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  • FIRST POST
    • liffy99
    • By liffy99 10th Sep 17, 9:12 AM
    • 12Posts
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    liffy99
    Worried about Friends Life pension
    • #1
    • 10th Sep 17, 9:12 AM
    Worried about Friends Life pension 10th Sep 17 at 9:12 AM
    I have a pension with FL to which I have been paying in for the past 19 years. Having recently stopped work at 60 I have ceased contributions and intended to take pension out next year when I am 61.
    But, reading all sorts of articles about FL it seems this is one of the worst pension providers to have been invested with. Crucially, they are not allowing the type of access to funds that Osborne had hoped for (e.g drawdown) and were still charging big fees to transfer pension pots to other providers that did offer this flexibility.
    Under the new pension rules that came in 2015 I can take my pension but now fear that I won't receive the full transfer sum (called what your fund is worth now by FL) as it would be 4 years before my selected retirement age of 65. I don't recall ever stating such an age ( other pensions I have stipulate 60) but it must have come from my application I suppose without me then realising its implications.
    However, does the 1% transfer cap apply in this case (rather than the hugely more onerous transfer fees contained in my original contract which I have now unearthed) ?
    It seems extremely disingenuous that I am denied the option of transferring at no cost where the provider has barred me from exercising an option with themselves. If terms are changed in a broadband contract for example, to ones detriment, you are permitted to exit the agreement and go elsewhere, charge free.
    I am awaiting a transfer vale from FL but do I broadly have this right ? Have others found themselves in a similar situation ?
    Thanks
Page 1
    • Uglymug
    • By Uglymug 10th Sep 17, 9:50 AM
    • 129 Posts
    • 70 Thanks
    Uglymug
    • #2
    • 10th Sep 17, 9:50 AM
    • #2
    • 10th Sep 17, 9:50 AM
    About 12 years ago I had a similar problem with Equitable Life, they wanted to charge 24% to transfer out.
    At the time the retirement age was 50, I waited about a year till I was 50, crystallised my fund and took my 25% lump sum.
    I was then able to transfer the remaining 75% free of charge to my Sipp provider. The transfer of crystallised funds was free.
    This way I avoided paying any fees.
    Perhaps FL have a similar policy.
    One of their reps did ask if I was really stopping work and retiring, I replied the rules state I can take my pension at age 50, I don't need to stop work to do so.
    • xylophone
    • By xylophone 10th Sep 17, 10:35 AM
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    xylophone
    • #3
    • 10th Sep 17, 10:35 AM
    • #3
    • 10th Sep 17, 10:35 AM
    But, reading all sorts of articles about FL
    The original policy was with Friends Provident/other?

    Would it not be your best bet to contact FL and check on what options are available to you under the terms of your policy?

    https://www.friendslife.co.uk/contact-us/index.jsp
    • dunstonh
    • By dunstonh 10th Sep 17, 10:50 AM
    • 89,501 Posts
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    dunstonh
    • #4
    • 10th Sep 17, 10:50 AM
    • #4
    • 10th Sep 17, 10:50 AM
    But, reading all sorts of articles about FL it seems this is one of the worst pension providers to have been invested with.
    You need to change your reading material. They are certainly not that.

    Crucially, they are not allowing the type of access to funds that Osborne had hoped for (e.g drawdown)
    Nor do any other legacy pension providers.

    If you bought a black and white tv, would you expect it to be able to become a widescreen ultra HD tv just because of the technology changes? Pensions are retail products and have gone through many changes over the years. They were built on hard coded systems that most providers would cost a fortune to change. There may only be 10,000 in the country holding that plan type but the costs of implementing the changes could be £5 million. It is clearly not good value for money to pay £5m for an option that probably only 1000 of that 10,000 would actually use.

    and were still charging big fees to transfer pension pots to other providers that did offer this flexibility.
    Only within the contracted terms, just like all the other pension providers.

