Advice on Phoenix Pension Scheme please

bilbo51

I've got a personal pension plan with Phoenix which I originally took out with Sun Alliance in March 1989. It's a with profits plan designed as a contracting out of SERPS scheme. I remained contracted out of SERPS until 2004, when I contracted back in, and NI contributions to this plan ceased with effect from 5 April 2004.

Of course, following mergers and acquisitions, my policy is now administered by Phoenix.

My latest statement from them shows this:

Guaranteed basic sum assured: £63,458
Annual bonus declared to 31 December 2009:
Existing Bonus £10,102.11 New bonus £36.85 (!) Total bonus £10,138.96

Transfer Value as at 5 April 2010
Pension benefits - protected rights £54,035.00

The benefits accrue at original state retirement age (currently June 2016 when I will be 65.)

There is a Guaranteed Annuity Rate of 10% based on single life, non-escalating at age 65.

My understanding is that the fund at retirement will still be of the order of £73,500 (I'm assuming that there will be no growth and no final bonus even though by then the policy will be 27 years old - I may be pleasantly surprised this way...) and that my gross (level) pension from this pot will be £7,350.

Is that right? Or am I missing something?

Any comments or advice grateful received.

Thanks in advance!

lamb1102

I have a pension with Phoenix and the with-profits are quite complicated but as far as i can tell you are right with your assumptions.
I would ring them up to confirm that the whole fund is eligible for the 10% annuity rate. Hopefully you will also get a terminal bonus but annual bonuses will probably remain negligible in the short term from what I understand from the latest statements.

dunstonh

There is a Guaranteed Annuity Rate of 10% based on single life, non-escalating at age 65.

Thats nice. Although check the frequency as there can be a sting in the tail there. That said, many allow adjustments which are then priced on that guarantee. although some dont.

With GARs, you typically expect limited investment performance (even zero annual bonus). as the value is in the guarantee. Although the terminal bonus may still get returns.

bilbo51

Thanks for your response. :beer:

dunstonh wrote: »

...Although check the frequency as there can be a sting in the tail there. That said, many allow adjustments which are then priced on that guarantee. although some dont.

Sorry - I don't understand what you mean by "frequency" here...

dunstonh wrote: »

...With GARs, you typically expect limited investment performance (even zero annual bonus). as the value is in the guarantee. Although the terminal bonus may still get returns.

The annual bonuses have been less than £40 for the last few years...! They published a 7% (I think) 2010 final bonus figure for policies of 25 years standing but I'm expecting that they'll renege when it's my turn!

McKneff

Phoneix were the most incompetent bunch of idiots when it came to my pension.

They made so many mistakes, telling my one lump sum, then lowered it £2k, pension went up, then came down.

In fact I'm fighting them through the FOS. This has gone on for nearly a year now.

When it comes tothe time of your pension, shop around.
But personally I would never recommend them to anyone.

lamb1102

Youre right about the incompetence, my ifa and myself obtained transfer values within 2 weeks of each other for the same fund and there was a £28000 difference and they have no idea why and cant help us. When I do finally take the fund God knows what Im going to receive. Im only staying because of the guaranteed basic sum and the hope i may get a final bonus . With 18 years to go i wonder wether to take a leap of faith and re-invest but i will need about 6% per year after charges to beat just the guarantee.

bilbo51

In reading this forum, I've stumbled across the notion that this fund, being a contract-out-of-SERPS type fund, has, by law, to be used to provide a 50% widow's pension on some kind of annual escalation. Is that right? Hell, this is confusing... I feel an IFA coming on... :huh:

dunstonh

Sorry - I don't understand what you mean by "frequency" here...

Some guaranteed annuity rates only pay a set way. i.e. Annually in arrears with no death guarantee (a bad version). Some allow you to alter the frequency and adjust the annuity rate to reflect that. i.e. monthly in advance. Some will alter the guaranteed rate so you still get a very good rate. Whilst others will not offer guaranteed rates in any other option. So, effectively the guarantee could be useless.

i will need about 6% per year after charges to beat just the guarantee.

Does that include the probable 2-3% a year average that the Pheonix plan is likely (at best guess) to make. Or just based on current value?

In reading this forum, I've stumbled across the notion that this fund, being a contract-out-of-SERPS type fund, has, by law, to be used to provide a 50% widow's pension on some kind of annual escalation. Is that right?

it does until 2012. However, after that it does not as protected rights in money purchase schemes will be reclassified as non-protected rights.

Loughton_Monkey

For what it's worth, I looked at a leaflet I had with the last Bonus Notice for a small Life Policy which had been transferred to Phoenix. The printed leaflet contained a table showing examples of Terminal Bonus.

'Years since Issue' 10 years, 15 years, 20, 25, 30, 35, 40.
Terminal bonus for Regular Premium Personal Pension were (respectively) 9%, 19%, 43%. 43%, 101%, 206%, N/A
For Single Premium Pensions - again respectively: 0%, 22%, 55%, 78%, 302%, 326%, N/A.

In each case, the %Terminal applies to Guaranteed sum, plus existing bonus.

Not comparable here, but my life policy was in force 37 years, and maturity value compared with premiums paid represented net annual compound growth of 9.68%.

ffacoffipawb

Loughton_Monkey wrote: »

For what it's worth, I looked at a leaflet I had with the last Bonus Notice for a small Life Policy which had been transferred to Phoenix. The printed leaflet contained a table showing examples of Terminal Bonus.

'Years since Issue' 10 years, 15 years, 20, 25, 30, 35, 40.
Terminal bonus for Regular Premium Personal Pension were (respectively) 9%, 19%, 43%. 43%, 101%, 206%, N/A
For Single Premium Pensions - again respectively: 0%, 22%, 55%, 78%, 302%, 326%, N/A.

In each case, the %Terminal applies to Guaranteed sum, plus existing bonus.

Not comparable here, but my life policy was in force 37 years, and maturity value compared with premiums paid represented net annual compound growth of 9.68%.

Best to check.

Some Phoenix policies pay TB on sum assured only. Others on bonus only. And others on both.

Which Phoenix company is it in?

Is it Phoenix and London Assurance Limited (PALAL) or Phoenix Life Limited (PLL)?

If the bonus is peanuts I'd suspect the former.

lamb1102

[QUOTE=dunstonh;
Does that include the probable 2-3% a year average that the Pheonix plan is likely (at best guess) to make. Or just based on current value?

Thats at present value.
The Phoenix with-profits fund Iam in has changed its asset mix to 45% equities ,25% property, and the rest in bonds and fixed interest which while not great is better than it used to be. Then again that depends who's doing the investing.