Protected Pension Age - Aviva Dispute

KippyBoodle

Hello I'm looking for advice or shared experiences.

I opened an Aviva pension in 2013 under a TK- prefixed plan. In 2017, this was moved under a block transfer by my employer, to Friends Life who were then subsequently taken over by Aviva. Based on HMRC guidance (Finance Act 2004, Schedule 36, Paragraphs 23ZB and 23ZC), I believe I retain a protected pension age of 55 because:

• My original scheme (pre-2017) gave access from age 55

• The block transfer occurred in 2017

• The transfer involved more than one member and was a single transaction of full rights

• The scheme rules on 11 Feb 2021 allowed access before age 57

• The transfer occurred before 4 Nov 2021

Aviva is currently stating that I do not have a protected age of 55, claiming the rules only apply to transfers after 4 Nov 2021. However, everything I can find, including their own website,  contradicts this. They say the protection was only introduced after that date, which appears to be incorrect.

My plan is to access 25% tax-free at 55 and begin drawdown at 58. Aviva’s current position would delay that by two years, which materially impacts my strategy.

Has anyone successfully challenged Aviva or another provider on this issue?
Am I right to escalate this and request a formal legal review of my scheme’s history and transfer status?

Any insights would be appreciated

Marcon

KippyBoodle said:

Hello I'm looking for advice or shared experiences.

I opened an Aviva pension in 2013 under a TK- prefixed plan. In 2017, this was moved under a block transfer by my employer, to Friends Life who were then subsequently taken over by Aviva. Based on HMRC guidance (Finance Act 2004, Schedule 36, Paragraphs 23ZB and 23ZC), I believe I retain a protected pension age of 55 because:

• My original scheme (pre-2017) gave access from age 55

• The block transfer occurred in 2017

• The transfer involved more than one member and was a single transaction of full rights

• The scheme rules on 11 Feb 2021 allowed access before age 57

• The transfer occurred before 4 Nov 2021

Aviva is currently stating that I do not have a protected age of 55, claiming the rules only apply to transfers after 4 Nov 2021. However, everything I can find, including their own website,  contradicts this. They say the protection was only introduced after that date, which appears to be incorrect.

My plan is to access 25% tax-free at 55 and begin drawdown at 58. Aviva’s current position would delay that by two years, which materially impacts my strategy.

Has anyone successfully challenged Aviva or another provider on this issue?
Am I right to escalate this and request a formal legal review of my scheme’s history and transfer status?

Any insights would be appreciated

There's a difference between 'giving' or 'allowing' access and having 'an unqualified right'. 'Give' or 'Allow' would mean you can - but you need someone to give permission. 'Unqualified right' means you can do it purely on the basis that you choose to do so, and nobody else has to agree to let you.

Could that be the thing fogging the issue?

dunstonh

Based on HMRC guidance (Finance Act 2004, Schedule 36, Paragraphs 23ZB and 23ZC), I believe I retain a protected pension age of 55 because:
My original scheme (pre-2017) gave access from age 55
The block transfer occurred in 2017
The transfer involved more than one member and was a single transaction of full rights
The scheme rules on 11 Feb 2021 allowed access before age 57
The transfer occurred before 4 Nov 2021

23ZC doesnt apply to you as that covers individual transfers and not block transfers.   23ZB covers block transfers

Paragraph 23ZB schedule 36 Finance Act 2004

For the purposes of the 2028 protected pension age, a transfer that takes place on or before 3 November 2021 is a block transfer if:

• the transferring members and the transferring scheme both had an actual or prospective right to take benefits from age 55 or 56
• on 11 February 2021 the scheme rules included a provision to pay benefits before age 57 
• the transferring members had an unqualified right to take pension or lump sums, or both, before they reached the age of 57
• it is a transfer of the pension rights relating to the member and at least one other member of the same pension scheme
• the transfer is made as a single transaction, and
• the transfer represents all the pension rights under the scheme for all the members transferring as part of that single transaction.

I have disregarded the points for block transfers that occur after 4/11/21 as they don't apply.

The bit on bold is the likely blocker.  

Whilst many of the ex CGNU based plans qualify under the rules, I have yet to come across a Friends Life plan that does (but by no means have I seen all ex Friends Life versions).  

Unfortunately, Aviva only lists the ex CGNU plans and one ex Friends Life plan on its website: https://www.aviva.co.uk/retirement/pension-basics/changes-to-pension-age/

The GSxxxxxx being ex Friends Life and rest being ex CGNU

If you had been block transferred into a scheme with unqualified rights, then you would have met all the points.   However, if you transferred into a scheme that didn't have unqualified rights, then you would fail the 11/2/21 requirement.

You say the scheme rules on 11 Feb 2021 allowed access before age 57. Virtually all did. That is not the requirement.  It has to be an unqualified right.

Am I right to escalate this and request a formal legal review of my scheme’s history and transfer status?

Can you afford to fund that?  If you cannot afford to fund 2 years of retirement then its likely you cannot afford it.

Before you have even considered something as extreme as that, you really need to ascertain whether the Friends Life plan had unqualified rights to pay benefits from 55/56.

