Royal and Sun Alliance Guaranteed 10% Annuity

rockers

I have a pension that I tokk out with Sun Alliance in 1988 that gives me a guaranteed annuity of 10%. I think these are called 'Zombie funds' now. Not sure why.

I paid into this for 6 years before joining my company scheme.

Sun Alliance have since become Phoenix but I still receive my pension statement each year though the bonus amount added is very low.

They did try and offer me an inducement last year to forgo my guaranteed annuity for a bigger pension pot but I declined.

My question is, when I come to retire, I am allowed to buy an annuity from anyone I choose. Can I transfer my company fund in to the Phoenix fund to receive the full 10% rate?

dunstonh

I have a pension that I tokk out with Sun Alliance in 1988 that gives me a guaranteed annuity of 10%. I think these are called 'Zombie funds' now. Not sure why.

The guaranteed annuity rate doesnt make it a zombie fund. If the pension is invested in a with profits fund that is being run to protect solvency rather than provide a rate of return, then that is a zombie fund.

Sun Alliance have since become Phoenix but I still receive my pension statement each year though the bonus amount added is very low.

Where plans have high guarantees, the bonus rate is usually very low.

My question is, when I come to retire, I am allowed to buy an annuity from anyone I choose

Yes. but you wont with that annuity rate.

Can I transfer my company fund in to the Phoenix fund to receive the full 10% rate?

Quick answer is no.

However, there are some very rare plans that do have contractual allowances for increments even if they are now closed for new business. That said, a transfer would not normally be classed as an increment and it would require an IFA to sign off on that is statistically unlikely to be the best option.

Loughton_Monkey

With this sort of plan, you have no 'rational' alternative than simply leave it where it is, and take the annuity at whatever specific date(s) are given and that suits you. Even without any bonus, it will have turned out to be a good deal, made up from a 'lowish' value, but an extraordinarily hugh annuity rate. To transfer it gives you the worst of both worlds.

rockers

Thank you for your prompt responses.

I did dust off the policy documents, It was taken out in June 1988 and is covered by Section 226 and is a "with profits" policy.

It does say that if no contributions are rceived for two years then it will be treated as "fully paid up".

So as you say, best to leave it. Still a good deal though I have my suspicions as to why Phoenix wanted me to forego my rights.

atush

Of course they want you to give up your rights as it will cost them a lot when you do.

Resist it, and look forwards to getting a good anuity on at least one part of your pension savings.