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


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.”



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  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 !!

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