We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
St James Place - Advice Please
Fermion
Posts: 218 Forumite
I'm trying to sort out the financial affairs for my wife's cousin. He is now 78 but has only recently stopped work.
Apart from his NHS pension he had a number of "Money Purchase" Personal Retirement Plans with St James Place which he didn't do anything with. Unfortunately St James Place had the wrong post code for him so the correspondence often didn't arrive.
He has now asked me to help him sort out his outstanding pension which he wants to draw an income from. However when we contacted St James Place, it seems that £9,800 has gone missing. It appears that they wrote to him just before his 75th birthday asking him what he intended to do with his funds but the post was not received. They therefore assumed that he intended to draw out the entire amount and therefore sent a payment to HMRC for £9800!
However when I queried this they said the funds are still classified as uncrystallised and my wife's cousin gave no authority to pay the HMRC out of the funds. Are they allowed to do this? They claim it is a legal requirement?
Any thoughts on the best way of handling this? St James Place are now saying that the call centre is not financially trained to provide advice on what we should do!
I have raised an official complaint but I am not hopeful
Thoughts?
Apart from his NHS pension he had a number of "Money Purchase" Personal Retirement Plans with St James Place which he didn't do anything with. Unfortunately St James Place had the wrong post code for him so the correspondence often didn't arrive.
He has now asked me to help him sort out his outstanding pension which he wants to draw an income from. However when we contacted St James Place, it seems that £9,800 has gone missing. It appears that they wrote to him just before his 75th birthday asking him what he intended to do with his funds but the post was not received. They therefore assumed that he intended to draw out the entire amount and therefore sent a payment to HMRC for £9800!
However when I queried this they said the funds are still classified as uncrystallised and my wife's cousin gave no authority to pay the HMRC out of the funds. Are they allowed to do this? They claim it is a legal requirement?
Any thoughts on the best way of handling this? St James Place are now saying that the call centre is not financially trained to provide advice on what we should do!
I have raised an official complaint but I am not hopeful
Thoughts?
0
Comments
-
It appears that they wrote to him just before his 75th birthday asking him what he intended to do with his funds but the post was not received. They therefore assumed that he intended to draw out the entire amount and therefore sent a payment to HMRC for £9800!
What about the rest of it?However when I queried this they said the funds are still classified as uncrystallised and my wife's cousin gave no authority to pay the HMRC out of the funds. Are they allowed to do this? They claim it is a legal requirement?
What year are we talking about? This is important as the rules changed in 2015. Which side of the rule change will impact on the answer.Any thoughts on the best way of handling this? St James Place are now saying that the call centre is not financially trained to provide advice on what we should do!
They are not. Wait until the complaint outcome perhaps0 -
What year are we talking about? This is important as the rules changed in 2015. Which side of the rule change will impact on the answer.
The pension plans were started between 1994 and 1996 but the unauthorised payment to HMRC was made on the 3/6/2017 on his 75th birthday.What about the rest of it?
Still exists as an uncrystalised fund which has been switched by them to a Money Management Fund0 -
In which case, wait until the complaint outcome.
It is a bit confusing as to why they would have paid tax when the fund is uncrystalised. Although you have to do a lifetime allowance declaration before 75. Without that, it could lead to a tax charge.0 -
It's really up to SJP to explain but my guess is that SonOf is on the right track.
Under current rules a check against a person's lifetime allowance, the standard one being a bit over a million at the moment, is done at age 75. It's possible that SJP decided that a person who'd taken nothing wanted to take the amount over their lifetime allowance as a lump sum and pay a 55% lifetime allowance charge on it.
SJP mentioning it being uncrystallised somewhat supports this view. A person is entitled to take tax free lump sums (PCLS) on amounts up to their lifetime allowance and also on small pot rule and related non-PCLS tax free portions. Even though lifetime allowance calculations and payments are needed at 75 a person doesn't lose their entitlement to take the tax free PCLS amounts. So he can still do that. There are some slightly fiddly calculations involved, see Example of calculating available lifetime allowance for benefits crystallised and paid after age 75.
PCLS tax free lump sums aren't available on the portions above a person's lifetime allowance.
