View more on these topics

Retirement Advantage’s tax-free cash stance branded ‘illogical’

Tax-Taxation-Blocks-700.jpg

Retirement income provider Retirement Advantage has been criticised for its  “illogical” stance on tax-free cash.

The insurer pays a different annuity rate depending on whether a customer’s tax-free cash has been paid by their ceding pension pro-vider or by Retirement Advantage.

Advice firm Plan Money was given two different annuity quotes for a £171,000 pot: £9,443 a year  and £9,370 a year.

In a letter to the firm, Retirement Advantage said it applied a wealth factor as part of its underwriting process.

This means it pays a lower annuity rate where it pays out the tax-free cash because it can verify the existence of a larger pension pot and therefore assumes the client will live longer.

Other annuity providers confirmed to Money Marketing they do not pay different rates depending on which provider pays the tax-free cash. They do apply a wealth factor, but only to the annuitised pot.

Plan Money director Pete Chadborn says: “Who pays the tax-free cash makes no difference to a client’s wealth, so this stance is illogical.

“Retirement Advantage has failed to be upfront with advisers on this. That means advisers could be unwittingly doing a disservice to their clients by getting them a worse rate.”

A Retirement Advantage spokesman says: “We apply different mortality assumptions depending on whether customers have already taken their tax-free cash or not, because the two groups have different profiles.”

Recommended

Business-Handshake-Meeting-Deal-Low-Angular-700x450.jpg

Retirement Advantage hires ex-FCA associate

Retirement Advantage has appointed former FCA senior associate David Forsdyke as head of compliance for its equity release division. At the regulator, Forsdyke was part of the team responsible for implementing the Mortgage Market Review. He was previously a director of equity release advice firm Argent Sage. Retirement Advantage equity release managing director Tom Evans […]

Tablet-Technology-Computer-Business-700x450.jpg

Retirement Advantage picks GBST for new blended product

Retirement income firm Retirement Advantage’s new annuity and drawdown blended product will be powered by GBST’s Composer platform. The Retirement Account is due to launch imminently and allows advisers to move clients’ funds between a guaranteed income stream and flexible drawdown function. Charges for the product have not yet been revealed. Retirement Advantage chief operating […]

Tax allowances and exemptions

Helen O’Hagan, Technical Manager at Prudential, looks into the planning strategies that can deliver considerable tax savings for your clients. Inheritance tax (IHT) Consider Margaret, featured on our Planning Matters family hub, who is a sprightly eighty year old with four children and several grandchildren. She’s recently been widowed and IHT planning is high on […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. As an IFA this is just one example of what’s so wrong with our industry. We’re never going to be trusted by the general public when providers pull stunts like this. Similarly when quoting for an annuity they all start asking what other providers have quoted then start “tweaking” their initial quote. Why can’t they just offer the best rate to clients in the first instance? I think of all the hoops we constantly have to go through on a compliance front and things like this are still happening. Unbelievable !!

Leave a comment