    Under the new pension rules that came in 2015 I can take my pension but now fear that I won't receive the full transfer sum (called what your fund is worth now by FL) as it would be 4 years before my selected retirement age of 65. I don't recall ever stating such an age ( other pensions I have stipulate 60) but it must have come from my application I suppose without me then realising its implications.
    You will receive the transfer value.

    However, does the 1% transfer cap apply in this case (rather than the hugely more onerous transfer fees contained in my original contract which I have now unearthed) ?
    Have you checked to see the difference between the current value and the transfer value?

    It seems extremely disingenuous that I am denied the option of transferring at no cost where the provider has barred me from exercising an option with themselves.
    No it doesnt. They are giving you everything you signed up to.

    If terms are changed in a broadband contract for example, to ones detriment, you are permitted to exit the agreement and go elsewhere, charge free.
    And what terms have changed to the detriment in your FL pension?

    I think the best thing to do is stop reading. Its filling your head with misinformation or misinterpretation. Stick to facts. FL will have over 100 pension plan versions in their book. The chance an article or person writing something on a website is talking about the same version contract you have is unlikely.

    Get the current value and the transfer value. The difference is the charge, if there is one. Then transfer to a modern plan. Easy.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • sandsy
    • By sandsy 10th Sep 17, 12:25 PM
    • 1,176 Posts
    • 679 Thanks
    sandsy
    • #5
    • 10th Sep 17, 12:25 PM
    • #5
    • 10th Sep 17, 12:25 PM
    As you are over 55, the maximum charge is 1%, in general.

    However, if you are invested in with profits funds, it is possible that with profits payments could be restricted further if market conditions justify it.

    You really need to contact FL and find out the current value and transfer value of your contract, so that you can make a decision based on facts rather than speculation.
    • liffy99
    • By liffy99 10th Sep 17, 4:36 PM
    • 12 Posts
    • 4 Thanks
    liffy99
    • #6
    • 10th Sep 17, 4:36 PM
    • #6
    • 10th Sep 17, 4:36 PM
    Thanks for the replies and I will wait for FL's reply of course.
    Quite right that I signed up to this contractually. Just that, like so many others, the jargon used makes it very difficult to understand all the implications of contractual terms for the layman.
    This, I feel, is where the whole industry needs reform - USE PLAIN ENGLISH !
    Shifting all of the risk involved in pension decisions to the customer is dangerous without making it very clear what people are signing up to.
    No doubt I will be told to see a IFA 😊 But it shouldn't need to be like this.
    I'll update with the outcome when known.
    • HappyHarry
    • By HappyHarry 11th Sep 17, 9:07 AM
    • 400 Posts
    • 475 Thanks
    HappyHarry
    • #7
    • 11th Sep 17, 9:07 AM
    • #7
    • 11th Sep 17, 9:07 AM
    Shifting all of the risk involved in pension decisions to the customer is dangerous without making it very clear what people are signing up to.
    Originally posted by liffy99
    Unless you were in a DB scheme, the risk involved has always been with the 'customer'. This has not changed.

    As mentioned above, once you know your fund value and your transfer value, you will be able to see what, if any, penalties are being applied by Friends Life. If the fund value and transfer value are the same, then there will be no penalties, hence no cost at all to you.
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
    • MEM62
    • By MEM62 11th Sep 17, 10:17 AM
    • 1,330 Posts
    • 954 Thanks
    MEM62
    • #8
    • 11th Sep 17, 10:17 AM
    • #8
    • 11th Sep 17, 10:17 AM
    No doubt I will be told to see a IFA �� But it shouldn't need to be like this.
    Originally posted by liffy99
    Why not?

    If you want accounts audited you consult and auditor. If you want your car repaired you see a mechanic, if you want you central heating boiler replaced you talk to a heating engineer. That is because each of these tasks requires specialist knowledge and/or skills. If you do not personally have this in a particular area you have to go to a professional.

