Screwed up....I think....

lilac_lady

A SIPP is a Self Invested Private Pension but I'm not technical enough to give any details about it. Maybe someone not rude will help you tomorrow!

jeannieblue

Thank you!:D

I'm going to bed now - and hope to get some basic, easy to understand advice that i can use and act on tomorrow. Phraseology that I can comprehend.

Sweet dreams

EdInvestor

The rules changed in 2006 at the time of "A day".Before then you couldn't take the 25% tax free cash and leave the money invested in income drawdown until later, you had to take an annuity (pension income ) with the other 75% at the same time.

If the Pru was unable to offer you an arrangement where you could take the 25% TFC and leave the rest invested, they should have told you that you needed to transfer elsewhere.

Instead you were missold an annuity.You should make a formal complaint.

jeannieblue

just a quickie before I crash out - they never sent me forms or ask me verbally how i want the income. I recall the oh so short conversations on the phone and have tons of paperwork, its not there............ It was only bank details of where I wanted the 25% tax free sum to be put. I've triple, quadruple, etc checked.

dunstonh

Pru would not offer you income drawdown or make you aware of it. That isnt their role or responsibility. They can only make you aware of the options on the stakeholder and that is just simply annuity purchase.

mcchell

JB I'm no wizard with pensions etc either. My best advice to you would be to find your local IFA and ask for some advice - numbers cn be found in the phone book.

You could also check with your local Citizens Advice to see if they can help or at least point you in the right direction of someone who can.

The important thing to remember don't waste that money that is coming your way - you're going to need it in future years, and if you sign any more contracts make sure you read all of it and the small print

Good Luck

jeannieblue

Thank you Merlot - I've had a very stressful 'rushed' panic run life over past six months - thought I'd sorted everything out....!

Am trying to keep optimistic and positive, but must thank you very much for sticking up for me, not used to that - you've made me a bit tearful..... but I'll cope! Bless you and thank you.

On a different note - or back to where we started. Who should I now contact re this extra amount I'm receiving?? I obviously have to pay tax on it - should I contact the Inland revenue?

Next question, once that is sorted, any ideas where I should perhaps put this monthly amount? ISA can only take 3000 a year - or has that changed? I've got an amount that I already want to put into my ISA which will cover that. Should I start another pension? Or just die young - sometimes that seems an easier option - I am joking here..

I also don't know why suddenly I'm typing in italic - must have hit a button somewhere...............

dunstonh

The citizens advice bureau will not be of any use. Benefit crystallisation (the name of the transaction that has taken place) cannot be undone once it is outside of the cancellation period (there are a few exceptions but this isnt one of them).

If jeannie had seen an adviser she would have full FOS protection and would now be putting in a complaint against that adviser which would be upheld because the transaction doenst meet her needs.

However, jeannie didnt see an adviser and chose to go direct to provider. This offers limited FOS protection as effectively she is taking on the role of the adviser. The provider is not authorised to give advice or opinion and can only take instructions. So at no point can you complain that the wrong product was sold because no advice was given.

Jeannie would have contacted Pru and said something along the lines of I would like to take my 25% out of my pension. The only way to do that with the Pru stakeholder is commence the annuity purchase and pay the 25%. So that is the information they gave. They are not allowed to say that it can be done differently with another provider as that would be outside of their remit. If Jeannie didnt specify any options on how to take income then they would issue the default only or a selection. They would also have mentioned in the paperwork the open market option/transfer (which is what was needed to be used in this case).

This is one of the major risks of doing a DIY transaction. You are reducing your FOS protection and cutting out the person that would tell you if its right or wrong. That is why some providers (not Pru as it happens) will reduce their charges or improve their terms when you use this channel (or use an execution only IFA) as the liability for advice doesnt exist. The cost of the liability for advice is one of the biggest costs to the industry.

EdInvestor

dunstonh wrote: »

If jeannie had seen an adviser she would have full FOS protection and would now be putting in a complaint against that adviser which would be upheld because the transaction doenst meet her needs.

Quite so, it doesn't, does it?

