jonno
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Post by jonno on Apr 21, 2023 10:14:19 GMT
Bearing in mind I'm dealing with this without seeing any documentation etc, a friend has contacted me re his pension. He is aged 65 and is eligible to access his Royal London pension. His pension is valued at £30,000, and he has decided to cash it all in. He tells me that Royal London are refusing to allow him to do so unless he can provide evidence that he has taken "proper" advice from a qualified "Advisor".
Has anybody out there heard of anything like this?
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Post by Deleted on Apr 21, 2023 10:27:13 GMT
Yes, it is pretty standard to insist that you have been advised.
He has choices, he finds a dodgy IFA who will want paying to sign a form or he does a quick, list of assets and liabilities, then goes to an IFA and pays him for actual advice
welcome to the world of being in danger of being sued
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jonno
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Post by jonno on Apr 21, 2023 11:01:56 GMT
Yes, it is pretty standard to insist that you have been advised.
He has choices, he finds a dodgy IFA who will want paying to sign a form or he does a quick, list of assets and liabilities, then goes to an IFA and pays him for actual advice
welcome to the world of being in danger of being sued
Ok I understand that it is good advice to advise people to get advice. But to actually refuse to allow someone to exercise their legal right?
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Post by bernythedolt on Apr 21, 2023 11:08:52 GMT
I believe this is correct. It is now a requirement to show you've taken advice.
Incidentally, your friend needs to be aware that any tax due will be charged at his marginal rate. Taking a large chunk of pension can often push you into higher rate for that year. This happened to a relative of mine, who then regretted (too late) not seeking advice beforehand.
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jonno
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Post by jonno on Apr 21, 2023 11:39:59 GMT
I believe this is correct. It is now a requirement to show you've taken advice. Incidentally, your friend needs to be aware that any tax due will be charged at his marginal rate. Taking a large chunk of pension can often push you into higher rate for that year. This happened to a relative of mine, who then regretted (too late) not seeking advice beforehand. Thanks for that; I've done a bit of digging and £30k seems to be something of a threshold. He is fully aware of the potential tax implications of his decision and is going into it with his eyes fully open. It is not a decision that he has taken on a whim which probably explains why he is feeling a bit miffed.
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adrianc
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Post by adrianc on Apr 21, 2023 11:51:04 GMT
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james100
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Post by james100 on Apr 21, 2023 11:56:27 GMT
Yes, 30k is the magic number. But I'm not sure he can't bypass the IFA signoff by moving it into a flexi drawdown account with same provider (I think RL offers one) and taking it out that way. Edit: maybe depends on whether it's a DB or DC too.
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agent69
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Post by agent69 on Apr 21, 2023 12:17:56 GMT
Yes, 30k is the magic number. But I'm not sure he can't bypass the IFA signoff by moving it into a flexi drawdown account with same provider (I think RL offers one) and taking it out that way. Edit: maybe depends on whether it's a DB or DC too. I have a DB pension (which I assume is what the OP is asking about), and when I got to retirement age there were 3 options:
- take the full amount on a monthly basis in perpetuity
- take up to 25% tax free lump sum, and a reduced amount on a monthly basis
- cash the whole thing in.
Less than £30k is a trivial sum and doesn't come with the restraints of larger amounts. Over £30k you need to take expert advice, but you don't have to follow their recomendations (I believe referred to as an insistent client). As @bobo mentioned above, people are keen to avoid being sued if you take the cash and then lose it all.
Either way I don't think flexi drawdown applies to a DB pension
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Post by Deleted on Apr 21, 2023 13:15:30 GMT
Yes, it is pretty standard to insist that you have been advised.
He has choices, he finds a dodgy IFA who will want paying to sign a form or he does a quick, list of assets and liabilities, then goes to an IFA and pays him for actual advice
welcome to the world of being in danger of being sued
Ok I understand that it is good advice to advise people to get advice. But to actually refuse to allow someone to exercise their legal right? yes, frustrating but yes
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agent69
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Post by agent69 on Apr 21, 2023 13:32:46 GMT
Yes, it is pretty standard to insist that you have been advised.
He has choices, he finds a dodgy IFA who will want paying to sign a form or he does a quick, list of assets and liabilities, then goes to an IFA and pays him for actual advice
welcome to the world of being in danger of being sued
Ok I understand that it is good advice to advise people to get advice. But to actually refuse to allow someone to exercise their legal right? What legal right is being prevented here?
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Post by bernythedolt on Apr 21, 2023 14:47:46 GMT
Bearing in mind I'm dealing with this without seeing any documentation etc, a friend has contacted me re his pension. He is aged 65 and is eligible to access his Royal London pension. His pension is valued at £30,000, and he has decided to cash it all in. He tells me that Royal London are refusing to allow him to do so unless he can provide evidence that he has taken "proper" advice from a qualified "Advisor". Has anybody out there heard of anything like this? If it's a DC and not a DB pension, he can get free advice - a 60 minute appointment apparently - from Pension Wise. www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wiseWhether that qualifies as "proper" advice in RL's terms, I don't know, but I'd like to think so after 60 minutes' worth.
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Post by overthehill on Apr 21, 2023 17:08:43 GMT
So I'm assuming it is a DB pension transfer value, you wouldn't need advice for a DC pension.