    Pensions, which for most of us are a critical element in financial stability in our post-working life, are no different and any assumption that they are not is flawed.
    • dunstonh
    • By dunstonh 11th Sep 17, 10:25 AM
    • 89,501 Posts
    • 54,962 Thanks
    dunstonh
    • #9
    • 11th Sep 17, 10:25 AM
    • #9
    • 11th Sep 17, 10:25 AM
    Quite right that I signed up to this contractually. Just that, like so many others, the jargon used makes it very difficult to understand all the implications of contractual terms for the layman.
    This, I feel, is where the whole industry needs reform - USE PLAIN ENGLISH !
    There will always be some jargon when dealing with a complext area that involves HMRC.

    Generally, the language used by providers in their documentation is very good nowadays. However, unless you are willling to put some effort to learn about every single option available, you are going to struggle. Plus, providers do not go into the depth required to learn about every single option available.

    Shifting all of the risk involved in pension decisions to the customer is dangerous without making it very clear what people are signing up to.
    No doubt I will be told to see a IFA �� But it shouldn't need to be like this.
    Nothing has been shifted to the customer. 2015 just extended options that have been available for over a decade. People have had the decision to drawdown or buy an annuity before 2015.

    The ability to DIY or use an adviser existed before then too.

    Ultimately, this is just like any other area where you either chose to DIY or use someone to do it for you. If you DIY and DIY well, you can save money. If you DIY badly it can be a costly mistake.
    Last edited by dunstonh; 11-09-2017 at 7:47 PM.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • liffy99
    • By liffy99 11th Sep 17, 6:00 PM
    • 12 Posts
    • 4 Thanks
    liffy99
    Thanks again for the replies and I quite understand that, from most perspectives, things may have improved rather than been changed (eg my contractual commitments to my pension).
    And I appreciate the need for professionals when complex situations arise that require much training and expertise.
    But the point I am clumsily trying to make is that products that affect MILLIONS of us should be made straightforward enough to deal with without recourse to professionals.
    Sure, if I want to challenge a complex area of litigation I'll see a solicitor, if I want my car repaired I'll see a good mechanic, if I have very complicated financial affairs I'll see an accountant. BUT, my view is that personal pensions (which, let's face it, have been sold on the back of dwindling employer-based DB pensions) are, essentially, CONSUMER PRODUCTS, and should be understandable by the great majority of us without external help.
    Sorry if I've offended any pension professionals out there.
    • dunstonh
    • By dunstonh 11th Sep 17, 7:58 PM
    • 89,501 Posts
    • 54,962 Thanks
    dunstonh
    But the point I am clumsily trying to make is that products that affect MILLIONS of us should be made straightforward enough to deal with without recourse to professionals.
    Your mean like cars, boilers, electrical goods etc?

    Sure, if I want to challenge a complex area of litigation I'll see a solicitor, if I want my car repaired I'll see a good mechanic, if I have very complicated financial affairs I'll see an accountant. BUT, my view is that personal pensions (which, let's face it, have been sold on the back of dwindling employer-based DB pensions) are, essentially, CONSUMER PRODUCTS, and should be understandable by the great majority of us without external help.
    The average consumer doesn't understand these things. A large number dont want to understand it as they have better things to do with their time.

    Nearly all the pension in retirement cases I do has the client say at the start what they want to do but after the advice has been given, they end up doing something different. Usually, because they have no idea of all the options available and didnt understand the consequences of what they wanted to do.

    However, there are plenty of people on this forum and beyond who successfully DIY and have no problem understanding it. They dont rely on silly media articles for their knowledge. They read up about options and methods in serious places and many go on to do very decent job. Although some will still make a complete pigs ear of it.

    No matter how easy you make it, there is never going to be a one-size-fits-all answer as there are so many options, different tax issues and over 16 different types of pension generically and each having specific rules.

