prudential pension

[sandraroff]

hi folks, have posted this here as prudential is an assuarance company and couldnt find anything else that was anywhere near my question!!!!

ok, so i saw in the paper a couple of weeks ago that if your private pension was under a certain amount (16k I think) you can ask for it all to be paid in one go. my pension is, so i wrote to prudential and asked why i wasnt offered this and could i have it NOW, to which they said no. this is because apparently this scheme only came in in april 2006 and i started drawing mine in january 2006. the amount i get (which equates to just over £8 a week!!!) is so small , and the interest on the credit card is more than that. I could pay everything off and the measly amount of pension and pension credit would a lot further. is there anything i can do to appeal this? i asked the lady on the phone and she insisted there was nothing more could be done BUT several times she did say that it was at the discretion of the company which may mean they may be open to a little bit of persuation. when i asked for my pension to be paid out before i was sixy (i started drawing ir on 1st jan 2oo6 and was sixty in september 2007) they didnt tell me that if i waited i would have it all.
anyone have any ideas how i can beg and grovel?? this would make a huge difference to me and very little difference to them. it would be less than 10k total and the £8 or so a week they are paying me is probably costing them more to administer it. thanks.xxxxx

[sandraroff]

any ideas anyone??xx

[remorse]

Hiya,

The rules that you are refering to are called 'triviality' and came about in April 2006.

You are correct in that in certain circumstances you may be able to commute your pension fund for cash - the criteria is as follows:

1 - that you are aged between 60 & 75
2 - that the whole of your pension funds are valued at less that 1% of the Standard Lifetime Allowance which for 2007/08 is £16,000 (the Standard Lifetime allowance changes annually)
3 - Any pension elected for triviality must be commuted in whole
4 - If you wish to cash-in more than one pension, assuming you meet the qualifying crieria above, you must do so within 12-months of cashing-in the first one. You will not be able to cash-in any pensions after that 12-month period has expired.

What you don't say is how you are taking your pension? When you took your tax free cash in 2006 did you elect to place your fund into what is known as Income Drawdown or did the fund value that was left behind buy an annuity.

If your fund value bought an annuity, I am not aware and don't believe that any company will allow you to now cash it in an take the cash.

I understand your frustration about not being informed of the new rules. There is the possibility that the Pru produced an 'A day' booklet which explained the new rules and sent this with the forms that you needed to sign to take your pension. I would add though that this was not mandatory for pension providers as they advocate taking independant financial advice prior to commuting pensions.

If you can give me a little more information on the type of policy that is paying your income I may be able to provide a little more help. Not promising though

Take Care

D x

[sandraroff]

as far as i can remember, i was given 2 choices: no lump sum and an amount per month. or a cash free lump sum and so much a month for the remainder. i elected for the cash free lump sum, which was just over 2k then the rest per month which works out at just over £38 a month. hardly life changing!!! and i started being paid from 1st jan 2006. i am pretty certain it is a draw down not an annuity. and i certainly wasnt given the booklet with the forms to sign. in fact prudential took absolutely ages to even respond to my question about receiving the pension early, as they have done this time with my asking about taking it as a lump. its been almost a month and several letters and emails before someone phoned me. this amount is so small to them and it is probably costing them more to adminster it than what they pay me. it could change a whole lot of things for me though. is there anything i can do???xxxxx

[remorse]

Hiya,

Are we talking about a personal pension or an occupational pension prior to you receiving an income? I have assumed a personal pension but from what you are saying it could an income arising from a previous occupational pension you had.

Hmmmmm, you've got me thinking now & it is too late in the night for me to be thinking at all let alone about pensions

If you can let me know about the policy you held before you starting taking your policy, I will have to do some research.

Night

D x

[sandraroff]

this is a personal pension, sorry forgot that bit!!

someone told me that because the pension is up and running, nothing can be done. i tend to think that if that were the case, then, the phrase they used 'at the discretion of the company' wouldnt have been used. hoping so anyway. look forward to hearing from you again.xxx

[remorse]

Hi,

Thank you for that.

