The Lemon Fool

I am 69 years old and am due to take my pension on my 70th B'day in May. Zurich have told me that although they will allow me to elect for a partial Uncrystalysed Funds Pension Lump Sum (UFPLS) i.e. to take out a fixed amount each year (amount decided by me), they have told me that if I elect for this, I must take out the entire fund by my 75th Birthday !. I thought the 75th birthday was the deadline for actually taking a pension not for having the pot depleted ?.

Apparently my pension plan (an old "Allied Dunbar Managed AP Plan" only offers me three options :-
a) I can extend retirement (to 75) and carry on paying in until then
b) convert into an annuity before 75th B'day
c) take multiple lump sums (1 per year) but must withdraw whatever is left by 75 ? - THIS WOULD HAVE BIG NEGATIVE TAX IMPLICATIONS FOR ME !

I do not want to do options (a) or (b) and although Zurich say I can move to another provided "free of charge", I would lose around 5% of my fund immediately in the form of the Buy/Sell "Spread" when putting it into another fund (this would be a significant loss !)

I thought the idea of a pension was that when you start to draw it it goes on for your lifetime not capped until your 75th B'day ?

I asked Zurich if they had this 75 year limit for all their pension plans and Zurich said YES - this is the case with all their pension plans !.

I can understand that I would need to select a pension payment option by 75 but to ask me to have it spent by 75 seems to defeat the whole object of a pension, and was not what I understood I was signing up to 33 years ago !.

Doese anyone know if they can put this 75 year old limit on me for taking the UFPLS option ? and if so do I have any legal redress for a missold policy, because this was definitely not pointed out to me when I sighed up ?

Thanks for any advice on this

Are you sure they mean actually withdraw by age 75, and not just crystallise the whole fund? Don't they offer a "take 25% tax free, then start drawdown" like any sensible DC pension?

If it's as you stated I think I'd take the hit and transfer elsewhere.

EDIT: I think this would be better on the Pensions Practical board.

Scott.

No - they definately mean to "withdraw the whole pot by 75" ! - its an old Allied Dunbar plan and they (Zurich) apparently don't offer drawdown !

Degsy wrote:
I can understand that I would need to select a pension payment option by 75 but to ask me to have it spent by 75 seems to defeat the whole object of a pension, and was not what I understood I was signing up to 33 years ago !.

Doese anyone know if they can put this 75 year old limit on me for taking the UFPLS option ? and if so do I have any legal redress for a missold policy, because this was definitely not pointed out to me when I sighed up ?

Thanks for any advice on this

Sounds like you didn't understand the contract you signed 33 years ago from what you have written. I doubt you have any redress for that though. What exactly is it in the contract (you presumably willingly signed) that wasn't pointed out to you? I am confused as it can't simultaneously not be pointed out to you but also be in that contract.

Are you sure that you are reading this correctly? What the law requires is that by 75 you have to crystalise your pension, either by buying an annuity or some other means. I know of no other instance where one is required to consume the crystalised funds.

MDW1954

MDW1954 wrote:Are you sure that you are reading this correctly? What the law requires is that by 75 you have to crystalise your pension, either by buying an annuity or some other means. I know of no other instance where one is required to consume the crystalised funds.

MDW1954

There will I am sure be plenty of "old" pensions written such that the only use of the pot is to buy an annuity, not drawdown. How the law has changed over time isn't relevant if those providers haven't, or won't, update their contracts.

dealtn wrote:

MDW1954 wrote:Are you sure that you are reading this correctly? What the law requires is that by 75 you have to crystalise your pension, either by buying an annuity or some other means. I know of no other instance where one is required to consume the crystalised funds.

MDW1954

There will I am sure be plenty of "old" pensions written such that the only use of the pot is to buy an annuity, not drawdown. How the law has changed over time isn't relevant if those providers haven't, or won't, update their contracts.

Sounds like the OP needs to transfer his pension to another provider, then.

MDW1954

With great respect to the OP the Allied Dunbar contracts were never market leaders and personally I could never understand why Zurich bought Allied Dunbar in the first place. It simply tainted their brand. These are of course old contracts drawn up well before the days of pensions freedoms and where it was just assumed that everyone would buy an annuity. The mindset was why would anyone want to do anything else?

So if the OP does not want to buy an annuity he should set in train the transfer of the entire pot to another provider now, who will almost certainly be more flexible. But he should read and understand the proposed contract details before he does the transfer!

Dod

Dod101 wrote:With great respect to the OP the Allied Dunbar contracts were never market leaders and personally I could never understand why Zurich bought Allied Dunbar in the first place. It simply tainted their brand. These are of course old contracts drawn up well before the days of pensions freedoms and where it was just assumed that everyone would buy an annuity. The mindset was why would anyone want to do anything else?

So if the OP does not want to buy an annuity he should set in train the transfer of the entire pot to another provider now, who will almost certainly be more flexible. But he should read and understand the proposed contract details before he does the transfer!

Dod

Checking he isn't entitled to a generous and guaranteed annuity rate that would be given up on transfer.

I transferred my Zurich pension (started out as Allied Dunbar Managed AP like yours) to an external SIPP as cash (before choosing my own shares) and haven't looked back. The process was relatively straightforward (albeit lots of forms to fill out from both companies). I now have much greater flexibility to do what I like with my investments and much lower charges. I was reasonably happy with the fund performance from Allied Dunbar (YMMV) but just wanted to do my own thing.

Regards, Puffster

dealtn wrote:

Dod101 wrote:With great respect to the OP the Allied Dunbar contracts were never market leaders and personally I could never understand why Zurich bought Allied Dunbar in the first place. It simply tainted their brand. These are of course old contracts drawn up well before the days of pensions freedoms and where it was just assumed that everyone would buy an annuity. The mindset was why would anyone want to do anything else?

So if the OP does not want to buy an annuity he should set in train the transfer of the entire pot to another provider now, who will almost certainly be more flexible. But he should read and understand the proposed contract details before he does the transfer!

Dod

Checking he isn't entitled to a generous and guaranteed annuity rate that would be given up on transfer.

Absolutely!

Dod

I remember them from my youth when they were called “Allied Crowbar” for their very forward selling techniques
They were the last blast of Insurance Companies selling Pension Plans of rather opaque performance and costs ie usually poor performance and high costs!
xxd09

Degsy wrote:I would lose around 5% of my fund immediately in the form of the Buy/Sell "Spread" when putting it into another fund (this would be a significant loss !)

Changes in the market place in recent years have removed this type of front ending of charges in most cases. You might have to steer clear of St James Place though.

I too had an old Allied Dunbar pension which was sold to Zurich years ago. The plan became known as 'Zurich Managed AP' and the sedol number was 0406181.

Zurich wrote to me prior to my 65th birthday informing me that I could if so desired, keep it running with them, but that I would need to transfer it to another provider BEFORE reaching my 75th birthday. I phoned them upon receiving the letter, asking if I could withdraw all or part at any time before 75 and was told it would not be possible.

Two and a half years after receiving the above mentioned letter, I requested Zurich to transfer the entire plan to Vanguard. From filling the forms online to receiving the closing value into my newly-opened VLS60 took 10 days.

Alaric wrote:

Degsy wrote:I would lose around 5% of my fund immediately in the form of the Buy/Sell "Spread" when putting it into another fund (this would be a significant loss !)

Changes in the market place in recent years have removed this type of front ending of charges in most cases. You might have to steer clear of St James Place though.

Unit trusts still, by their nature, have a bid-offer spread, and I believe that's what's being referred to here, if the Zurich plan is indeed structured as a unit trust.

UTs are still around ... even Vanguard has a couple!