I’m struggling to hit a tight deadline to turn six pensions into a £17,500-a-year annuity: STEVE WEBB replies

Deadline: I need to turn six pensions into an annuity quickly to get the best rate quoted

Further to brain illness last autumn I left work in February as after three months back was finding it too tiring, and at 57 I am unexpectedly trying to buy an annuity through an annuity broker firm.

I received a best quote of £17,500 a year with Aviva with an annuity rate guaranteed for a month.

I have six pensions needing to be brought together from four providers. Two are already with Aviva.

However, one provider gave me two weeks’ notice of a pension platform change which required a period when no transfers could be made.

The period ends three days before the Aviva guarantee on the quote ends. If transfers are not made before that its current rate will apply, which is approximately £1,200 a year less than the original quote.

Another provider also seems to say its pension transfer will be six to eight weeks anyway.

Is there something wrong with the whole process as surely it is unlikely annuity broker best quotes are ever achieved? Of course, in theory this could also work positively but doesn’t seem so for myself.

If I choose to cancel money gets sent back to the original companies and I seem back at square one, and I am currently living off savings so see the only option is to continue.

I didn’t use Pension Wise as it took six weeks for an appointment.

I prefer to have an RPI inflation-protected annuity, rather put my pensions in an investment drawdown plan.

However, I will need to see how viable my final annuity income is combined with savings until state pension age at 67, or consider some part-time job.

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Steve Webb replies: I was sorry to read that you have been in poor health and want to sort out your retirement finances as quickly as possible.

I would encourage everyone to use the Government’s free Pension Wise service when considering their options, not least because decisions such as buying an annuity cannot be reversed if you change your mind.

I do however understand that your personal circumstances made it difficult to wait for an appointment.

Got a question for Steve Webb? Scroll down to find out how to contact him

When a pension company provides you with a quote for an income for life – an annuity – it is normal for that quote to have an expiry date. But I understand your point that the quote needs to last long enough to be able to get the money transferred across.

I contacted Aviva, which gave you your initial time-limited offer, and they said:

‘Our current position is to guarantee illustrations for up to 40 calendar days from the date the annuity quotation is produced (not the four weeks mentioned).

‘Where we receive customer’s pension pots within those 40 days they are entitled to the annuity rates they were quoted. This is in line with our competitors and general market practice.

‘The reason is that we have to use a number of factors to determine annuity rates, in particular market conditions from long term yields.

‘These conditions can change rapidly and we want our annuity rates to reflect the latest conditions.

‘We are guaranteeing an income for life, that can often last for 25 – 30 years, so we want to be confident that we can provide that income for our customers over a long period of time.

‘Reflecting the latest market conditions allows us to provide certainty to customers and ensure they get the fairest rate based on the conditions when they take out the annuity.’

With regard to the time taken to transfer, such time limits on the validity of an annuity quote should not be a problem in most cases.

The reason for this is that most funds are transferred from your pension provider to the annuity provider using an online service provided by a company called Origo.

The idea is that Origo enables pension and annuity providers to exchange information securely and helps to decrease the time it takes to transfer pension funds to other providers.

When the annuity provider receives an application, it makes contact with Origo which passes this on to your current pension provider, which obtains the necessary details and processes the transfer.

Where pension providers are part of this network, the industry standard turnaround time is a maximum of 14 calendar days.

It would be fair to say however that pension transfers are not always this swift. Where individuals undertake the transfers themselves I often hear of delays in getting money moved.

This is one reason to make sure that – wherever possible – any planned pension consolidation is done in good time rather than at the last minute and with the clock ticking on an annuity quote.

Alternatively, you can go to the annuity provider and let them do the work of consolidating your pensions. Aviva, which provided your quote, told me:

‘Customers are able to come to us and tell us they have multiple pension pots and we combine these into one for purchasing an annuity.

‘There are some special types of pensions where we couldn’t combine them together, but the majority of customers’ pensions we can consolidate for the purchase of an annuity policy.’

In your case there seems to have been a particular issue with a pension provider putting in place a block on transfers just at the wrong time for you.

This can happen in the following scenarios.

– The pension provider is undertaking a major change to its computer systems, resulting in it needing to put a freeze on transactions.

This is perhaps a bit like your bank saying that its online banking or app is out of service for a period while maintenance or upgrades are undertaken. Obviously the delay is more serious in your case.

– Sometimes a pension provider will block transfers because of a particular issue with some of the underlying investments.

A recent example related to certain property funds, when turmoil in the commercial property market made it hard to value such assets and meant that selling in haste could have resulted in large losses.

Such funds were sometimes ‘gated’, putting a pause on transactions, in some cases for many months.

I agree with you that, wherever possible, savers should be given as much notice as possible of any restrictions on access to their funds.

This is probably easier for a (presumably long-planned) IT upgrade than when restrictions are needed in response to sudden market volatility.

If you feel that this pension provider has behaved unreasonably, and you have lost out as a result, then you could complain.

If you do not get a satisfactory response you could then complain to the Financial Ombudsman Service or the Pensions Ombudsman if you feel that your provider has been guilty of ‘maladministration’.