MVA Can anyone tell me it's not just robbery?

jintywp

During the 80's we had numerous short term with profits which did very well. During the 90's we got some more, as supplements to our retirement fund. During the mid 00's, the term MVA suddenly appeared and our profits disappeared. Our endowment instead of giving us the nice little nest egg demonstrated each year for 20 years, barely paid off the mortgage. We would have done better to have put our money under the mattress than to invest in new Clerical Medical Endowments. Now MVA is appearing in my husband's pension statements and guess what - the estimated pension income is shrinking year on year. I don't buy it's 'smoothing out' good and bad years on the stock exchange, I made a graph of the performance of our endowments, the performance of the stock exchange and the performance of Halifax, there is no correlation. We have gone from having a well planned comfortable retirement to job hunting. Did the bosses of the providers join this 'smoothing of profits' NO, the year they wiped out our retirement fund they made record profits and enjoyed obscene bonuses. Can someone please tell me who allowed MVA's in the first place? Finally I have the same amount of capital in my pension as my husband, you would expect we would be getting about the same income at the end. Well according to our statements of this year, my projected income is 500% higher than his. How can this be, well I am going to retire 10 years after him and they just haven't started robbing my pension yet. I would place a bet right now, that 5 years from now, suddenly I will see the MVA popping up on my statements and my projected pension income falling like a stone. I expected some fairness from the FSA but that was before I learnt it was run by the same people who run the insurance and pension companies, Is that not putting the fox in charge of the chicken house? I would rather have been mugged at a cash point, at least I could have put up a fight there and even if I lost maybe have been compensated. I am bitter and would truly like someone to tell me how this is fair, it won't change anything but if I understood it it might make things a bit easier, Thank you

dunstonh

During the mid 00's, the term MVA suddenly appeared and our profits disappeared.

MVRs have always been there but the economy and returns meant it never really had to be used until we hit the 2000s and had a whole raft of issues to deal with.

Our endowment instead of giving us the nice little nest egg demonstrated each year for 20 years, barely paid off the mortgage.

It still paid off the mortgage and you benefited from lower monthly payments than a repayment mortgage. Ask most people with more recent endowments and they would bite your hands off for that.

In real terms you are actually better off with it paying less. The economic events that caused endowments to fail were offset in other areas.

We would have done better to have put our money under the mattress than to invest in new Clerical Medical Endowments.

No you wouldnt. You say it hit target. That mean it paid your life assurance and probably around 8% a year after tax. How would your mattress do that?

Now MVA is appearing in my husband's pension statements and guess what - the estimated pension income is shrinking year on year.

Is that because of lower values or because of a change in the projection rates?

I don't buy it's 'smoothing out' good and bad years on the stock exchange

You shouldnt. Most with profits funds hold only a minority of holdings in the stockmarket.

I made a graph of the performance of our endowments, the performance of the stock exchange and the performance of Halifax, there is no correlation.

you wouldnt expect there to be.

We have gone from having a well planned comfortable retirement to job hunting.

That is more likely due to incorrect assumptions on your part and probably a lack of funding rather than anything else.

Did the bosses of the providers join this 'smoothing of profits' NO, the year they wiped out our retirement fund they made record profits and enjoyed obscene bonuses.

How has the retirement fund been wiped out?

Can someone please tell me who allowed MVA's in the first place?

You when you took the product out.

Finally I have the same amount of capital in my pension as my husband, you would expect we would be getting about the same income at the end. Well according to our statements of this year, my projected income is 500% higher than his. How can this be

Because they are using different assumptions.

I would place a bet right now, that 5 years from now, suddenly I will see the MVA popping up on my statements and my projected pension income falling like a stone.

Why would an MVR have any impact on your pension income?

I expected some fairness from the FSA but that was before I learnt it was run by the same people who run the insurance and pension companies, Is that not putting the fox in charge of the chicken house?

Its actually run mostly by graduates with no financial experience or ex bankers. There is very few ex retail financial services and ex insurance staff at the FSA. That is no surprise when you see some of the things they come out with.

I am bitter and would truly like someone to tell me how this is fair, it won't change anything but if I understood it it might make things a bit easier, Thank you

Its clear you are bitter but you are making incorrect assumptions and the opinions are now clouding your judgement. You need to wind it back in a bit and look at what has happened over the last decade and realise that whilst most with profits funds are now obsolete, they havent actually returned as bad as many people think when they compare it to the general stockmarket performance of the last 12 years and the way the economy has changed from boom/bust, high inflation to steady (erm, was) low inflation.

DavidLaGuardia

Dunsonh has pretty much said everything that needs to be said here.

To add to it In with profits funds were pretty much all smoke and mirrors, with annual bonuses often having little correlation with the performance of a fund. Given the time they were normally invested over, if the underlying investments had not managed to perform there would have been nothing to "smooth" out. Worse still when markets fell and a move away from endowments meant a ne outflow of funds, many of them had liquidity restrictions imposed on them meaning they couldn't get the best out of markets when they rose.

