Q. I'm 59 yrs old and had my pension fund with Phoenix Life. I received a call last year saying that I could change my fund. I'm a single parent and have discovered that the pension I have is a single life annuity that has no benefit to my daughter when I die.
I would not have chosen to do this if I had been given this advice as I'm a widow and my daughter's father died when she was three and I have brought her up on my own. She is now 22 and I'm dismayed to find out now that I have no provision for her when I die. I have spoken to them and they refuse to do anything for me.
When I first noticed it last year they told me to just leave it for now as the legislation was changing and I would be able to access the funds and reinvest in a more suitable product but that never happened can you advise please?
A. Kate Smith, Head of Pensions at Aegon says:
I have assumed that you bought the the annuity, and that it isn’t one resulting from the death of your husband, so a dependant’s annuity.
Thank you for your query about your annuity with Phoenix Life. As you selected a single life annuity, I’m afraid the annuity effectively dies with you. Even if you had bought a dependant’s annuity payments would depend on the terms and conditions of the policy. This would normally mean payments ceasing as soon as your daughter finished in full-time education or reached the age of 23.
How to pass your pension pot on to your loved ones
Buying an annuity is an irreversible decision, unless the value is less than £10,000. Originally the Government had wanted to extend the ‘pension freedoms’ enjoyed by the over-55s to those who had previously brought annuities before April 2015. But following a wide-reaching consultation, the Government backtracked, as it was concerned that too many people might be lured into selling their annuities for a cash sum which may be poor value, or fall victim to scammers.
Phoenix Life has recently announced that it will be allowing annuitants to cash in small annuities provided the income is no more than £300 a year, the calculable value doesn’t exceed £2,000 and the annuity commenced before the pension freedoms in 2015. If you fit into this category you should receive a letter from Phoenix Life or you could contact them to find out more.
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