign away your rights, especially when you are not in a position to know what you are signing away.

Why are you not using the other sources?    Are they better or worse?

Has anyone had similar issues, and how was it resolved or is there a licenced financial adviser willing to sign the form, naturally after a conversation, for a small fee? 

What you want to do is likely to be a financially bad decision.
1 - overriding the GAR
2 - Accessing your retirement fund before retirement (indicating you cannot afford the expenditure whilst working and as most people earn less in retirement, meaning you are unlikely to be able to afford what you are doing)
3 - MPAA being triggered
4 - unimportant luxury spending.

You only want to pay a small fee?   Even when you find an adviser willing to do it, expect the fee to be very large, reflecting the risk and cost involved.    Probably around £5k. However, most are going to tell you that they are not willing to do it.

Marcon

Headlamp said:

I recently discovered a small pension pot taken out by my father on my behalf around 40 years ago. It is with the Pru and following a long conversation have decided to cash it all in, as I need the money (c.£50k) for home improvements. 

They have asked me to get a Financial Adviser to sign an Appropriate Advice Form, to show that I have taken independent financial advice. My existing adviser is tied to a firm and his company rules prohibit him from signing it. Other financial advisers I have spoken to also refuse to sign because it has a guaranteed annuity (£3k/year) & cashing it in would not be good advice. 

I have stated that I am willing to sign any waiver, aware of the tax implications, and that I have other sources of income for retirement. 

Has anyone had similar issues, and how was it resolved or is there a licenced financial adviser willing to sign the form, naturally after a conversation, for a small fee? 

I don't want to transfer the pot elsewhere, just gain access to this money. Thanks 

I think you've been given a bit of a hard time by some of these answers, although in their defence, they are entirely accurate. The posters concerned have wearied of saying the same thing too many times, and you just happened to be the next person asking the same question!

In terms of the risk to the advice giver, there's not much difference between advising you on transferring/scooping the pool in one go. As you have said in your post:

Other financial advisers I have spoken to also refuse to sign because it has a guaranteed annuity (£3k/year) & cashing it in would not be good advice.

There is a reason they are saying that - and it isn't just protecting their PI premium.

ali_bear

Don't you want 3k/year for life? That's 250 per month. If you got 50k as a lump sum and took 3k a year from it, it would last almost 17 years only (ignoring inflation). 

dunstonh

It also depends on the terms of the £3k a year.
i.e. is that a projection or a quote if taken now?   What the terms? (single life, joint, indexed, level etc)