If SJP was in an ongoing servicing relationship this suggests some possible other SJP failings to provide good or proper service:
1. I wrote about a person's lifetime allowance because the allowance used to be higher than it is today and there have been a number of schemes that people could apply for to keep a limit higher than the current one. Under some forms of servicing agreement SJP might have been expected to advise that he used those opportunities.
2. the low amount suggests that it would have been easy to plan and arrange to be within the lifetime allowance by crystallising earlier. Under some servicing arrangements they might have been expected to advise on this.
3. they might have mentioned use of the small pot or other potentially relevant rules to reduce the amount on which a lifetime allowance charge would be made.
That your wife's cousin didn't remember consenting for the payment to be made to HMRC isn't significant because if it was for a lifetime allowance charge the law does require schemes to make the payments and it can be expected that their terms have relevant provisions to handle it. To argue about his would be pointless quibbling and there are better opportunities to wonder about, including their communications and whether they delivered a proper level of service.0 -
Did they do this three years ago on his 75th birthday as well?Still exists as an uncrystalised fund which has been switched by them to a Money Management Fund
Someone who hasn't taken any money from their pension before age 75 might most usefully be assumed to be intending it for inheritance and a money management fund would normally be highly inappropriate for this unless death was known to be imminent.
So asking how it came to be moved to that sort of fund may be useful.0 -
Further update. I've written to St James Place and lodged a formal complaint, however we have also now managed to get hold of a copy of the letter that was send by SJP on the 7th Aug 2017 (1 month after his 75th birthday) which include a Lifetime Allowance Declaration form which basically siad that this needed to be completed by the 4th Sept 2017 otherwise they would take a 25% tax charge and send to HMRC.
(interestingly he was moving out of a block of NHS apartments which were planned for demolition and the letter and forms from SJP were found in the post box for another apartment! - viz. sent to the wrong address)
Interestingly, when I phoned my Pension provider (HL) about possibly moving his drawdown pension to HL they said that they quite often get this situation where Lifetime Allowance forms have not been completed by the client before they reach 75, and that they have a Reclaim Process that has been agreed with HMRC to reclaim the tax and pay back into the uncrystallised pension funds if appropriate. They didn't think there was any specific time limit on this, although usually this occurs only a few months later. HL did say though that the reclaim must be done via the Pension provider.
When I phoned up SJP again today they said that they are unable to take any further action as a Formal Complaint has been raised and I will have to wait to hear from them. However they were not aware of SJP having a similar Reclaim Process to HL!
So we will just have to wait for the SJP complaint team to respond. Fingers crossed!0 -
Was he over the lifetime allowance? If he was, then some payment to HMRC was needed and 25% of the excess is the lowest of the two possible ones.
You can read more about reclaiming overpaid lifetime allowance charge money here. PCLS is the normal 25% tax free lump sum. SJP as a pension firm can reclaim the money from HMRC if no payment was needed or too much was taken..0 -
Was he over the lifetime allowance? If he was, then some payment to HMRC was needed and 25% of the excess is the lowest of the two possible ones
He was well within the lifetime allowance - his total was less than £500K
Thanks for the link - I'm hoping for a positive response from SJP but most of the regular Service Desk staff don't know anything about reclaiming. I'm hoping the response to my complaint will have acknowledge there is a reclaim process with HMRC0 -
but most of the regular Service Desk staff don't know anything about reclaiming.
You dont put skilled and knowledgeable on the phone at a call centre. Even when you are paying SJP charges.0 -
He was well within the lifetime allowance - his total was less than £500K
Is that total including his DB pension? Which is valued at 20x pension plus lump sum...if he had 500k just in DC arrangements he could easily breach LTA with a decent NHS DB pension on top.........Gettin' There, Wherever There is......
I have a dodgy "i" key, so ignore spelling errors due to "i" issues, ...I blame Apple
0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 355.6K Banking & Borrowing
- 254.8K Reduce Debt & Boost Income
- 456.1K Spending & Discounts
- 248.2K Work, Benefits & Business
- 605.7K Mortgages, Homes & Bills
- 179K Life & Family
- 263.5K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.7K Read-Only Boards