Pension Transfer value must be wrong??

Geoffo_M

I was made redundant 4 years ago, and my L&G defined benefits fund has been handled by a firm called Buck Consultants. In Feb this year, they wrote & said they are no longer to administer the fund & it was being transferred to Aegon. They said my fund was worth £129,000 and was split 51% gilts, 39% equities & 10% cash. Today, just 4 months later, I received a statement from Aegon saying my transfer value was only £73,000. So, in 4 months it has crashed by 43%, at a time when the FTSE has dropped 5.7% - and I am only 39% in equities!

There has to be a mistake surely? I will ring Aegon in the morning, but I wonder if that should be L&G. We never had contact with them directly though as it was handled by Buck, but they are saying they are no londer responsible. Am I missing something obvious? The original £129,000 included £30,000 protected rights. All a bit of a worry, losing nearly half your pension fund; I retire in 3 years.

dunstonh

Markets fell back between 10-15% between Feb and last week. So, the drop of that size has to be explained elsewhere.

Couple of suggestions to look for:
1 - Is the Aegon current value different to the transfer value?
2 - Are the protected and non protected rights shown independently from each other and you are perhaps looking at just one element and not both?
3 - was there a penalty applied when transferring from L&G to Aegon?

MikeJones_2

Hi Geoffo,

Geoffo_M wrote: »

...They said my fund was worth £129,000...

Geoffo_M wrote: »

...Today, just 4 months later, I received a statement from Aegon saying my transfer value was only £73,000. So, in 4 months it has crashed by 43%...

A 'fund' value and a 'transfer' value may differ in amounts for a variety of reasons.

A defined benefit scheme member is entitled to request a Cash Equivalent Transfer Value (CETV) which may be reduced in certain circumstances (e.g. where the pension scheme is in deficit). Any reduction must be explained.

However, you mention a split of fund types which alludes to your pension being defined contribution (money purchase) rather than defined befefit. Can you confirm?

Buck Consultants and Aegon are reputable companies.

A simple email/letter/telecon to the new scheme administrator stating your concerns ought to reveal the true situation.

If, upon enquiring further as per the above, you do not get a satisfactory reply, post again and we'll try to point you in the right direction with the appropriate questions.

Hope that helps?

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

Geoffo_M

Thanks Dunston for your reply

dunstonh wrote: »

Markets fell back between 10-15% between Feb and last week. So, the drop of that size has to be explained elsewhere.

FTSE 12/2/10 was 5,142 and on 21/6/10 was 5,299, so a small increase here. I appreciate my fund is a global equity fund though

dunstonh wrote: »

Couple of suggestions to look for:
1 - Is the Aegon current value different to the transfer value?

I have only received one fund value in an opening statement from Aegon (as of 21/6/10) for £73,059 & it is going into the "Scottish Equitable Buyout Policy" for my old company's pension scheme. I didn't receive a transfer value from L&G on that same date. Buck sent us a fund value as at 12/2/10 for £129,536. There is also a letter from Buck (13/5/10) saying another £5,614 has been allocated to my fund from final "Unallocated Fund Allocation"

dunstonh wrote: »

2 - Are the protected and non protected rights shown independently from each other and you are perhaps looking at just one element and not both?

Yes, it says Protected Rights £29,787, Unprotected Rights £99,749

dunstonh wrote: »

3 - was there a penalty applied when transferring from L&G to Aegon?

Can't find that mentioned in all the paperwork

Geoffo_M

MikeJones wrote: »

Hi Geoffo,
A 'fund' value and a 'transfer' value may differ in amounts for a variety of reasons.

A defined benefit scheme member is entitled to request a Cash Equivalent Transfer Value (CETV) which may be reduced in certain circumstances (e.g. where the pension scheme is in deficit). Any reduction must be explained.

However, you mention a split of fund types which alludes to your pension being defined contribution (money purchase) rather than defined befefit. Can you confirm?

Buck Consultants and Aegon are reputable companies.

A simple email/letter/telecon to the new scheme administrator stating your concerns ought to reveal the true situation.

If, upon enquiring further as per the above, you do not get a satisfactory reply, post again and we'll try to point you in the right direction with the appropriate questions.

Hope that helps?

Mike

Thanks Mike for your reply. It says it is a "Contracted Out Registered Occupational Pension Scheme". Not sure if this makes it a defined benefits scheme. Buck wrote to us in February saying they were winding up my employers pension fund and gave us 4 choices:-
1. Transfer value of my personal account to Trustee Transfer Plan with Aegon
2. Send details about transferring to another provider
3. Lump sum payment in certain circumstance (I didn't qualify)
4. Send more information about early retirement

As I don't intend to take a pension for 3 years, I ticked option 1.

The opening Aegon statement says I am now 57% gilts, 15% cash & 28% equities - so it looks like they haven't got me mixed up with anyone else as I am on similar "Lifestyle" choices as I was at L&G. I will ring later and let you know how I get on

Geoffo_M

Can you hear that huge sigh of relief - I've just phoned Aegon, and they said a "deal" was done in two parts, and another statement for £67,000 would be sent to me eventually. They said they had already had a trustee on the phone, and I asked why they didn't mention it in the covering letter. They said it was an error and would be sending one out tonight to the thousands who were probably worried like me.

Thanks you dunston & mike for your help

Geoff

JasX

Geoffo_M wrote: »

Not sure if this makes it a defined benefits scheme.

Were you ever told how much of a pension to expect? in defined benefit schemes like 'Final Salary' or 'Average Salary' schemes you will usually be quoted has having built up a pension of x% of your Final/Average salary as a pension on retirement.

With non-defined benefit schemes you basically put your money but never know quite how big a pension you'll get as it depends how investments in your pension fund perform....