Prudential Pension Death "Benefits"

[dunnie1]

Is this the right forum I wonder?

 

A dedicated Pension forum seems like a good idea to me..

 

"There are also apparently some old occupational schemes, which will be money purchase, that have a rule that if a deferred member dies before reaching pension age then only a return of the members contributions is paid"

 

I'm unfortunately in the above situation whereby Prudential have generously offered to return only £8000 of a £45,000 pension pot (sum of contributions minus interest) from my late father's retirement Annuity Plan (conventional with-profits plan) or in this case, without-profits it would seem.

Clearly, I should have paid more attention to the death benefits and moved the pot, but its too late now. Is there any action I can take now to retrieve this money? Perhaps using the Unfair Contracts legislation? (Unfair Contract Terms Act 1977)

Thanks in advance,

Dunnie

Edited December 12, 2010 by MARTIN3030
link removed

[honeybee13]

Hello Dunnie. I'm not sure there's a lot you can do here. Could you tell me what the policy document says about death benefits please? As far as I'm aware, insurance and pension policies don't come under the terms of unfair contracts, but I could be wrong.

 

If you wouldn't mind posting what the policy says about death benefit, I'll tell you what I think.

 

My best, HB

[dunnie1]

"On Death before benefits are taken, we (Prudential) will return the sum of the contributions padi at the date of death with no interest added"

 

Clearly unfair, so can I use the Unfair Contract Terms Act?

[honeybee13]

I don't know about the legal aspect, but didn't think the act related to insurance policies as I said before. If this was an occupational scheme as you say, that means there would have been an employer involved. Have you had any discussions with them at all?

 

HB

[honeybee13]

"There are also apparently some old occupational schemes, which will be money purchase, that have a rule that if a deferred member dies before reaching pension age then only a return of the members contributions is paid"

 

Hello again. I'm not sure where you found this quote, but an occupational scheme and a retirement annuity are absolutely not the same thing. I think it might be helpful to clarify which type of pension we're talking about.

 

It might also help to know when your father took out the policy to see whether it's covered by the Financial Services Act, which came into operation in the late 1980s from memory.

 

My best, HB

[dunnie1]

I used the initial quote to describe the punitive types of contracts some pensions use, not to categorically state my dad had an occupational pension - altohugh it must have been misleading as everyone here thinks it was...

 

It wasn't an occupational pension, it's a retirement Annuity Plan (conventional with-profits plan).

[dunnie1]

Don't know when he took it out, I will have to ring them tom.

[honeybee13]

Hello again. So if it was a conventional with profits plan, when your Dad signed up for it, he would have chosen a basis for the death benefit, being return of contributions with or without interest, possibly some other options like no return of contributions at all. The reason for the choice of death benefit from memory 100 years ago was that the pension would have been larger if a lower death benefit was selected.

 

A policy is based on the original application form. Do you have a copy of that?

 

My best, HB

[dunnie1]

I don't no. He would have likely just choosen the cheapest option I reckon..

 

I'll see if I can dig something out..

[honeybee13]

Hello Dunnie, how are you getting on with this?

 

HB

[dunnie1]

Sorting funeral this week, will crack on over the weekend..

[dunnie1]

A selection of correspondence from the Pru to Myself dating back to 2006: (edited for brevity)

7 Nov 2006

"If the tranfer is to go ahead please return attched docs - As the plan is not invested in with profits fund, a market value reduction is not applicable. Plan XXXXXXX is a conventional with profits plan and is not invested in unti linked funds. Therefore the current fund value of the plan is the transfer value."

"Values - the current value and transfer value of this plan are the same

Death benefits - On death before benefits are taken, we will return the sum of the contributions paid at the date of death with no interest added

the death benefit will be paid to the estate unless the plan is written under trust. If the plan is written under trust, the death benefit will be paid to the trustee."

 

I remember at the time I was trying to consolidate smaller pensions, this being the biggest and concluded that the cost outweighed the benefit for a SIPP (as no more contributions were to be made). Clearly, I gave no thought to getting it written under trust or the death benefits.

 

11 dec 2007

"The use of trusts is a specialised field and pru does not provide trust forms for use in connection with their plans. We suggest you seek independent legal and financial advice to help minimise the risk of inheritance tax"

We will defer your retirement age to 11/11/2012."

This letter was a response to me trying to set up beneficaries as per dad's will. I also deferred retirement age as I was unsure whether to transfer it or not at the time.

 

31 jan 2008

"Plan xxxxx is a retirement annuity plan hence you cannot nominate a beneficiary as the plan is not written under trust. The use of trusts is a specialised field and pru does not provide trust forms for use in connection with their plans. We suggest you seek independent legal and financial advice to help minimise the risk of inheritance tax"

and finally

 

8/12/2010

 

the total sum payable is £7948.14. This amount forms part of the estate. tax may be due, send relevant documents (death certifcate, confirmation of the personal representatives are or a letter from the trustee's) etc. we're very sorry, etc.

 

Stuff like enhanced annuities were dicussed over the phone to my re-collection - at least I don't have any more letter's