I’m struggling to meet a tight deadline to convert six pensions into an annuity of £17,500 a year – replies STEVE WEBB

Due to a brain illness last fall, I left work in February because after three months I found it too exhausting and, at age 57, I am unexpectedly trying to purchase an annuity through an annuity brokerage company.

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

I have to collect six pensions 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 where transfers could not be made.

The deadline ends three days before the Aviva guarantee on the quote ends. If transfers are not made sooner, your current fee will apply, which is approximately £1,200 per year less than the original quote.

Another provider also appears to say that your pension transfer will still last between six and eight weeks.

Is there anything wrong with the whole process, as surely getting the best quotes from the annuity broker is unlikely? Of course, in theory this could also work positively, but it doesn’t seem that way to me.

If I choose to cancel, the money is returned to the original companies and I seem to be back to square one, and I am currently living off my savings so the only option is to continue.

I didn’t use Pension Wise because it took me six weeks to get an appointment.

I prefer to have an inflation-protected RPI annuity, rather than put my pensions into a drawdown plan.

However, I will have to see how viable it is to combine my final annuity income with savings until state pension age, 67, or consider some part-time work.

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Steve Webb responds: I’m sorry to read that you are in poor health and want to get your retirement finances in order as quickly as possible.

I encourage everyone to use the Free government Pension Wise service when considering your options, especially since decisions like purchasing an annuity cannot be reversed if you change your mind.

However, I understand that your personal circumstances made it difficult for you to wait for an appointment.

When a pension company provides you with a quote for a lifetime income – an annuity – it is normal for that quote to have an expiration date. But I understand your point that the listing needs to last long enough to be able to transfer the money.

I contacted Aviva, who gave you their initial limited time offer, and they said:

‘Our current position is to guarantee illustrations for a maximum of 40 calendar days from the date of submission of the annuity budget (not the four weeks mentioned).

‘When we receive pension funds from clients 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, particularly market conditions from long-term returns.

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

‘We are guaranteeing a lifetime income, which can often last 25 to 30 years, so we want to be sure that we can provide that income to our clients over a long period of time.

“Reflecting the latest market conditions allows us to provide security to clients and ensure they get the fairest rate under the conditions when they take out the annuity.”

With respect to the time needed for the 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 will allow pension and annuity providers to exchange information securely and help reduce the time it takes to transfer pension funds to other providers.

When the annuity provider receives a request, they contact Origo who pass it on to your current pension provider, who obtains the necessary details and processes the transfer.

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

However, it would be fair to say that pension transfers are not always so quick. When individuals make transfers themselves, I often hear about delays in moving the money.

This is one reason to ensure that, wherever possible, any planned pension consolidation is done in time and not at the last minute and with the clock ticking for an annuity contribution.

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

‘Clients can come to us and tell us they have several pension funds and we combine them into one to buy an annuity.

“There are some special types of pensions that we cannot combine, but most clients’ pensions we can consolidate into the purchase of one annuity policy.”

In your case, there appears to have been a particular problem with a pension provider blocking transfers at just the wrong time for you.

This can happen in the following scenarios.

– The pension provider is carrying out a major change to its IT systems, requiring it to freeze transactions.

Perhaps this is a bit like your bank saying that your online banking or app is down for a period while it undergoes maintenance or updates. Obviously the delay is more serious in your case.

– Sometimes a pension provider blocks transfers due to a particular problem with some of the underlying investments.

A recent example concerns certain property funds, when turbulence in the commercial property market made it difficult to value such assets and meant that selling hastily could have led to large losses.

Such funds were sometimes “locked,” disrupting 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 an IT upgrade (presumably long planned) 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 can complain.

If you do not get a satisfactory answer, you can make a complaint to the Financial Ombudsman Service or the Pensions Ombudsman if you believe your provider has committed “maladministration”.

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