It’s a hard pill to swallow, but many would-be retirees across the country have to deal with problems getting their money out of pension plans. Phoenix Life, one of the major pension providers nationally, has been at the forefront of numerous complaints. The reason? The company does not wish to let go of the money until someone can prove they’ve talked to a financial adviser. Is this smart or a case of customers being railroaded by companies yet again?
It’s a mixture of both issues, but the mishandling of pension pots is a growing issue as many workers are beginning to desire to access money they’ve saved for decades. Whether you have a small pension or a rather large one, there are some things that you need to keep in mind in order to be sure that you’ll have access to your money.
Check the Original Contract
The original contract on the pension policy is your best friend. It can be hard to keep records like that, but it’s highly recommended that you do. Long before you want to try to get the money out, try to see if you can get a copy of the contract. If you have the original one, this is a great time to make sure that you weren’t automatically pushed into terms that aren’t favorable for you.
These contracts are pretty lengthy for a reason: they want to make sure that you truly understand what’s going on behind the scenes. Even though all of this legal language is usually well above people’s heads at the time, they do need to try to remember a few details. One of the key particulars is what happens when you want to access the money. If you have to show proof that you spoke to an adviser, what type of adviser will they accept? Many building societies have links to low cost or even free advisors, but that really isn’t the point.
The trouble here is that it’s your money and all you want to do is be able to spend it the way you see fit. The industry association behind companies like Phoenix Life says that they’re trying to protect customers too, in their own way: they want to ensure customers are getting sound financial advice. By requiring it before money is transferred, they want to prevent customers from losing out on all of their options. Once you convert a pension into a lump sum, there’s no going back. So it’s key that you understand every aspect going in.
What this means for pensioners looking to get additional cash is that they’re going to have to make sure that they speak up about their rights and not be afraid to get second or even third opinions. The rules on pension freedom are designed to relax a lot more of the cases, but that still doesn’t mean that everything is well. The sheer number of over 55s trying to cash out is so high that there are bound to be errors as these stories continue to come out.