However, jeannie didnt see an adviser and chose to go direct to provider. This offers limited FOS protection as effectively she is taking on the role of the adviser. The provider is not authorised to give advice or opinion and can only take instructions. So at no point can you complain that the wrong product was sold because no advice was given.

Just because no advice was given does not mean that misselling did not take place and redress cannot be paid.Remember precipice bonds?

All providers have a duty of care under the law towards the customer.They also have an obligation imposed by the regulator to treat customers fairly. If the OP can show that she made it clear to the provider what her needs were ( take the tax free cash, leave the rest of the fund invested) then the Pru should not have sold her an annuity as it does not meet her needs.

They should have told her that they could not provide her with a suitable product. She would then have been promopted to seek advice - or at least proper information about what product she did actually need and how to obtain it.

This would eventually have resulted in a transfer out of her business to another company, as opposed to the current arrangment where she is forcibly locked in to providing a profit for the Pru for the rest of her life :mad:

They are not allowed to say that it can be done differently with another provider as that would be outside of their remit.

But nor are they allowed to substitute another product which does not meet her needs but rather produces a gain for them.

They would also have mentioned in the paperwork the open market option/transfer (which is what was needed to be used in this case).

Very unlikely the "no income" option of income drawdown would have been mentioned: if indeed drawdown was mentioned at all - and in any case the OP would not have known that what she needed was an income drawdown plan.

[quoute] This is one of the major risks of doing a DIY transaction.[/quote]

I'd say it was one of the major risks of having a pension in the first place.The jargon and regulations covering these products are so complex and opaque that hardly anyone understands them. They break every rule of transparency. There's a good reason why so many people regards pensions as a "minefield".

If the OP decides to stay with the annuity, she can reinvest the money into a stocks and shares ISA; this is in addition to the cash ISA ( a further 4k annual allowance). That money will then grow tax free and the income will be tax free as well when she needs it.

But I would urge her to complain because, as Retired IFA says, the annuity sale has locked the OP into a much lower lifetime income than she could expect if she had left the money invested until retirement, something that she specifically planned to do, and which is specifically now allowed by law. Potentially, especially if inflation were to rise, she could lose out big time in the long term with the annuity.

Since there are likely to be increasing numbers of people trying to do what the OP planned now the law has changed, IMHO the authorities may take a somewhat dim view of providers taking advantage of policyholders' technical ignorance in this way.

jeannieblue

Thank you for that advice.

I've been on other forum's but this one is really er, tricky, i think that's the best way to describe it.

I seem to be told continuously of 'what I did wrong' and 'what I should've done' - think I can work that out for myself now.

Its the next step/s that I am concerned about. As I said originally, I have emailed pru and know they only work mon to fri - I still believe quite strongly that when I filled in the forms, I ticked the box that said I had no intention of retiring in near future. Never in the forms was I asked for commencement date of annuity nor was it mentioned.

But i notice that some of the experts on here know the pru forms very well and therefore, it must have been on them somewhere, because they know the forms very well.

The first time I had it in writing about receiving annuity and/or commencement of receiving monthly or yearly sum, was in a letter which was sent after i had received the 25% tax free sum (yesterday morning to be precise, tax free sum went into my account on 21st Dec). I had nothing before that regarding this issue.

I came on here for advice. I've got slapped down. Think i will wait for email back from Pru and a chance to talk to them, I know its a call centre, but there is no other choice and they seem really helpful..........................

Its sad that the !!!!!ing got in the way here. I have no inclination to seek an IFA because feel a bit put off to be honest. Sorry if that offends anyone but you should really listen to yourselves. Its not pleasant, helpful or kind. You obviously know your stuff and maybe it would be an idea to put this across in a different way? This forum could be so helpful.

Maybe some of you could visit other forums on different subjects to see how it is handled there? I found the mortgage one very good - because that was another thing I had to sort before Christmas, they were friendly, helpful and informative. You weren't 'blinded' with the jargon, it was pure plain speak, sensible and good.

This has been the hardest forum - ok, for me that is. Just hope that its easier for others.