KippyBoodle

Ok Thank you for your replies. So if when my pension with a TK number at Aviva moved to FriendsLife with a GS number it didn't offer unqualified rights to access at age 55 then I lose it? This does seem wholly unfair as the transfer was done by my employer. I would not think they would move to a pension provider that gave less rights from one that did. I do have files from Friends Life which have the wording 'You can usually take the benefits from your account from your 55th birthday onwards (possibly earlier in certain circumstances, for example ill-health) but if you take them before the date shown in this illustration you are likely to get back less than is shown here' but is this too ambiguous to be relevant? It's tricky as in 2017 no one knew the government were going to change the date so therefore the wording is hard to qualify from letters alone. 

dunstonh

So if when my pension with a TK number at Aviva moved to FriendsLife with a GS number it didn't offer unqualified rights to access at age 55 then I lose it? 

Yes.

This does seem wholly unfair as the transfer was done by my employer. 

It's an unforeseen consequence.

The Government changing the law is what it is.   Many law changes result in negative consequences for some people but not others.

 I would not think they would move to a pension provider that gave less rights from one that did. I do have files from Friends Life which have the wording 'You can usually take the benefits from your account from your 55th birthday onwards (possibly earlier in certain circumstances, for example ill-health) but if you take them before the date shown in this illustration you are likely to get back less than is shown here' but is this too ambiguous to be relevant?

That wording is irrelevant.   It's just stating the rules as they were at the time.   It doesn't make it an unqualified right.  And we know the GS range does not have an unqualified right.

At least you now know not to waste your money on legal action.

KippyBoodle

I think that the blocker is the method of transfer i.e. it was probably staggered rather than in one transaction. Which is probably how most bulk transfers were done and why HMRC included that as a criteria. I am trying to get full clarity from Aviva as their frontline customer service don't seem to know the nuance here. 

Marcon

KippyBoodle said:

I think that the blocker is the method of transfer i.e. it was probably staggered rather than in one transaction. Which is probably how most bulk transfers were done and why HMRC included that as a criteria. I am trying to get full clarity from Aviva as their frontline customer service don't seem to know the nuance here. 

That's not how most bulk transfers are/were done - it's called a bulk transfer for a reason. 

Block (or 'buddy') transfers are for smaller group and have a different purpose (preserving certain rights under the 'old' scheme).

Possibly the fact you are (understandably) confusing the two is creating the confusion when you speak to Aviva? 

dunstonh

I think that the blocker is the method of transfer i.e. it was probably staggered rather than in one transaction.

Forget everyone else's transfers, as the dates do not matter if they differ for each transfer within the block transfer.   Are you now saying that your  transfer wasn't done as a single transfer but multiple transfers?   That would be highly unusual and not how transfers out of the TK range would normally happen.

However, why are you thinking that is the blocker when it is clear that the GS range did not have unqualified rights in 2021?

Which is probably how most bulk transfers were done and why HMRC included that as a criteria.

The vast majority of block transfers have different dates for each of the individuals within the block transfer.  This is normal and HMRC allow that as it would be unrealistic to expect otherwise.   What matters is just your part of it.  i.e. did your transfer have just one transfer or multiple transfers?  

KippyBoodle

dunstonh said:

I think that the blocker is the method of transfer i.e. it was probably staggered rather than in one transaction.

Forget everyone else's transfers, as the dates do not matter if they differ for each transfer within the block transfer.   Are you now saying that your  transfer wasn't done as a single transfer but multiple transfers?   That would be highly unusual and not how transfers out of the TK range would normally happen.

However, why are you thinking that is the blocker when it is clear that the GS range did not have unqualified rights in 2021?

Which is probably how most bulk transfers were done and why HMRC included that as a criteria.

The vast majority of block transfers have different dates for each of the individuals within the block transfer.  This is normal and HMRC allow that as it would be unrealistic to expect otherwise.   What matters is just your part of it.  i.e. did your transfer have just one transfer or multiple transfers?  

Where is it clear? and no I am not saying my transfer was done as a multiple transfer more that it was staggered due to complexity and size and this would void it from the block transfer criteria. But if you are saying that a staggered transfer still qualifies then perhaps it does fit the criteria. And when I say staggered I mean over the course of a few weeks the entire pension portfolio of members was moved from Aviva to Friends Life rather than in a day. 

As PPA should be preserved via a block transfer. It then comes down to whether the transfer was treated as a block transfer or not. And if not why not. And also if it is worth pursuing?

dunstonh

Where is it clear? and no I am not saying my transfer was done as a multiple transfer more that it was staggered due to complexity and size and this would void it from the block transfer criteria. But if you are saying that a staggered transfer still qualifies then perhaps it does fit the criteria. And when I say staggered I mean over the course of a few weeks the entire pension portfolio of members was moved from Aviva to Friends Life rather than in a day. 

Block transfers do not require instantaneous transfers of each individual pension within the block.    

What is clear is that the Aviva GS policy range does not have unqualified rights.

As PPA should be preserved via a block transfer. It then comes down to whether the transfer was treated as a block transfer or not. And if not why not. And also if it is worth pursuing?

Protected pension age 2021 did not exist in 2017.     It is possible that protected pension age 2006 could apply but not 2021.

And I refer you back to Paragraph 23ZB schedule 36 of the Finance Act 2004 of the requirement:

• on 11 February 2021 the scheme rules included a provision to pay benefits before age 57 

And we know that the GS policy range does not include that provision.

Cus

KippyBoodle said:

Hello I'm looking for advice or shared experiences.

My plan is to access 25% tax-free at 55 and begin drawdown at 58. Aviva’s current position would delay that by two years, which materially impacts my strategy.

Change Aviva for Government unfortunately.  I feel for you as you are not alone in having to change strategy (and causes pain) due to this change, me included.

I wonder if everyone impacted was made fully aware in good time aka WASPI...😁