What do I know? - I'm only an IFA

All very interesting - and, sadly, true. Thanks must go to Bob for pointing this all out. Most people don't realise that 'Retirement' just may involve them in taking a bigger financial decision than they have made before, maybe not always as high in value as purchasing a property, but unless you fall into negative equity you can 'always' rectify your property mistake by selling and moving - whereas it may well be a once only, irrevocable, decision with pension proceeds. By coincidence I have just today seen a 'pre-maturity' letter on a PPP from a large Scottish Life office, no names, but they do have offices at 30 Lothian Road EH1 2DH. The maturity date is July 2010 and the letter says somthing like 'take your pension with us and there are no forms to complete' and TFC paid in 5 working days. If I was a client then 'no forms to complete' is brilliant, let's go for it!!!! Bit like a red rag to a bull. However, and this is what got my goat, the letter says (Nov 2009 remember), under other options, if total value of all plans "is below £18,000 .... This .. is known as commutation and 25% of the lump sum you receive is tax free ....." So that's 3 mistakes here, surely a) current limit (if take plan today) is only £17,500; b)I was under the impression that this is the Trivialisation option; c) if the fund is £16,000 and you receive, say, £15,000 net of tax, then actually 26.66% of the "lump sum you receive" is tax free, not 25% Or maybe I'm missing something - but then again, what do I know; I'm only an IFA.

Posted by: Neil Higham