It doesn’t exist
Back at what might be called the coalface of Pension Advice in the UK, it’s nice to be back at The Pensions Advisory Service (TPAS) as a volunteer on the switchboard. Founded 30 years ago as a charity, it is now a QUANGO funded by the DWP with full-time staff and over 300 volunteers – IFAs, actuaries & pension administrators – retired & still working. Annual budget is around £7 million with the volunteers’ contribution having been valued at £10 million.
My concerns about being up to date with the recent major pension changes from the March Budget prove to be less of a problem than I thought.
Henry James’s famous quote sums up a full and interesting day with more than 200 phone calls where yours truly manages to handle 30 of them with: fraud, incompetence and ignorance all making their appearance:
* A guy has had a phone call from an 0113 number where they introduce themselves as the Pensions Review Board. Assuring him that they are funded by the government, they offer advice on the “recent pension changes”. Something about the call raises his suspicions prompting him to call TPAS. His internet search has revealed no such animal – the Pensions Review Board doesn’t exist, or not in the form that they say. While he is on the line, I do my own narrower search with quotes around “pensions review board” which reveals 20 records of this non-existent organisation on one of the search results.
Solution: refer it to Action Fraud tel. 0300 123 2040
* FindmyPension are mentioned in another phone call where a colleague points out that this outfit has been dissolved. The caller is quoting from a year-old letter sent from Alicante in Spain. This turns out to be a Pension Liberation case where the guy has received a small amount of money and is wondering where the rest of his money is and why is nobody answering his letters? Pension Liberation is basically “you can have your pension money now, even if you are under 55” a scam which started a couple of years ago but sadly took sometime for the regulators to wake up to.
The pension providers are now culpable and must do their own due diligence before transferring any money, which has stopped pension liberation in its tracks. This leaves a few early people who may have got their money but who are going to get a 55 per cent Unauthorised Payment Charge from HMRC. Those who have not completed the process are left in limbo and may never get any of their money. To add insult to injury, they may get an Unauthorised Payment Charge as well.
TPAS link on Pension Liberation scams here
* More cheerful is a call from a sub-postmaster who is being offered £54,000 redundancy money and wants to put this into a pension. Unsurprisingly, he is Indian – a group who have saving built into their genes. He has a current personal pension but no IFA.
Answer: he can put 100 per cent of his earnings into to his existing personal pension plan as a single contribution although he will need to provide evidence of earnings. With his stated annual income of £30,000, he only has to write a cheque for the net amount of £24,000 as the pension fund will pick up the other £6,000 via tax relief. His wife can do the same although as she is in a defined benefit scheme, best get to check how much she can contribute this year. Little point in putting too much into a pension scheme in one year and losing the tax relief, so best to get it in writing. If there is anything left over from the £54,000 (the excess over £30,000 is taxable) then the exercise can be repeated after April, in the following tax year.
* Worry arises from a another call where a guy is reviewing his annuity options but slowness of correspondence between the provider and pension administrator cause frustration. In spite of having informed both parties, he is still being quoted standard annuity rates when he is a diabetic who has to give himself 6 insulin injections a day!
In essence: if you are in normal health, you should get standard annuity rates as your life expectancy is normal. If you smoke, you are probably not going to live as long so you may get an enhanced rate. If you have a serious health issue you may get an even higher rate – an impaired life annuity.
* Disappointment in another call from a guy who bought an annuity in January. He wants to review his options now that buying an annuity is no longer compulsory? Too late, once you have bought your annuity, you are locked in – as would have been clearly explained in the correspondence at the time.
* A teacher who retired on Ill-health grounds was told last year that she could have her pension this year. Now Teachers’ Pensions have told her she cannot have it? Her financial adviser has been unable to help. While TPAS sorts out thousands of pension queries every year, it has no statutory powers or in legal terms – no teeth. If one party digs their heels in, TPAS cannot force them to act.
Answer: refer the case to The Pensions Ombudsman who do have statutory powers.
* One minute before 5pm, a 53 year-old guy asks if he can cash in his pension with the Pru? Without mentioning Pensions Liberation, I inform him that he needs to wait two years. Hope he does not get a call from the Pension Review Board or their next incarnation, in the meantime.
Free guide on recent pension changes here from Hargreaves Lansdown.
TPAS will be at the 10th Ascot Retirement Fair Wednesday 20th August 2014