Pension Fund cash in??

caxia

Hi MSEs.
I wonder if anyone could advise me regarding some saving plans.

Years ago (1985) as a student nurse I began first one then another savings plan with the Royal National Pension Fund for Nurses. Called Moneybuilder, I saved £17 between the two policies monthly.
In 1998, again with RNPFN, I began a "Retirement Savings Plan" saving £50 per month. I have just realised that this is in fact an endowment policy.

The deal with these plans was that as long as I saved every month my policies would attract annual bonuses and at termination in 2023 when I am 60 would pay a final terminal bonus too. For example the £7 policy had a projected pay out of £59898. Of course the small print did say none of this is guaranteed.

In 2001 Liverpool Victoria acquired the RNPFN. Since this date the annual bonuses have stopped completely. They say this is to ensure that final bonuses will be better but there is no guarantee of a final bonus.

If I give you the boring facts and figures would someone advise:
Whether I should cash these policies in (as they would take a chunk out of our £40000 mortgage)?
Freeze them?
Or continue and hope they pay out when I am 60?

Moneybuilder 1:
£7 monthly payment. Sum assured £4449. Surrender value now £4785. Maturity projection : 3.5%pa - £10800, 6.5%pa - £15440

Money builder 2:
£10 monthly payment. Sum assured £5126. Surrender value now £4177.
Maturity projection : 3.5% - £11185, 6.5% - £16492.

Endowment :
£50 monthly payment. Sum assured £14735. Surrender value now - £6674
Maturity projection: 3.5% - 27107, 6.5% - £38079.

Any comments would be gratefully received! I blooming struggled as a student nurse to pay those moneybuilders. Think I should have gone down the pub with my buddies instead.

Oh another thought is there any case for endowment misselling here too?
Thanks.

MikeJones_2

Hi caxia,

Re: Mis-selling
It was a long time ago, and we have different Regulators in place now - as well as dedicated Ombudsmen services.

However, this might help as a start, if you received advice (rather than took action of your own volition):

A quick guide to...our jurisdiction... (source: Financial Ombudsman Service)

Hope that helps.

Mike Jones

I work in the field of Pension Education and Pension Guidance in the UK. I am a current member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

dunstonh

Oh another thought is there any case for endowment misselling here too?

On the basis that you should have had a repayment mortgage instead?

Did the RNPFN have reps or was it just marketing stuff chucked out via the union where you chose to buy or not rather than being advised to buy?

EdInvestor

Please post the maturity dates of the endowments and the interest rate you are paying on your mortgage for a view.

caxia

Thanks for your replies.
Yes it was in the dim and distant past and I think I was sold one at a nursing conference I went to. The others were taken out after mail shots with info on existing policy.
So no misselling I suppose.

The maturity date for all 3 is 2023 when I am 60.
The mortgage is 5.09% fixed until next March. We have £13000 saved up to take off the £36000 balance then . So if I surrendered these policies we would be virtually mortgage free. I just wonder if keeping them is a good long term bet as pension provision or throwing good money after bad.
Oh for a crystal ball eh?

EdInvestor

If you surrendered these policies and used the lump sum to reduce the mortgage also increasing the mortgage payment by the premium to maturity you would end up with the fillowing returns

caxia wrote: »

Moneybuilder 1:
Maturity projection : 3.5%pa - £10800, 6.5%pa - £15440

11,951 at maturity

Money builder 2:
Maturity projection : 3.5% - £11185, 6.5% - £16492.

11,474 at maturity

Endowment :
Maturity projection: 3.5% - 27107, 6.5% - £38079.

27,446 at maturity.

These returns would be risk free. It's unlikely the RNPFN WP fund will make more than around 4% as it is mainly invested in bonds, so I'd be inclined to junk these policies and use the money to pay off the mortgage.

caxia

Thanks Ed.
That was my gut feeling. It was good to get your perspective. I will junk these and have my jam today in current climate.
Best wishes!