Why can’t I cash in £10,000 pen­sion?

The Daily Telegraph - Your Money - - READERS’ LETTERS -

Af­ter spend­ing 25 years in the pen­sions and life as­sur­ance in­dus­try, I ceased work­ing in the field at the age of 50.

By then I had ac­cu­mu­lated var­i­ous pen­sion plans with dif­fer­ent life of­fices: some from com­pany schemes, oth­ers from self-em­ploy­ment. My wife and I also moved to a dif­fer­ent area be­cause of a job pro­mo­tion.

Later, af­ter ac­quir­ing a de­gree, I taught in adult ed­u­ca­tion for 10 years un­til I re­tired aged 65. Since I was by then out of date about pen­sions, I asked a fi­nan­cial ad­viser to deal with re­al­is­ing my pen­sion poli­cies. How­ever, one pol­icy was over­looked. JOHN DAVIS, WORCS

When you found out about it, just be­fore your 75th birth­day, pen­sion leg­is­la­tion was chang­ing.

Now, aged 77, the mat­ter was still in limbo. You needed the money for fam­ily, for char­i­ta­ble do­na­tions and to as­sist Egypt: the Postal Con­ces­sion 1932 to 1956.

Time and again when you tried to cash in the plan, Phoenix Life, which it was now with, thwarted you. This was partly be­cause from the out­set Phoenix had in­sisted that, as the pol­icy con­tained a guar­an­teed an­nu­ity rate (which com­pared very well with stan­dard an­nu­ity rates), you must first take fi­nan­cial ad­vice.

Only when I be­came in­volved did it ap­pre­ci­ate that the plan’s value put it well below the £30,000 thresh­old for need­ing an ad­viser’s opin­ion.

For the trou­ble and up­set this had caused you Phoenix Life of­fered £300. Us­ing a claim form it had re­ceived from you in 2015, and af­ter some is­sues with pa­per­work were un­rav­elled, you re­ceived its £10,313 value.

You be­lieve you may be able to claim back some of the tax that has been de­ducted.

Phoenix has now paid 8pc late pay­ment in­ter­est, which af­ter tax is £995, and £50 for the ex­tra in­con­ve­nience. The to­tal re­ceived is £11,658. in­sur­ance pro­vided that they are vis­i­tors. Usu­ally this ap­plies for up to six months.

“Some­times their in­surer may al­low them to drive some­one else’s car third­party only while in the UK.”

Each in­di­vid­ual sce­nario should be care­fully checked out, how­ever.

In the end your friend hired a car that in­cluded in­sur­ance. An added ben­e­fit of do­ing this is that gen­er­ally if the guest does have an ac­ci­dent, the host would not lose their ex­cess and no-claims bonus. This would be the case if there were a mishap while the host’s ve­hi­cle was be­ing driven by the guest.

Mr Crow­der said that, over the years, AA In­sur­ance had sought to de­velop a re­la­tion­ship with a third-party provider to en­able it to of­fer just this type of cover. How­ever, it had not found a part­ner will­ing to do this.

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