I appreicate this is cold comfort but many with profits based pensions and endowments have still given good returns, it is just that projections were made on higher growth assumptions. Considering that these higher growth assumptions went alongside higher previous rates of inflation and interest rates, means that many of the maturity vaues are not that bad compared to what went in.

purch

Dunsonh has pretty much said everything that needs to be said here

He normally does :T

easyfinance

MVR is there for a reason. To protect the investors which remain invested if you try to transfer out in adverse market conditions.

Not all with profits are doing great these days most of them not. I am specialised in analysing them so if you let me know who is the pension provider an the name of the with profits plan I may give you an idea.

I have seen with profits with 25% MVR last year and now the MVRs are around 10% for some of them.

In 10 years time at 7% grow a pension fund will nearly double but yes 500% is a bit too much. Don't forget those are only assumtions the real figure you'll get it when retire.

It's normal for the projected value to fall after a year with poor performance. After a year with good performance the value may get back.;

casey_junior

dunstonh wrote: »

How has the retirement fund been wiped out?




What a very smug answer!

You when you took the product out.



What an even more smug answer!!!










Its clear you are bitter but you are making incorrect assumptions and the opinions are now clouding your judgement. You need to wind it back in a bit and look at what has happened over the last decade and realise that whilst most with profits funds are now obsolete, they havent actually returned as bad as many people think when they compare it to the general stockmarket performance of the last 12 years and the way the economy has changed from boom/bust, high inflation to steady (erm, was) low inflation.

Financial advisers are the dogs !!!!!!!!, they will sell you each new product as the best thing since sliced bread and when it goes wrong they will smile at you and tell you its your own fault.
As i have said before in another post, private pensions are a rip off, the only winners are the financial advisers, the financial institutions and the tax man.
Can you convince me after paying into pension schemes for 35 years and finishing up with a total pension £15 pw greater than what the state would pay me ,that I have not been ripped off.

Old_Slaphead

casey_junior wrote: »

Financial advisers are the dogs !!!!!!!!, they will sell you each new product as the best thing since sliced bread and when it goes wrong they will smile at you and tell you its your own fault.
As i have said before in another post, private pensions are a rip off, the only winners are the financial advisers, the financial institutions and the tax man.
Can you convince me after paying into pension schemes for 35 years and finishing up with a total pension £15 pw greater than what the state would pay me ,that I have not been ripped off.

Then don't go to IFAs.

Do your own research - it's not rocket science.

I've managed my savings/investments/pensions for 20 years without IFA help or advice (mostly by reading quality weekend business/money news). Sure, a few hiccups have occured along the way (mostly WP bonds) but, in general, I've done ok - and I don't pay over the odds for my products or advice.

Re. rip off pensions - if you're likely to end up with a pension pot of under £50k then it probably won't be worth saving - but you may not have known that 30years ago. That's the fault of this Gov't and it's negative attitude to private pension provision.
I've a stakeholder scheme charging 0.25% on incremental contributions with a decent choice (about 50) of funds - enough for most BASIC requirements. Periodic switching to take account of changing world economic conditions has enabled it to show returns over most of the last decade.

lemma1968

OK, pension newbie - what is an MVR?

And Old Slaphead - a stakeholder that charges 0.25% - more info please - by pm if you would rather. Mine charges 1% - thats 4 times yours.

vbm

casey_junior wrote: »

Financial advisers are the dogs !!!!!!!!, they will sell you each new product as the best thing since sliced bread and when it goes wrong they will smile at you and tell you its your own fault.
As i have said before in another post, private pensions are a rip off, the only winners are the financial advisers, the financial institutions and the tax man.
Can you convince me after paying into pension schemes for 35 years and finishing up with a total pension £15 pw greater than what the state would pay me ,that I have not been ripped off.

Would you be able to explain how a pension helps the tax man win ?

I would assume that tax relief at your highest marginal rate, gross roll up of funds and 25% tax free at vesting, would mean the tax man isnt exactly winning in this situation.

Old_Slaphead

lemma1968 wrote: »

And Old Slaphead - a stakeholder that charges 0.25% - more info please - by pm if you would rather. Mine charges 1% - thats 4 times yours.

PM with details - unfortunately charges increased a couple of years ago to to around 0.8% with this plan (though I still pay pre-increase rate). There are low cost options available with trackers (ie via HL sipp) and ETF/investment trust (via Sipps) if charges are your main criteria.

Old_Slaphead

vbm wrote: »

Would you be able to explain how a pension helps the tax man win ?

I would assume that tax relief at your highest marginal rate, gross roll up of funds and 25% tax free at vesting, would mean the tax man isnt exactly winning in this situation.

Depends - he will be winning if it means he doesn't have to shell out for pension tax credits