Teachers' AVCs with Prudential

KennyBoy58

My Prudential AVCs are modest but have ten year's worth of savings in there. I wanted to draw 25% lump sum and leave the rest to crystallise until I have decided what to do with it (combining with other pensions into a final annuity for example). I was sent the options pack and called the number and shared what I wanted to do only to be told I was not allowed to manage this process myself but had to use a Financial Advisor (3% rate of the amount transacted) to do this on my behalf. I have five other pensions and have had no issues with this (Including Main TP) Apparently, this is their policy. It's a racket! Nowhere in their documentation is this mentioned and so I have referred it to the financial ombudsman. Prudential farm AVCs out to their daughter company M&G but it is still Prudential.

I am interested in whether anyone else attempting to access their AVCs after so many years have come up against this barrier?

dunstonh

 I was sent the options pack and called the number and shared what I wanted to do only to be told I was not allowed to manage this process myself but had to use a Financial Advisor (3% rate of the amount transacted) to do this on my behalf.

Most Pru legacy plans don't support income drawdown.  If you ask Pru to do income drawdown, it will use its in house salesforce to set up a modern plan and charge you 3% for doing so.

I have five other pensions and have had no issues with this (Including Main TP) Apparently, this is their policy. It's a racket!

It's expensive but not a racket.    Did your five other pensions require closure and transfer to a different pension? (unlikely).

Nowhere in their documentation is this mentioned and so I have referred it to the financial ombudsman. 

 You will also find that the ability to do drawdown on your existing pension is not mentioned either.      
You also cannot complain directly to the FOS.  They will forward your complaint to Pru and your complaint will be rejected.

Prudential farm AVCs out to their daughter company M&G but it is still Prudential.

Branding is irrelevant.

I am interested in whether anyone else attempting to access their AVCs after so many years have come up against this barrier?

Plenty of people on legacy pensions that never supported drawdown in the past have had this issue.    
You transfer it to a modern pension that offers drawdown.  As simple as that.  You are free to chose from the marketplace and don't have to use Pru.

Effectively, you have a black and white TV and you are complaining it doesn't do ultra HD widescreen.  

KennyBoy58

I understand what you are saying here...however there is the issue of transparency. These were marketed as additional ways to boost your pension benefits and a lot of people  were sold the product without ever understanding what the implications were. AVC reps earned a cracking commission on it all and another tranche of "financial advisers" are lining up to do the same. It's easy to say you should have known...and the whole point of a pension investment is that you will draw down on it eventually...otherwise ...why invest. It IS a racket.. my TP and LGPS didn't have these conditions....conditions BTW that are only revealed when you come to actually access it. The ability to drawdown is mentioned in both of those. The customer service agent admitted a lot of people had complained about this and that it isn't transparent from any of the documentation. I can throw my hands up in the air and resign myself to it as you suggest... I didn't know I had a B&W TV until I turned the thing on. I have since both several HD TVs.

I guess we both agree it is a bad product choice. If only we knew....

Dazed_and_C0nfused

KennyBoy58 said:

I understand what you are saying here...however there is the issue of transparency. These were marketed as additional ways to boost your pension benefits and a lot of people  were sold the product without ever understanding what the implications were. AVC reps earned a cracking commission on it all and another tranche of "financial advisers" are lining up to do the same. It's easy to say you should have known...and the whole point of a pension investment is that you will draw down on it eventually...otherwise ...why invest. It IS a racket.. my TP and LGPS didn't have these conditions....conditions BTW that are only revealed when you come to actually access it. The ability to drawdown is mentioned in both of those. The customer service agent admitted a lot of people had complained about this and that it isn't transparent from any of the documentation. I can throw my hands up in the air and resign myself to it as you suggest... I didn't know I had a B&W TV until I turned the thing on. I have since both several HD TVs.

I guess we both agree it is a bad product choice. If only we knew....

TP and LGPS are completely different types of pensions (like deferred salary).

If you want to access the TFLS from the AVC why don't you just transfer it to a more modern pension and take the money from that.  You may find you can also get cheaper fees with a different provider.  And a bigger choice of funds to invest in.

You don't have to stick Prudential if you don't want to.

dunstonh

I understand what you are saying here...however there is the issue of transparency. 
You have been told the fee if you use Pru to do it.  You have the choice to refuse or accept.

These were marketed as additional ways to boost your pension benefits and a lot of people  were sold the product without ever understanding what the implications were.

Drawdown has been available for 30 years.   The product you hold has never been able to offer drawdown.    

AVC reps earned a cracking commission on it all and another tranche of "financial advisers" are lining up to do the same.

Commission hasnt existed for nearly 13 years.     I believe Pru's in-house service is non-advised.  The last Terms of business letter I saw from them started non-advised but that was a few years ago. It may have changed.

Even if it is advised, the general rule of thumb is to either DIY or use an IFA.  Do not use FAs.

 my TP and LGPS didn't have these conditions

Of course they didn't.  They don't facilitate drawdown.   You never asked them to faciliate drawdown.   But if you had, you would have been told you cannot.

The ability to drawdown is mentioned in both of those. 

Its not possible to do drawdown on defined benefit pensions.

 The customer service agent admitted a lot of people had complained about this and that it isn't transparent from any of the documentation.

Possibly just to pacify you if you are not thinking logically and getting a bit irate.  Its a common call centre tactic to reduce abuse.

The fact is that the product you hold doesn't offer that functionality. It never did. So, why would it document functionality that it did not have?

However, when you get to retirement, the FCA requires providers to make people aware of the key options (not all, just the key ones) even if the product you hold doesn't offer them.

. I didn't know I had a B&W TV until I turned the thing on. I have since both several HD TVs.

And how did you get those HD TVs?   Did you try and turn your older TVs into HD?   No.   You bought a new one.   And that is the point here.    You need to buy a pension that offers the functionality you want as what you have never offered it in the first place.

There is no big deal here.  You are making a mountain out of a mole hill.  Just buy a new pension that offers that functionality.

I guess we both agree it is a bad product choice. If only we knew....

It wasnt a bad product choice.  It was a product of its era.    When drawdown was introduced in 1995, it was a niche option for higher value investors.   Back then, you needed around £100k+. It's unlikely you would have considered using a drawdown in retirement.   

Drawdown functionality was amended in 2015 to make it more widely available.   Most modern plans now offer it.  However, even today, some do not.    It doesn't matter though, as it's free of charge to exit most pensions and free of charge to move them to new ones, with the exception of a number of tied salesforces where you are paying someone to do it for you.     

There is no point getting angry about Pru being one of the salesforces that charges.  Their product is not the best value.  Their investment options are limited and their software is old fashioned and clumsy (in my opinion).    I wouldnt use them if it was free to put money on there, and as an IFA, I can put money on Pru without that initial charge.   So, don't get angry about it.    Just move it somewhere better.

xylophone

You could choose another  pension provider which offers the flexibility you require, ask that provider to organise the transfer in and then proceed to take the PCLS, leaving the rest invested/as cash.

Example

https://www.hl.co.uk