You mention that you think this is a drawdown arrangement - I do suspect annuity though based on the wording above. If it is drawdown you would still be receiving fund value statements and would have been notified that the income levels were subject to review every 3 or 5 years (depends on what Pru were doing at the time as A day rules changed the review period). Also, drawdown arrangements have a minimum and maximum income level hence my feeling that you have an annuity.

Assuming it is an annuity I have done some digging to find out if anyone has managed to commute their annuity to cash at a later date. Unfortunately, I haven't found anything. The problem I can see is that when the pension minus your tax free cash is placed into a annuity this product is designed to provide an income for the remainder of your life (simple terms - additional features available such as spouses pension) and the company have entered into a contract with you on that basis.

There is no harm in you formally writing to them quoting your telephone conversation and requesting that you receive a written response within 14 days. If you don't receive a response within 14 days, I would put a complaint in writing to their customer relations team - address is on their website. I would be asking if their plan conditions would allow you to now commute the annuity to cash utilising the triviality rules (HMRC does allow for pensions in payment to be commuted but in theory this is an annuity contract now rather than a pension contract - technicalities I know ) What I would say though is to think carefully before doing this - annuities are calculated based on criteria and there is every possibility that in the long term you would receive more income from the annuity route that the original purchase price of the annuity. Also, if Pru were to allow the annuity to be commuted to cash, you would be taxed on the lump sum.

Does this help? As I said above, this is based on this being an annuity contract, if it isn't please let me know.

Kind regards

D x

[sandraroff]

thanks for your help. i will have to dig out the original paperwork or check with prudential. you may well be right. i was wondering if a begging letter to the MD may help!! what they pay me, i have to pay more each month in interest on credit. i could pay it all off and try to start to live normally. and i am a little miffed that i wasnt told at the outset that if i hung on, things could be different. bit naughty that. i will follow your advice and just hope for the best.xxxx

[remorse]

Originally Posted by sandraroff

i am a little miffed that i wasnt told at the outset that if i hung on, things could be different. bit naughty that.

This is where it is extremely difficult for administrators. The pension legislation that came in effectively changed the onus on who was to check limits etc. Prior to A day, it was the responsibility of the administrator to ensure that a contribution did not exceed the maximum IR limits. Since A day, the responsbility falls on the customer. With regards to the trivality aspect it gets even more complex - an administrator would potentially be crossing the line if they were to suggest trivality or holding on as this could be deemed as advice which an administrator is not qualified to do.

I truely do understand where you are coming from but as I have been a pension administrator (not with Pru) on the otherside of the fence, so to speak, it can be a frustrating job!

Let me know how you get on with your letter.

D x

[sandraroff]

sorry its been a while. i delayed in writing to pudential then they surely delayed in writing back.

basically, they have told me to go away and play. they have admitted that the legislation is in place for people to do this, BUT, by their own admission, they and most of the other pension comapanies are refusing to let anyone do it.!!!!!!!

the legislation when put in place to allow people to do this, was at the discretion of the company,and has said that all the companies are saying no.

they sent me details of how to complain about it to the finacial ombusman if i'm not happy with their decision. to darn right i'm not happy with their decision. what the hell is the point of the legislation in the first place, if they are all going to close ranks and refuse.

they said that the whole point of a pension was to provide people with an income rather than rely on the state. so my £8 a week is an income??? mmmmm. so i am going to complain and see what ahppens.

any advice on a letter and relevant wording would be good. thanks.xxxx

[sandraroff]

can anyone help me on this letter please? need to have the best impact i can get!!!! thanks.xx

[sandraroff]

can anyone please give a bit of advice on how to complain to the finanical ombudsman about prudential not letting me have my pension. they have said that most of the companies who pay pensions are all refusing to do it. this is not good for pensioners surely!!!!!!

[moneyguru]

I'm sorry but once you have taken benefits, as you did in Jan 2006, you essentially buy an annuity and are locked into the deal you signed up to until you die.

The legislation you talk about only came into being in April 2006 and applied to those taking benefits after that time. As you took yours before then it doesn't apply to you.

Harsh but true. There is nothing you, the Pru' or The Ombudsman can do about it. Sorry.