Access denied to pension pot
One reader needed to cash in his £1,200 pension pot, but was refused by his insurer Close friends Life 
I have a tiny pension pot of £1,200 with an insurance company, Close friends Lifestyle. I have asked them if I can withdraw the income in complete as I read through it could be done. They refused. The insurance coverage business just ignores HMRC principles by saying their scheme principles have not been up to date. I’d be grateful for your support.
AH, Oxon
You had read through in this newspaper that because April 6 2012, HMRC had permitted a pension pot really worth £2,000 or significantly less to be encashed in certain situations.
You fitted the criteria but the pension provider Close friends Daily life wouldn’t enable you to make this “trivial commutation” – as it is technically identified – of your £1,300 or so fund into money. It stated that these adjustments have been not necessary. It was up to companies whether or not they updated their guidelines and systems to let for rewards to be paid in this way.
When I contacted it, not extended after you had been rebuffed, I was advised that you must also have been informed that Friends Lifestyle was on track to alter its procedures. This would suggest it would be in a position to pay lump sums of this nature from the beginning of 2014. It says its customer service representative did not mention this due to some confusion around when the changes would get spot.
Buddies Life says it has also now ensured that the appropriate staff are aware of this modify to its terms and circumstances and scheme rules. I recommended it contacts anyone else it knows of to whom it has provided equivalent misinformation and can make any redress.
You now have your income with 25pc as a tax-free of charge lump sum and the other 3 quarters paid soon after the deduction of 20pc tax.