I have been trying since September to get my tax-free cash from a pension with ReAssure, with no luck. The incompetence of the company is staggering. ReAssure has consistently avoided answering my emailed questions and does not appear to be actioning anything until I phone again and chase.
On a call in February I was told that ReAssure could not action a request without the funds being sent to the pension firm Standard Life, which is part of the same group of companies. Standard Life told me that it would accept my funds from ReAssure, that I need do nothing further and would get payment direct from ReAssure of the tax-free amount in five to ten days.
Then I was told by ReAssure that since such a large sum had been requested, a more senior manager needed to authorise the payment. Needless to say nothing has been done, I haven’t received a penny of my money and I am getting nowhere with this organisation. This is totally unacceptable.
Stephen, Hampshire
Holly Thomas writes
You are 68, and although you have retired you haven’t accessed your pensions yet, choosing to live on income from your savings and investments. Last year you decided to start rounding up the six pension pots you had built during your working life in the IT sector. These were dotted around pension companies and your aim was to get full investment control of all your retirement savings under one roof.
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With rumours circulating that the tax-free cash perk might be withdrawn in the chancellor’s budget in November, you decided to take the tax-free lump sum from your ReAssure pot. You planned to leave the rest of the money untouched and to transfer it into the same pot as your other pensions once you had the tax-free cash. After making your request to ReAssure, however, you had nothing but mixed messages. Time and time again you were told different things by different people without it being made clear why your pension — worth about £224,000 — needed to be transferred to Standard Life, part of the same group as ReAssure, before you could take your tax-free lump sum.
What ReAssure failed to explain at the outset was that your pension was a little more complicated than normal because you were entitled to a larger tax-free sum. Since April 2006 most pension savers have been able to take up to 25 per cent of their total pension value as a tax-free pension commencement lump sum. Before April 2006 many pensions, including your ReAssure pot, offered more generous tax-free cash sums, and those perks were protected when the rules changed. You are entitled to take almost 42 per cent of your pot tax-free.
To take advantage of this protection the policy had to be kept within the Standard Life group of companies and you had to set up what is known as an active money personal pension contract. You could have chosen an alternative option or transferred your pot elsewhere but that would have meant that your tax‑free cash entitlement would have been the standard 25 per cent.
It seems none of this was explained to you properly, but the upshot is that you have a boosted tax-free lump sum of about £94,000, plus interest of £1,623, which should help your retirement to go with a swing. ReAssure offered compensation of £650 in recognition of the inconvenience you have been put through, which you have accepted. You said you would put the money into tax-efficient Isas for you and your grandchildren and spend some on travel.
You said: “It’s been a huge worry that I seemingly had no way to access to my own money. I’m very grateful to finally have my tax-free lump, thanks to you. If the budget had been different this would have been a very different story, of course.”
ReAssure said: “We are very sorry for the experience. The delays and the poor communication encountered fell well below the standard of service our customer should expect from us, and we fully acknowledge that we let him down.
“There were points where the customer requested a pause to the process, which added some complexity to the overall timeline, but we recognise that he had already experienced delays up to that point and our communication should have been much clearer and more proactive throughout.”
On the matter of the delay in authorising the payment, that was because a higher level of authorisation is required to release pension pots worth more than £200,000. This is to meet regulatory requirements designed to prevent fraud and financial crime.
Taking tax-free cash is typically a straightforward process from more modern pension schemes, which is one of the reasons savers choose to consolidate pensions into a single self-invested personal pension (Sipp). It’s typical for the tax-free lump sum to be paid out in a matter of weeks, rather than months. If it takes too long and you end up financially disadvantaged you can make a formal complaint to the company and seek adjudication from the Financial Ombudsman Service if you don’t get a satisfactory outcome after the eight weeks given for a response.
£615,493 — the amount Your Money Matters has won back for readers so far this year
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