I am writing to you in order to ascertain whether or not any fellow IFAs out there believe that my attitude to the following problem is misplaced or misguided. We recently dealt with a case on behalf of a client who had a “six-figure” pension fund with Prudential. This was a fund that we had set up for the client almost 20 years ago and who now wanted to take the tax-free cash for a specific purpose but defer income until an indeter-minate date in the future.
After some deliberation and discussion with the client, we decided that there was no merit in moving the fund to another provider and instructed Prudential to deal with the case as an internal switch from a personal pension plan into “unsecured income” mode.
Apart from a number of related problems that this particular application had, we had cause to complain about the length of time it took for the tax-free cash to be paid to the client. Part of the explanation that we were given read as follows: “We produce internal service level agreements for the effective processing of new business (and if this would help in the future I can arrange for these to be shared with you) for the settlement of an existing pension plan with PRU a standard time of five working days has been agreed, then two days maximum for the transfer of money between teams, then five days maximum to set up a new drawdown plan, then three to five days for backs of tax-free cash payment totalling circa 16 working days.”
Is there anybody out there who seriously believes that taking this length of time to do an internal transfer (the emphasis being on “internal”, that is, the fact that they have already have the money) is anything other than completely and utterly ridiculous?
It is a sorry sorry state of affairs when a provider cannot pay out tax-free cash to a pensionholder in under 16 working days when they already hold the money themselves. I have this mental picture of one person writing out a cheque walking across the room and giving it to another person, that sort of service standard simply beggars belief. Why does this industry continue to justify completely untenable positions which simply cause clients and other professionals to shake their head in wonder?
Paul D Beard
The Alexander Beard Group