More than 45,000 pensioners have broken free from poor-paying annuities and taken their savings back.
Money Mail has campaigned for years on behalf of retirees who were forced to buy trivial annuities, rather than take their pension as a meaningful lump sum.
But whether or not you can claim your pension back depends on the company who pays it — some firms still refuse to let customers cash in.
Victory: Money Mail has campaigned for years on behalf of retirees who were forced to buy trivial annuities, rather than take their pension as a meaningful lump sum
In all, 75,000 pensioners have now been offered lump sums for their annuities since we launched our campaign.
Rothesay Life, the nation’s third largest annuity provider, has written to 50,000 policyholders to offer them the chance to swap their income for a one-off lump sum.
More than 30,000 have accepted so far, and the firm says it will write to a further 30,000 before the end of the year.
Insurer Phoenix Life has revealed that around 15,000 people have taken up its offer to cash in.
Annuities give a guaranteed income for life in exchange for a pension pot. Income depends on the size of your savings and your life expectancy.
Before 2015, those approaching retirement had to buy an annuity, no matter how small their pot. Some pensioners were left with policies paying as little as 63p a year. But the pension freedoms let people do what they want with their pots from 55.
Before 2015, those approaching retirement had to buy an annuity, no matter how small their pot. Some pensioners were left with policies paying as little as 63p a year
Money Mail launched its ‘Unlock Our Pensions’ campaign three years ago to allow retirees trapped in paltry paying annuities to take out a lump sum instead.
Rothesay bought 200,000 annuities from Aegon and Zurich Life in 2017. It is these policyholders who are being offered a chance to cash in providing they are eligible.
To qualify for the lump sum offer, policyholders must be under 85 and their annuity cannot be worth more than £10,000.
Rothesay prices its offer by calculating how much it would cost to meet your current annuity payments, based on the life expectancy of an average policyholder your age.
In a letter seen by Money Mail, the firm offered one 83-year-old man around £7,250 in exchange for his £1,029 annual annuity income.
In its booklet, Rothesay warns customers they are ‘highly unlikely’ to get a better annuity rate if they use the cash to buy another one. The lump-sum payment could also be subject to income tax.
…but WE’RE still waiting
We get just £50 a month
Howard and Annie Williams want to unlock up to £10,000 from an annuities policy that pays just £50 a month.
The couple, who live in Treharris in South Wales, say the money would be much more useful in one lump sum.
Howard and Annie Williams, from Treharris, South Wales, want to unlock up to £10,000 from an annuities policy that pays just £50 a month
Retired engineer Howard, 71, bought the annuity for £12,156 from Scottish Widows after working for the National Coal Board.
But Scottish Widows is among the firms that refuse to let customers swap their annuity for a lump sum.
Howard says: ‘We haven’t got a lot but that £10,000 would make an immense difference. Fifty pounds a month is neither here nor there.’
Howard and Annie lived in Costa Blanca, Spain, for nine years but moved back to South Wales last year. They wanted to live close to family in Caerphilly, but could only afford to live nine miles away.
Retired accounts clerk Annie, 69, says: ‘We feel we are living in reduced circumstances. We feel we have been discriminated against. People without annuities are enjoying the benefits of their pensions.’
I need cash to move home
Retired nurse Doreen Clarke wants to cash in her annuity so she can use the money to help pay her legal fees when she moves home.
Miss Clarke, 68, receives just over £1,000 a year — or £84 a month — from Rothesay Life after retiring nearly 20 years ago.
Retired nurse Doreen Clarke, pictured with her dog Poppy, wants to cash in her annuity so she can use the money to help pay her legal fees when she moves home
Her pot was worth £17,890 when she bought the annuity through a financial adviser. Her pension was later transferred to Rothesay Life.
Rothesay has told her that she will receive a letter by the end of the year if she is eligible to cash in.
But Doreen now fears her pot will still be worth more than £10,000 — barring her from taking it as a lump sum.
Yet she says she would take £10,000 for it — even if it was supposedly worth more.
She says: ‘I would be happy to accept virtually anything to get this off my shoulder. I would just like it finished with. We should have the chance, it is our money.’
The money could fly us to Australia
Marie Smith wants her annuity money back after being diagnosed with cancer last year.
The 66-year-old grandmother has two annuities with Canada Life paying her £83 a month — or just under £1,000 a year.
But now she is undergoing treatment for breast cancer, she wants to use her savings to spend time with her family — including her daughter who lives in Australia.
Marie, who ran a transport business with her husband James, bought her first annuity in 2006 for around £20,000, and a second in 2013 with £15,000.
She now believes that the pots are each worth less than £10,000, so she can access the money in lump sums.
But Canada Life has refused to swap the annuities.
Marie says: ‘I want the money out, I don’t know how long I’m going to last.
‘I want to know why they can’t when other companies can.’
Rothesay is currently appealing a court ruling against its £12 billion buy-out of 400,000 annuities from insurance giant Prudential.
If it wins, annuity customers currently with The Pru could one day be made the same offer.
A Rothesay spokesman says its customers with small pots were all offered a lump sum on retirement, adding: ‘It seems natural to extend this option to those forced to purchase smaller annuities before they transferred to us.’
Phoenix made the offer to 25,000 customers with pots worth £2,000 or less, and more than 60 per cent took the lump sum.
Blow: In 2016, the Government abandoned plans for a secondary annuity market that would have let pensioners sell their annuity to another firm for a lump sum
A spokesman says: ‘Both the initial and reminder letters make it very clear there is no obligation to accept our offer, and we highlight that they can seek advice if they are unsure about the offer.’
Graham Parry wants to cash in two annuities he had to buy with Prudential when he retired from Rolls-Royce in 2014.
His £7,200 savings pay £169.42 a year after tax, but the firm has refused to let him take a lump sum. The 66-year-old from Bristol says: ‘People should have the option to decide our own future.’
Former pensions minister Baroness Ros Altmann says annuity firms should let customers make an ‘informed choice’.
But she wants official guidelines and checks from the regulator to ensure customers are not exploited, and adds: ‘I am really concerned people were ripped off on the way in and could be ripped off on the way out.’
In 2016, the Government abandoned plans for a secondary annuity market that would have let pensioners sell their annuity to another firm for a lump sum. Existing legislation lets annuity firms buy out policyholders with pots under £10,000.
Despite this, most insurers told Money Mail they would not allow customers to cash in their annuity. Standard Life says: ‘This is something we are reviewing for the future.’ Legal & General says the process would need a framework to ensure a ‘fair outcome for all customers’.
Other firms refused to budge. The Pru says swapping an annuity for a lump sum posed a ‘high risk of poor outcomes’.
An Aviva spokesman says: ‘Without an agreed regulatory framework, there is increased risk to the customer that they may not make an informed decision.’
Scottish Widows, LV= and Royal London do not consider it either — and fear customers would not get good deals for their annuities.