Demutualisation Benefits

nessy39

I used to have a couple of pensions with Colonial Mutual who demutualised approx ten years ago and the schemes were transferred to Winterthur Life.

On my 99/00 pension statement, I received £1500 in pension shares, marked as "Demutualisation Benefit".

At no time was I told about this, nor offered any options, ie shares or a cash sum.

Can anyone tell me whether the trustees of my company pension/Colonial/Winterthur were right in doing this, or should I definitely have been offered options?

EdInvestor

If you didn't have a vote to approve the DM this may have been because your company pension trustee voted on your behalf - the trustee is often 'the member' in mutual lifecos.The structure of the DM (how the windfall was to be paid) should have been outlined in the prospectus. It's not a requirement to offer options and often the windfall is different if the pension is via a company rather than held individually.Your trustees should be able to explain further.

nessy39

I have been waiting several weeks for a reply from Winterthur, but nothing so far. The trustees from the old scheme retired years ago. They obviously had a much, much bigger pot than I and it would have suited them to gain pension shares running into the 1000s. Still seems unfair that we had no say..

EdInvestor

£1500 seems like quite a decent windfall to me, how large was your pension pot at the time?

nessy39

I had two Colonial pensions both in the RainbowPlus PPP. This particular one had £4600 in plus £1460 demutualisation benefit. I was 29 at the time and could only join once I was 21.

The other PPP was worth £10500 but I seem to think this one was closed down and all new contributions went into the one that attracted the Demut Benefit.

I was earning no more than £12k those years.

dunstonh

When you say pension shares, that isnt really a recognised phrase. Typical demutualisation benefits either result in shares in the company, a cash payment or a payment to your plan in the form of increased units or a special bonus.

I cannot remember how the Colonial one was but as Ed says, the trustees would have been the decision makers.

I have been waiting several weeks for a reply from Winterthur

Whilst Winterthur are the pension provider, they are almost certainly not the administrators. They have probably forwarded your letter on to the administrators and you will need to wait for them to respond. Sometimes (frequently) you have to wait a fair while to get a response from the administrators.

nessy39

The statement for y/e Apr 2000 actually says:

Net Demutualisation Proceeds £1454.60

Then underneath the heading of "How these payments have been invested":

Demutualisation Benefit - Managed Fund - 91.6445 Investment Units - Current Bid Value £1408.19.

Give me a few mins and I will see what the 2008/2009 value is

nessy39

Feb 2009 - still 91.65 accumulation units - bid value £1169.

nessy39

I had forgotten all about this from 10 years ago. It was a letter from Winterthur saying that they were investigating my previous Colonial pension scheme that brought it back. I actually thought that it was about the Demut Benefit, and it was going to say a mistake had been made, and we are going to get a cash offer!
It turns out that it isn't about this, but a lack of paperwork trail when Colonial handed over the company scheme paperwork to Winterthur.
Of course, that is what has prompted me to ask on this fabulous website if anyone can help.
I guess that I just want to know if there is any chance of these investment units (not shares!) being offered back to me as a cash sum!!

EdInvestor

nessy39 wrote: »

I guess that I just want to know if there is any chance of these investment units (not shares!) being offered back to me as a cash sum!!

No chance of that, but you can get 25% of it out in cash when you turn 50 - or 55 after next year.

nessy39

Be interesting to see what reply I receive officially..I shall happily post it on here.