Adviser insight: Unlock pensions for clients who face an early death

Crunch time

Guy is sitting in my office and looks well enough, having made his own way happily and is quite lucid. He looks slightly older and a bit tired. The surgeons were unable to remove the entire tumour, he says, because of its location and it may grow back. So it is crunch time.

‘I have to ask you a question…but you don’t have to answer,’ I say. ‘How long have you got?’

Without pause and quite calmly, he tells me 50% of people with his condition are dead in 12-18 months because the tumour grows back.

He has just completed his divorce and he has a six-figure sum tied up in his old pension policies. The idea of tax-free cash and an annuity is ridiculous but this is my first case of dealing with a terminally ill client. I have had a couple of critical illness claims but never this.

Accessing pension pots

Guy is not going to buy any policies and the best approach for him is to have the funds in cash. So I will have to charge him for my time: two hours ought to cover it. I then pass the file to the administrator. Many weeks go by and she has made no progress so I take the files back.

After 25-minute phone call to the pension provider and four transfers from one department to another, I finally speak to the person who can send me the forms I need, which take four days to arrive. These are then sent to the GP and my client’s pensions are finally paid out in cash.

I seriously undercharge for my time but I do not have the heart to send the client another invoice. I get an e-mail three months later to tell me he died in a hospice.

Serious sparcity of information

Writing up this case makes me wonder how many people out there in the same state of health do buy an annuity.

Information on the web is sparse. A pensions article on the Cancer Research website (www.cancerhelp.org.uk/help), for example, contains a lot of quite technical information, advises talking to an IFA (for which it provides links) and mentions enhanced rates for people with cancer. But I could find no information on the site about being able to get all the funds in cash.

Around 90,000 people a year are diagnosed with cancer, so ignorance of the options is depressing.