Is it possible that Norwich Union have been negligent

howeller_2

Like most people I have seen the value of my personal pension plummet but I am due to convert a pension I paid into for 15 years. During that time 1993-2008 I paid in £28500 and now my pension pot is worth £26818. is that incompetence or market forces? Any advice gratefully received.

EdInvestor

Market forces I'm afraid.

Were you not advised to move your pension into safer investments like cash or gilts in the run-up to retirement?it's known as the 'lifestyle option" when done automatically.

You could always defer taking the pension until a bit later, the markets will recover at some point.

dunstonh

Is it possible that Norwich Union have been negligent

Not in the slightest.

When you invest in funds, the fund has an aim and objective. If you invest in say, UK Equity, you will be invested in UK equity even if it turns out to be the worst place for 10 years or so. The reason is because that is what the fund objective and rules state it has to invest in.

It is up to you and your IFA (if you use one) to decide what investment funds you invest in. The insurance company just takes you or your IFA's instructions.

If you are now going to commence the pension benefits, then what you should have done around 5 years ago is start to reduce the investment risk by moving into cash, gilts etc. It doesnt sound like you did that.

The exception to the above be on legacy pensions (pre 1988 retirement annuity contracts with guaranteed annuity rates for example) or section 32 buy out bonds with GMP.

tinksy

not all norwich union pensions have the automatic lifestyling option on them and where they dont it is advisable for the financial advisor to look at the policy when it comes up to retirement and do that themselves.

jamesd

howeller wrote: »

Like most people I have seen the value of my personal pension plummet but I am due to convert a pension I paid into for 15 years. During that time 1993-2008 I paid in £28500 and now my pension pot is worth £26818. is that incompetence or market forces? Any advice gratefully received.

Market forces mainly. To see what can be done to improve your situation it'd be helpful if you can say what the money is currently invested in within the pension plan, when you want to retire, or when you must retire, your age and that of any partner and give details of your needed income and the incomes you're expecting from the state pensions and any other income and savings or investments.

That's a lot of information but it'll let the people here form an opinion about whether annuity or income drawdown might be suitable and what other options might be available to you.

howeller_2

Thanks everyone for your replies; I don't have a IFA; every time I have consulted one I have been offered more life insurance etc. The last time was as recently as 2005 and he didn't even look at the status of my pension. I had no idea I had to steam in and tell NU to safeguard my investment so close to retirement, I would have thought it would be the other way round.
jamesd suggests filling in some gaps here.
I am 57 female; I have another pension (non-contributary) also with NU transferred from a company pension in 1993. Worth about 40,000 in 2003 it was upgraded by £40000 to compensate for losses incurred by removing it from the company scheme. By February 2008 worth £130000 (99000 non-protected 30000 protected whatever that all means) now worth £99000.
I still feel that there is a sniff of 'emperors new clothes' here. I cannot see the advantages of putting money into pension plans even with any tax advantages. If I had paid my pension contributions into a savings account earning a fairly modest 2% over the last 15 years it would now be worth about £50,000... or am I missing something?
jamesd asks what my plans are; I don't have any other investments, I will get a full state pension when I am 61+. I have a partner who has roughly the same pension pot as me and is age 56. What should we do now to safeguard our money. Pretty grim when you think I was sensible and started paying into a pension in about 1975......

dunstonh

I don't have a IFA; every time I have consulted one I have been offered more life insurance etc. ....
....The last time was as recently as 2005 and he didn't even look at the status of my pension.

IFAs or FAs?

It sounds more like FA because they wouldnt be allowed to review the products of another provider and as sales reps they would look for what they can do. IFAs will review the area that you ask them to do regardless of product provider.

It is important to make sure you arent seeing a sales rep FA but an IFA.

I still feel that there is a sniff of 'emperors new clothes' here. I cannot see the advantages of putting money into pension plans even with any tax advantages.

The simple fact is that pensions will beat every other alternative as far as income provision goes.

If I had paid my pension contributions into a savings account earning a fairly modest 2% over the last 15 years it would now be worth about £50,000... or am I missing something?

Yes, you are missing something. You are comparing car and petrol. The pension is the tax wrapper. It is a container to put your investments in. It doesnt make or lose money. The investments you place in the pension do that. You can put virtually all conventional invesmtents inside a pension. This includes savings account options.

You havent actually mentioned your investments once on this thread.

The section 32 buy out bond with NU and the investment returns on that are probably of little interest in the long run as there is going to be guaranteed minimum pension attached to it. NU will have to pay that out as a minimum regardless of the return. There is also possibly a guaranteed annuity rate attached to it. So, the "return" could be heavily factored into the terms that will be paid upon retirement.

Pretty grim when you think I was sensible and started paying into a pension in about 1975......

For someone that started paying in 1975 you have very low pot. However, a large quantity of retirement annuity contracts (pensions from pre 1988) have guaranteed annuity rates (GAR). Often 50-75% higher than what you can get nowadays. Like the S32 mentioned above, the actual returns may be lower on these because the real benefit is on the maturity terms and the GAR you will get.

howeller_2

dunstonh wrote: »

IFAs or FAs?

It sounds more like FA because they wouldnt be allowed to review the products of another provider and as sales reps they would look for what they can do. IFAs will review the area that you ask them to do regardless of product provider.

No. it was an IFA. I understand the difference.


The section 32 buy out bond with NU and the investment returns on that are probably of little interest in the long run as there is going to be guaranteed minimum pension attached to it. NU will have to pay that out as a minimum regardless of the return. There is also possibly a guaranteed annuity rate attached to it. So, the "return" could be heavily factored into the terms that will be paid upon retirement.

Interesting, but how on earth could I find all that out?



For someone that started paying in 1975 you have very low pot. However, a large quantity of retirement annuity contracts (pensions from pre 1988) have guaranteed annuity rates (GAR). Often 50-75% higher than what you can get nowadays. Like the S32 mentioned above, the actual returns may be lower on these because the real benefit is on the maturity terms and the GAR you will get.

Surely I have lost the benefit of that when the pension was transferred to NU in 1993?

dunstonh

Surely I have lost the benefit of that when the pension was transferred to NU in 1993?

No. Almost certainly a section 32 buy out bond would have been used and that would have included GMP and possibly a GAR. You also said there was redress payable. This "may" include a further review on commencement (as that was one of the redress methods).

whiteflag_3

EdInvestor wrote: »

Market forces I'm afraid.

Were you not advised to move your pension into safer investments like cash or gilts .

or perhaps a portfolio of high yielding shares, carefully selected as part of a low cost SIPP?;)

howeller_2

dunstonh wrote: »

No. Almost certainly a section 32 buy out bond would have been used and that would have included GMP and possibly a GAR. You also said there was redress payable. This "may" include a further review on commencement (as that was one of the redress methods).

does that stand for
guaranteed minimum pension ...and
guaranteed annuity rate?