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Rakhi Vasavada
Rakhi Vasavada, Financial Advisor
Category: Law
Satisfied Customers: 4546
Experience:  Attorney and Financial Expert. Have specialization in Financial Laws.Practice experience of over 13 years
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We have requested a "cash in"

Customer Question

We have requested a "cash in" of two small annuity/pensions from the Prudential. We have received a letter back stating that changes in the 2014 budget do not apply to pensions/annuities already in payment. Is this true? Also the Prudential have stated they will not change the terms of any annuity contract to allow the contract to be cashed in. Is this also the case? One of the annuities, was sold to us 45 years ago as one which could have the monthly payment increased at any time, this turned out not to be the case, as we had to take out a further annuity for pension purposes. Is this miss- selling of an insurance product? Regards...Mr & Mrs R. XXXXX

Submitted: 2 years ago.
Category: Law
Expert:  Rakhi Vasavada replied 2 years ago.
Dear Friend,

Hello and welcome. Thank you for providing an opportunity to assist you.

I am sorry to be the bearer of bad news but what Prudential has said is correct. This is ALSO a case of mis selling as I understand.

So far as cashing in goes, if you are in capped drawdown and have at least £12,000 a year of "secure pension income", including the state pension and annuities in payment, you can move to "flexible drawdown" which gives you complete freedom over how much you take out of the pension pot. HOWEVER, who have more than £18,000 in cash can take up to two pensions worth up to £2,000 as cash lump sums, again subject to income tax and this is the option which is used by vast majority.

I believe you have more than 18,000 and therefore, cashing in completely might not be an option.

Kindly refer the following two very good references which are informational.

http://www.telegraph.co.uk/finance/personalfinance/pensions/10710606/Budget-2014-How-will-the-new-pensions-system-work.html


http://www.bbc.com/news/business-26653312


I am sure this would help.

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Warm Regards,