Pension with Legal & General - query.

Sapphire

There is a report in today's Daily Telegraph that L & G shares have dropped sharply today. I have a pension with L & G that matures in a couple of years time. If the company were to go bust, what would happen to my pension?

Any help (hopefully in the form of reassurance :rolleyes: ) appreciated.

dunstonh

If the company were to go bust, what would happen to my pension?

They are very well capitalised. I read in the proper press that they still have capital to see another 30% drop in share price.

Pensions are protected under the insurance part of the FSCS which is at least 90% of your value. That really only applies to conventional with profits plans. If its unit linked then the units are ringfenced and held under trust and do not for part of the insurers assets.

Sapphire

dunstonh wrote: »

They are very well capitalised. I read in the proper press that they still have capital to see another 30% drop in share price.

Pensions are protected under the insurance part of the FSCS which is at least 90% of your value. That really only applies to conventional with profits plans. If its unit linked then the units are ringfenced and held under trust and do not for part of the insurers assets.

Thanks very much for the helpful reply.

A 30 per cent drop in share price does not seem very much, given what is going on with shares (and the economy) in general. :cool:

My plan is a with profits one. When you say 'at least 90%' of the value, does that mean I would have to forfeit 10% should the company fail? Having been mis-sold this pension about 10 years ago, I wouldn't like to lose any more of it (it is not large). :cool:

dunstonh

A 30 per cent drop in share price does not seem very much, given what is going on with shares (and the economy) in general. :cool:

It is when it has already gone down 40%. That drop doesnt make them go under either. That is just the money they have without having to raise more.

My plan is a with profits one. When you say 'at least 90%' of the value, does that mean I would have to forfeit 10% should the company fail?

Basically yes. You get 100% of first £2000 and 90% of the rest.

EdInvestor

dunstonh wrote: »

Basically yes. You get 100% of first £2000 and 90% of the rest.

Is that 90% of the guaranteed value, or 90% of the total value?Or is it assumed there will be no terminal bonus money left if the company has gone bust?

Sapphire

EdInvestor wrote: »

Is that 90% of the guaranteed value, or 90% of the total value?Or is it assumed there will be no terminal bonus money left if the company has gone bust?

Good point – getting or not getting a terminal bonus would make a big difference, especially if you were going to lose 10% of virtually the whole amount!

ferdyb

I have just recently bought an annuity with Legal & General. Is my monthly income guaranteed ? or could I end up losing it ? Anyone know ?

dunstonh

It would be without terminal bonus as they would pull that long before it goes down.

I have just recently bought an annuity with Legal & General. Is my monthly income guaranteed ?

Depends on the annuity you bought. Purchase, short term, lifetime, compulsary, unit linked, with profit annuity etc?

ferdyb

Just a straight, lifetime annuity, I gave them all my money and they they should give me x pounds a week.
I thought I had read that the company had to purchase securities with that pension pot to cover the amounts they would be paying out.
I think maybe I should have been working for a local council for all those years. If their pension funds drop low they will just put up council tax to compensate, won't they ?

EdInvestor

ferdyb wrote: »

Just a straight, lifetime annuity, I gave them all my money and they they should give me x pounds a week.

This should be safeguarded under the 90% rule, but it would be helpful (to say the least) if the rules were spelt out a bit more clearly.