I have a “fully crystallized” pension pot, so just the cash left after all drawdowns and lump sums have been taken. My financial adviser of many years told me to transfer it to a cash account with Aviva as I already have a minuscule account with it.
She can’t make the transfer as her firm no longer allows advisers to do so. The reason for the transfer is purely down to tax liability – the company it is currently with will only allow the whole amount to be withdrawn, whereas with Aviva you can make several smaller withdrawals.
I have contacted Aviva, and been told that the transfer must be instigated by a financial adviser. Why should I have to pay another one for advice I have already received.SJ, Coalville, Leicestershire
You are discovering that financial advisers and pension companies are running scared of the new rules designed to free up people’s access to their pensions. Legislation requires pension providers to check that anyone wanting to convert a final salary scheme of more than £30,000 to a defined contribution pension, or who has a pension with certain other safeguarded benefits, has taken independent financial advice.
However, after the PPI scandal, companies are making up their own, more stringent, rules to avoid future compensation claims. This means people like you are being forced to pay around £1,000 for unnecessary advice in order to access their money.
Research by the Financial Conduct Authority has found 72% of the largest firms required customers to take advice before transferring into a scheme, and concluded that many were confused about their statutory obligations. The Pensions Advisory Service says it has received many calls from customers in your position, even when there is no regulatory or legislative requirement for advice.
Aviva says that because drawdown is complex ongoing independent advice is necessary. The mystery is why your existing financial adviser can’t oblige. As Chris Hannant of the Association of Professional Financial Advisers says: “The financial adviser has already advised on the drawdown and therefore assumed liability for that advice, so as this is just the remains of a DC pot I’m not sure why they wouldn’t do it.”
There are companies that will accept transfers of pension pots without advice and the government body Pension Wise can give pointers on how to find them.
If you need help email Anna Tims at [email protected] or write to Your Problems, The Observer, Kings Place, 90 York Way, London N1 9GU. Include an address and phone number.