Standard Life MVR

cogito

This has now been increased to 30% for some WP contracts including mine. This is significant to me because the nominated retirement date on my pension policy is February 2009. It has always been my understanding that the MVR would not apply if I take benefits on the nominated date. I have asked SL to clarify the position but they seem to think that the MVR will still apply. Could this be correct?

dunstonh

It shouldnt apply on the specified retirement date but SL do apply it if you do the open market option.

EdInvestor

I thought it was only applied if you did income drawdown, as opposed to an annuity? Does it apply if you do drawdown via the Standard Life SIPP?

It's a disgrace of course. :mad:

dunstonh

Standard Life's application of the charge is disgraceful. You have to wonder how they get away with it. My understanding is that they waive it on selected retirement date provided you buy the retirement product with them. If you dont, they charge it.

EdInvestor

Try calling the Ombudsman and asking them what they think about this, and whether they would entertain a complaint.

https://www.financial-ombudsman.org.uk

It's thoughoughly against the spirit and possibly the letter of the regulations.

cogito

The WP element is around 25% of my fund before application of the MVR and my fund is of such a size that it would not make sense to purchase an annuity at the age of 60. I think I need to get them to confirm their position in writing and also to enquire if I could purchase an annuity with just the WP part of my pot if that's the only means of avoiding the MVR.

If I have to take a hit, it is indeed disgraceful. They guarantee 4% annual growth and then take it back again by hiking the MVR.

cogito

Standard Life say:

1.
The Unit Price Adjustment (UPA) depends on the fund type but in most circumstances does not apply at NRD assuming the client takes his benefits and does not transfer to another provider as this can give rise to a UPA.

2.
As the client is using the OMO and purchasing an annuity then he is deemed as making a retirement decision so there will be no UPA.

Basically, they seem to be saying that if I do anything other than buy an annuity at my NRD, I will suffer a £15,000 penalty. There is no choice in the matter. No drawdown option, for example. It looks like a clear breach of the FSA code on treating customers fairly to me.

I'm also looking back at the advice given when I took this out through my then employer's IFA. There was a great deal said about how wonderful the SL WP fund was (this was 1997) but no suggestion of a possible downside.

dunstonh

I'm also looking back at the advice given when I took this out through my then employer's IFA. There was a great deal said about how wonderful the SL WP fund was (this was 1997) but no suggestion of a possible downside.

Highly unlikely to be classed as a mis-sale. There is no guaranteed option out there and had you gone unit linked you would almost certainly have seen bigger drops on a like for like risk basis.

The SL WP used to be highly regarded. Even Which? (consumers association) used to recommend endowments from SL because of their WP fund. Things change which is why you keep them under review. If you havent reviewed them in the last 11 years, then that is not the fault of the original adviser.

EdInvestor

cogito wrote: »

Basically, they seem to be saying that if I do anything other than buy an annuity at my NRD, I will suffer a £15,000 penalty. There is no choice in the matter. No drawdown option, for example. It looks like a clear breach of the FSA code on treating customers fairly to me.

Absolutely.Please let us know how you get on in taking this up.

cogito

I’ve dug out the correspondence which I received at the time which includes the following statements:

Under policies launched after 1.1.95, you will no longer be penalised if you wish to transfer your money away from an insurance company. This does not apply to all insurance companies but Standard Life have a much more flexible contract so that a company that underperforms through poor investment will not prevent you from taking your money away.

In the 1994 budget the Chancellor announced that an employee with a personal pension may take benefits by placing the fund in a special bank account and taking an income from the fund. This saves the dilemma of purchasing an annuity at an inadvisable time.

There are NO early retirement surrender penalties involve except for investments made within 5 years of taking proceeds.

The SL policy says:

On your Vesting Date we will cancel all units and use the policy proceeds to buy an annuity payable to you.

My valuation statements also say ‘the growth rate includes 4% a year that we already guaranteed.’

Some of these statements are questionable to say the least and may amount to negligence as I based my investment decision on this advice. It is not the value of the funds which is an issue – I accept that these will vary. The issue is that Standard Life do not offer the flexibility that I was assured was there and I now find myself in a position where I am being forced to buy an annuity at the most inopportune time imaginable.

cogito

To add to the above, my wife has the same type of policy set up by the same adviser. As she is 10 years younger than me, she nominated 50 as her retirement date. She was told that the date didn't matter and was of no importance. It clearly was. Who in their right mind would buy an annuity at age 50?