My wife and I are retired and in our early 70s. We had a pension policy with NPI who some time ago wrote asking if we wanted to draw down a tax-free lump sum of £21,758 from our pension pot.
We agreed to do that. It told us that, after receiving the lump sum, we would then be paid around £4,138 per annum as an “annuity” from the pension pot.
NPI then sold out its policies and, after various changes, the company our policy is with is now called ReAssure.
I have written time and again asking where the £65,279 that was still in our pension pot after we took the tax-free lump sum is. Could you unravel this mystery?
ES, East Sussex
In 2010, when you took the lump sum, the remaining amount went to buy the guaranteed income of what in fact is £4,782 for the rest of your life.
Apparently you thought you were receiving interest on the pension pot with the capital staying intact.
In fact, the payments came from the annuity that had been bought with the capital that had been left over. Failure to grasp this seems quite some oversight on your part.
The return is higher than the figure you cite because, in another disturbing twist, the smaller amount was for a joint life annuity with a five-year guarantee.
The annuity you did opt for in the end and the one you have been receiving payments in respect of is on a single life basis and there was no guarantee. It cannot, as you apparently thought it could, outlive you. Your wife cannot benefit.
You say you did not take advice and things were not explained to you, although your accountant, you say, has given you information. This, from what you indicate, may have been wrong.