Cashing in is the same as transfering to a DC pension so the 30k limit applies.
Both myself and my Ex used pensionhelp.co.uk which are based in Manchester. The service was good and the fees were as low as you could expect (still a complete waste of money thanks to legislation). I'm fairly certain if the advice to transfer was not going to be positive based on an early review there would be no charge (whether advice needs to be positive depends on your pension provider). I'm not sure how much they would charge for such a small amount, I had to pay 4k about 5 years ago for a much larger amount. If this was their minimum charge then you and everyone else who wants flexibility is in a bad government enforced expensive undesirable situation.
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agent69
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Post by agent69 on Apr 21, 2023 17:31:53 GMT
So I'm assuming it is a DB pension transfer value, you wouldn't need advice for a DC pension.
Cashing in is the same as transfering to a DC pension so the 30k limit applies.
Both myself and my Ex used pensionhelp.co.uk which are based in Manchester. The service was good and the fees were as low as you could expect (still a complete waste of money thanks to legislation). I'm fairly certain if the advice to transfer was not going to be positive based on an early review there would be no charge. I'm not sure how much they would charge for such a small amount, I had to pay 4k about 5 years ago for a much larger amount. If this was their minimum charge then you and everyone else who wants flexibility is in a bad government enforced expensive undesirable situation.
For the vast majority of people with a DB pension the requirement to take expert advice before pawning their crown jewels is excellent legislation. As mentioned above, the fact that the fee is so high reflects the cost of insurance the the financial advisor needs to hold, in case somebody fritters away their new found wealth and decides to sue, alleging poor advice.
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Post by bernythedolt on Apr 21, 2023 22:32:49 GMT
So I'm assuming it is a DB pension transfer value, you wouldn't need advice for a DC pension.
Cashing in is the same as transfering to a DC pension so the 30k limit applies.
Both myself and my Ex used pensionhelp.co.uk which are based in Manchester. The service was good and the fees were as low as you could expect (still a complete waste of money thanks to legislation). I'm fairly certain if the advice to transfer was not going to be positive based on an early review there would be no charge (whether advice needs to be positive depends on your pension provider). I'm not sure how much they would charge for such a small amount, I had to pay 4k about 5 years ago for a much larger amount. If this was their minimum charge then you and everyone else who wants flexibility is in a bad government enforced expensive undesirable situation.
That's a strange assertion. In fact, you are legally required to obtain advice before cashing in a DC pension over £30k. The OP's correspondent wants to cash in. We don't know if he has a DB or DC pension, but the rules for cashing in >£30k are the same. It's a couple of years old now, but the Telegraph states the legal position: "If you plan to cash in a defined benefit pension, you are legally required to seek financial advice regardless of how much is in your plan. You must also use a financial adviser if you are planning to cash in a defined contribution pension over £30,000. If your [DC] pension pot is below £30,000, then there is no legal requirement to seek advice. However, given the potentially severe tax implications of taking a large amount of money in a given month, it is prudent to consult a financial adviser before doing this."Also worth a read: www.fool.co.uk/personal-finance/share-dealing/guides/do-i-need-a-financial-adviser-for-my-pension/
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agent69
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Post by agent69 on Apr 22, 2023 8:26:02 GMT
So I'm assuming it is a DB pension transfer value, you wouldn't need advice for a DC pension.
Cashing in is the same as transfering to a DC pension so the 30k limit applies.
Both myself and my Ex used pensionhelp.co.uk which are based in Manchester. The service was good and the fees were as low as you could expect (still a complete waste of money thanks to legislation). I'm fairly certain if the advice to transfer was not going to be positive based on an early review there would be no charge (whether advice needs to be positive depends on your pension provider). I'm not sure how much they would charge for such a small amount, I had to pay 4k about 5 years ago for a much larger amount. If this was their minimum charge then you and everyone else who wants flexibility is in a bad government enforced expensive undesirable situation.
That's a strange assertion. In fact, you are legally required to obtain advice before cashing in a DC pension over £30k. The OP's correspondent wants to cash in. We don't know if he has a DB or DC pension, but the rules for cashing in >£30k are the same. It's a couple of years old now, but the Telegraph states the legal position: "If you plan to cash in a defined benefit pension, you are legally required to seek financial advice regardless of how much is in your plan. You must also use a financial adviser if you are planning to cash in a defined contribution pension over £30,000. If your [DC] pension pot is below £30,000, then there is no legal requirement to seek advice. However, given the potentially severe tax implications of taking a large amount of money in a given month, it is prudent to consult a financial adviser before doing this."Also worth a read: www.fool.co.uk/personal-finance/share-dealing/guides/do-i-need-a-financial-adviser-for-my-pension/The Telegraph article confirms that the rules are not the same!
- for a DB scheme you are legally required to seek financial advice
- for a DC scheme you are required to use a financial advisor if you want to cash in your pension (so no requirement to seek advice)
The telegraph article is poorly worded and I am confused by the reference to cashing in a DC pension. You pay money into a ringfenced DC pot and on retirement you take the money from the pot and transfer it to somebody who can provide a pension. So the pot needs to be cashed in before the pension comes into being.
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