Retirement annuity plan

cwoodham

I used to have a Prudential Personal Pension (Table 86) and one of the older style Prudential Personal Retirement Plans (Table 66). My IFA advised me to consolidate both into a stakeholder pension, but my accountant now says NO, I should have kept the older personal annuity plan because of the features it has which you cant get in a modern plan.
Is there a rule of thumb in the pensions world that the older personal retirement plans are worth keeping and not converting to newer stakeholder plans and why?
Thanks.

Cook_County

The old section 226 plans do have some modest advantages but firstly these will disappear from A day and secondly they tend to have much higher non-stakeholder charges (I wish I could get out of mine and move it to a SIPP but I'd lose 20% to 30% as an MVA)

whiteflag_3

Cook_County wrote:

The old section 226 plans do have some modest advantages but firstly these will disappear from A day and secondly they tend to have much higher non-stakeholder charges (I wish I could get out of mine and move it to a SIPP but I'd lose 20% to 30% as an MVA)

Are these the same plans that are payin your adviser renewal /trail commission? per your post of 1/2/06.

dunstonh

Accountants should stick with what they know. Once upon a time accountants use to give financial advice. Not many do now but some of those that did still continue to give information which is very out of date.

Ask your accountant for his views on FSA Occassional Paper 18. Chances are he has never heard of it and it's content. For reference it is the guidence issued by the FSA actively encouraging IFAs to switch people out of legacy pensions into modern plans when it is in their best interests. You could also ask your accountant what authorisation he has to give financial advice and if he is regulated in that area.

I wouldn't dream of doing the accountants job. Some of them should stop doing ours.

Is there a rule of thumb in the pensions world that the older personal retirement plans are worth keeping and not converting to newer stakeholder plans and why?

No rule of thumb. Each plan requires the IFA to do an analysis on them, along with projections. All pros and cons should be considered and a recommendation made on that basis. Over the last few years I have authorised the transfer of all but one Prudential pension. So, it is possible some should stay but the majority, in my case, have been good to move.

EdInvestor

You have to be very careful with old pension plans invested in With profit funds because they may have valuable guaranteed annuity rates (GARs) attached.

This means that instead of having to take the low annuity rates now available,you may be able to receive 10% - or even more - on your fund at retirement, almost double the income you could otherwise expect in some cases.

So do check - these guarantees are often not obvious in the documentation.

It seems pretty clear that in the past people may have lost their GARs, as it was in the interests of the lifecos for this to happen. But since the House of Lords case and demise of Equitable Life over the issue , lifecos have been required to take these guarantees very seriously by the FSA.

Everyone moving an old With profits pension should always check for any guarantees - there are also Guaranteed Investment returns (GIRs) on some policies and some policies have guaranteed minimum pensions (GMPs).

In some cases a high MVA can be an indication that you are in a fund where many policies have GARs.