Ahead of the budget in October I was concerned about a potential tax raid on pensions. In trepidation I asked the investment platform Fidelity if I could withdraw my 25 per cent tax-free lump sum from my self-invested personal pension (Sipp).
I was told that I needed to make an appointment for this and I couldn’t get booked in until after the budget. I suspect lots of people were making similar requests, especially after the chancellor announced that pensions will be included in the scope of inheritance tax in 2027.
Like many people of my generation, I am worried that this new rule could add a lot of complexity, cause delays, and be detrimental to retired people and their families.
Eventually on November 13 I spoke to a pension adviser at Fidelity. At this point the value of my Sipp was about £493,000, which would have given me a tax-free cash payment of just over £123,000.
I sent off my application in the post and was told it would take two weeks from the time Fidelity received it to when I would get the cash. I believe Fidelity received my application on November 20 or thereabouts, so I expected it to pay my lump sum by December 4.
But by December 12 I had heard nothing about my application, so I called Fidelity to chase. I was told that a supervisor would give me a call but I never heard back. At this point, the value of my Sipp had gone up, which would have given me a tax-free cash payment of around £124,000.
Fidelity then finally began processing my application and, over ten days, it sold my investments while the markets plunged. When my tax-free payment arrived on December 30, I was stunned to get just £118,935. I fully appreciate that there would be some movement between the initial estimate and when my investments were sold, but I was shocked by this low valuation.
• Tips and tools on how to draw your pension
I complained to Fidelity about the time it had taken to process my request, but it has offered only £150 compensation for the delay, £50 for two missed calls, and interest of £203 to account for the financial impact of the delay. Yet I believe that the delay has cost me about £5,345 — the difference between the tax-free payment I should have received on December 4, which would have been about £124,280, and the £118,935 that I got.
I am still waiting to understand why my application was delayed for so long, while Fidelity doesn’t seem to recognise that its delays exposed me to a drop in the market. As well as the consequential losses caused by Fidelity’s failures, I think it should pay compensation for the time and emotional energy this has cost me.
I had plans to use my lump sum to pay for a holiday and I also want to give a reasonable gift to my step-granddaughter and each of my seven great-nieces.
Steve, address supplied
Katherine Denham writes
In just three weeks the value of your Sipp plunged by more than £22,000, sinking to £475,750. It must have been stressful to see this happening, knowing the impact it would have on your tax-free lump sum.
When investments need to be sold, Fidelity’s website says it takes up to 13 working days to process this kind of request (or eight working days if the money is already in cash).
Fidelity got your application on November 25, so if it had acted according to its own timescales your withdrawal should have arrived on December 12, at which point you would have got £124,517. But instead you got £118,935, a difference of £5,582.
If Fidelity had met this deadline then you would not have been exposed to the market downturn towards the end of December.
It told me that around this time there were lots of customers wanting to withdraw money from their pensions. The company carries out these requests using manual and automated processes, but its staff were overstretched during this busy period, which caused the delays. Fidelity isn’t alone in this: since October, pension companies have been inundated with similar requests as people try to avoid the incoming inheritance tax raid by moving money out of their pensions.
But Fidelity was also slow to realise that it was missing some information from you. Before it could carry out your request, it needed to know how you wanted your remaining pension to be invested, but it wasn’t until early December that it asked you about this.
None of this was your fault and I agreed with you that Fidelity should make sure that you weren’t out of pocket, so I was pleased when my involvement spurred it to do the right thing and pay you £5,582.
Fidelity said: “We apologise for the delays and inconvenience our customer experienced. We are committed to providing our customers with the best service possible and he did not receive this.
“We have arranged payment of the losses he incurred, which will put him back in the position he would have been in had the delays not occurred.”
It has given you £500 compensation and £171 representing loss of interest on the additional payment.
You said: “Fidelity certainly changed its tune since you got involved and for that I am extremely grateful.”
I’m sick of Virgin Media’s false promises of £556 refund
My wife and I had a TV, phone and broadband package with Virgin Media, but before we moved house in December we discovered that it didn’t offer a service at our new address.
I called the company to explain that we needed to cancel our contract and it said I would be charged a cancellation fee, but that I would get a refund once I provided evidence of my new address. Before moving into our new home we stayed with our family for about six weeks, which I explained to Virgin Media.
I paid the cancellation charge of £556 via direct debit in December, and when we moved into our new house in late January I gave Virgin Media evidence of the new address. It accepted this and said a cheque would be sent in 36 days, but no cheque arrived.
In March I used Virgin’s web chat service and was promised that a cheque would be sent in 15 working days, but I’m still waiting.
One of the most frustrating things about this is how difficult it is to get through to someone to raise a complaint — it always seems to take at least an hour to get any sort of response. I am at a loss as to what to do next.
I find it extremely frustrating that Virgin Media keeps making promises that it doesn’t keep.
Tim, Cheshire
Katherine Denham writes
It is a bugbear of mine that companies insist on sending cheques when bank transfers are so much faster and more secure.
Virgin Media told me that it could send a refund electronically, but only if a customer’s direct debits are still in place when the refund is paid. In your case, your direct debits had stopped and your account had been closed, which is why a cheque was arranged.
So why hadn’t your cheque arrived? Virgin Media told me that because the amount was greater than £500, it should have been escalated to a team manager to approve the cheque. This didn’t happen, which it said was human error.
So was the same mistake made twice? The company said the second agent processed the cheque correctly, but the system thought it was a duplicate refund, so it didn’t go through.
• Read more advice from Katherine Denham in The Times
I spoke to Virgin Media and it quickly arranged for a cheque to be sent to your new address, which arrived the following week. It gave you an extra £50 as a gesture of goodwill, so the total was for £606.
Virgin Media said: “We have spoken directly with Tim to apologise for the delay he experienced in receiving his refund after moving to a non-serviceable area.”
You said: “It’s just a shame that I had to seek your help to get any traction on this, but hopefully Virgin Media will learn from this and ensure that their processes are corrected.”
£686,059 The amount Your Money Matters has saved readers this year
If you have a money problem you would like Katherine Denham to investigate email [email protected]. Please include a phone number
