I'm with Equitable. Help

By THIS IS MONEY
Updated:

 

I have an AVC with Equitable Life. I retire soon so have not wanted to change to another product but I think I should now. Can you recommend a company? I realise I shall be liable to heavy penalties. Do you think the Inland Revenue will change the rules so people can have their money back? MH, Cheshire.

Sean Fernyhough, at independent financial advisers, Torqil Clark says: It's difficult to see Equitable returning to financial health within a reasonable time. The risk is that Equitable becomes insolvent, which could delay access to your AVC fund to purchase an annuity.

This is an unsettling thought but it should be set against the certainty that you'll pay a 20% penalty to leave Equitable. I would be reluctant to transfer so near to retirement because there would be no possibility of you getting back the 20% before you buy an annuity.

Instead at retirement you should exercise your open market option and place your annuity with another provider. There is a range of annuities available that will allow you to maximise your retirement income, but research your subject to ensure you get best for you.

I am not sure which Inland Revenue rules you are referring to, but it is clear that the Revenue will not change any rules so that a pension fund could be used for anything other than providing a retirement income. Once a pension is in payment the Revenue does not prevent people from transferring the liability for paying the annuity to another provider. But this tends to be prevented by the conditions you accept when you agree to the annuity.

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