    Sorry if I've offended any pension professionals out there.
    no offence taken.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • zagfles
    • By zagfles 11th Sep 17, 8:08 PM
    • 12,250 Posts
    • 10,178 Thanks
    zagfles
    Thanks again for the replies and I quite understand that, from most perspectives, things may have improved rather than been changed (eg my contractual commitments to my pension).
    And I appreciate the need for professionals when complex situations arise that require much training and expertise.
    But the point I am clumsily trying to make is that products that affect MILLIONS of us should be made straightforward enough to deal with without recourse to professionals.
    Sure, if I want to challenge a complex area of litigation I'll see a solicitor, if I want my car repaired I'll see a good mechanic, if I have very complicated financial affairs I'll see an accountant. BUT, my view is that personal pensions (which, let's face it, have been sold on the back of dwindling employer-based DB pensions) are, essentially, CONSUMER PRODUCTS, and should be understandable by the great majority of us without external help.
    Sorry if I've offended any pension professionals out there.
    Originally posted by liffy99
    Interesting article on the BBC website: http://www.bbc.co.uk/news/business-41159944

    I wouldn't be surprised if some IFAs just enter customer data into a piece of software like this and use the output!
    • dunstonh
    • By dunstonh 11th Sep 17, 8:12 PM
    • 89,501 Posts
    • 54,962 Thanks
    dunstonh
    Interesting article on the BBC website: http://www.bbc.co.uk/news/business-41159944

    I wouldn't be surprised if some IFAs just enter customer data into a piece of software like this and use the output!
    Originally posted by zagfles
    If there is any software that does that, please tell me. It would save hours of work.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • zagfles
    • By zagfles 11th Sep 17, 8:24 PM
    • 12,250 Posts
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    zagfles
    If there is any software that does that, please tell me.
    Originally posted by dunstonh
    Did you read the BBC article?
    It would save hours of work.
    It would give you more time to post on MSE
    • dunstonh
    • By dunstonh 11th Sep 17, 9:08 PM
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    dunstonh
    Did you read the BBC article?
    I did but that was about robo-advice and that is little more than the equivalent of picking a multi-asset fund and having an app.

    It would give you more time to post on MSE
    Thats why I employ people.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • zagfles
    • By zagfles 11th Sep 17, 9:28 PM
    • 12,250 Posts
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    zagfles
    I did but that was about robo-advice and that is little more than the equivalent of picking a multi-asset fund and having an app.
    Originally posted by dunstonh
    Not what it says.
    Basically, you answer lots of questions online about your income, expenses, family situation, attitude to risk, and so on, and then the algorithm allocates your savings to a mix of investments, from index funds that aim to mimic a particular stock market index or sector, to fixed-income bonds
    Though maybe this IFA used the app you're talking about: http://forums.moneysavingexpert.com/showthread.php?t=5553079
    Thats why I employ people.
    Ah, that explains a lot. One person getting to 89k MSE posts is a bit unrealistic
    • bigadaj
    • By bigadaj 11th Sep 17, 9:36 PM
    • 9,979 Posts
    • 6,377 Thanks
    bigadaj
    Thanks again for the replies and I quite understand that, from most perspectives, things may have improved rather than been changed (eg my contractual commitments to my pension).
    And I appreciate the need for professionals when complex situations arise that require much training and expertise.
    But the point I am clumsily trying to make is that products that affect MILLIONS of us should be made straightforward enough to deal with without recourse to professionals.
    Sure, if I want to challenge a complex area of litigation I'll see a solicitor, if I want my car repaired I'll see a good mechanic, if I have very complicated financial affairs I'll see an accountant. BUT, my view is that personal pensions (which, let's face it, have been sold on the back of dwindling employer-based DB pensions) are, essentially, CONSUMER PRODUCTS, and should be understandable by the great majority of us without external help.
    Sorry if I've offended any pension professionals out there.
    Originally posted by liffy99
    Pensions are fairly straightforward, I suppose it boils down to your background, knowledge and ability to read and learn and put some effort in.

    The Internet has made a huge impression on financial services, from the ability to pick up large amounts of information and become better educated to the ability to access cheap products and providers, monitor portfolios, build up asset models, project returns etc etc

    There's no reason why you can't service your own car, or you choose to use a mechanic, I personally use a garage.

    I complete a self assessment tax return, I could pay an accountant to do this, but I'm happy doing it myself.

    I've never utilised a solicitor apart from conveyancing, but then again have a decent contract knowledge of civil law and haven't been in a position to have to issue or defend proceedings.

    There's certain areas where legislation prevents the amateur from completing their own work, gas appliances and certain electrical works, or transferring a db pension woth more than £30k, these are areas where the risk to the amateur consumer is considered high and total freedom would have adverse consequences for many people.
    • zagfles
    • By zagfles 11th Sep 17, 10:20 PM
    • 12,250 Posts
    • 10,178 Thanks
    zagfles
    Pensions are fairly straightforward, I suppose it boils down to your background, knowledge and ability to read and learn and put some effort in.

    The Internet has made a huge impression on financial services, from the ability to pick up large amounts of information and become better educated to the ability to access cheap products and providers, monitor portfolios, build up asset models, project returns etc etc

    There's no reason why you can't service your own car, or you choose to use a mechanic, I personally use a garage.

    I complete a self assessment tax return, I could pay an accountant to do this, but I'm happy doing it myself.

    I've never utilised a solicitor apart from conveyancing, but then again have a decent contract knowledge of civil law and haven't been in a position to have to issue or defend proceedings.

    There's certain areas where legislation prevents the amateur from completing their own work, gas appliances and certain electrical works, or transferring a db pension woth more than £30k, these are areas where the risk to the amateur consumer is considered high and total freedom would have adverse consequences for many people.
    Originally posted by bigadaj
    Yes, millions of people are in workplace DC pensions, which have a default fund allocation if the employee doesn't choose an alternative. Some ask a few simple questions about attitude to risk, expected retirement age, whether they're likely to buy an annuity or go into drawdown etc, and an algorithm constructs a portfolio on that basis. Most providers have tools where you can model predicted retirement income.

    There's no reason why what applies to workplace pensions can't apply to personal pensions.
    • dunstonh
    • By dunstonh 12th Sep 17, 12:18 AM
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    • 54,962 Thanks
    dunstonh
    FCA published some stats in its data bulletin for Sept 17.

    69% used an adviser when going into drawdown.
    57% of individuals chose to use their existing provider for drawdown
    (i think this stat doesnt tell us much as many people prepare in advance. Indeed, some providers require the pension to be switched into first and then do the drawdown post sale)

    58% of people with GARs did not utilise them (thats not good. not all GARs are great but I would have thought a much lower percentage on the not taken up figure).

    https://www.fca.org.uk/publication/data/data-bulletin-issue-10.pdf
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • zagfles
    • By zagfles 12th Sep 17, 6:29 PM
    • 12,250 Posts
    • 10,178 Thanks
    zagfles
    FCA published some stats in its data bulletin for Sept 17.

    69% used an adviser when going into drawdown.
    57% of individuals chose to use their existing provider for drawdown
    (i think this stat doesnt tell us much as many people prepare in advance. Indeed, some providers require the pension to be switched into first and then do the drawdown post sale)

    58% of people with GARs did not utilise them (thats not good. not all GARs are great but I would have thought a much lower percentage on the not taken up figure).

    https://www.fca.org.uk/publication/data/data-bulletin-issue-10.pdf
    Originally posted by dunstonh
    Also 54% of those accessing their pension did a full withdrawal! Going with the majority isn't necessarily a good thing. As I told some dodgy saleman trying to convince me to take out an endowment in the 90's!

    Drawdown should be almost as easy for an app, a few months ago someone posted a simple tool where you put figures in (pot, required withdrawal, age etc) and it gives the probably of your pot running out before a certain age (taking into account adverse sequence of returns etc), a more sophisticaed version of that combined with asset allocation/fund suggestions would be useful. Though I can see more benefit in an IFA for drawdown for some people.
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