Metlife retirement portfolio

Hocroft

My IFA has recommended this because it provides a secure income plan but the charges are a hefty 3%. Has anyone taken up this plan and do you find it worthwhile. I am 68 and have no plans to draw a pension in the near future as I have other income.

CannySaver_2

Hi

What are the reasons behind the recommendation to change?

Can your existing plan not meet your goals?

Has your IFA recommended that you take the tax free lump sum? Do you need the tax free lump sum?

I did look at the Met Life contract but found it awfully and unnecessarily complex and I hate investing in anything which I don't understand.

The Canny Saver

Loughton_Monkey

You refer to "My IFA".

Did you go to him with a 'problem' to which MetLife was his 'answer'?

Did he simply contact you out of the blue and say "Hey. You need to move your pension to MetLife.."?

Did he sell you the plan in which you are currently invested?

Or, did your IFA wake up one morning and say "Phew.... Times are hard. My revenue is going down. I need to do a bit of 'churning' to earn more fee/commission. Time I gave old 'Horcroft' a pull......" OK, this is my rather 'sledgehammer' cynical humour, but it's probably imprtant to know what you are trying to achieve (if anything). If it ain't broke. Don't fix it.

Hocroft

Thanks for your responses. I do not need a lump sum drawdown or a pension income in the foreseeable future: I am presently in an Advisory potfolio SIPP with a very average performance record and average costs/charges.

As for my IFA; this is a recent appointment following a fallout with my previous advisers after many years. Obviously they are going to recommend changes because you go to someone new for a fresh approach.

Met Life offers a guaranteed minimum income and guaranteed lock-in on investment performance but with high charges.

It does seem complicated but that does not necessarily make it a bad thing.

CannySaver_2

Hocroft wrote: »

Thanks for your responses. I do not need a lump sum drawdown or a pension income in the foreseeable future: I am presently in an Advisory potfolio SIPP with a very average performance record and average costs/charges.

As for my IFA; this is a recent appointment following a fallout with my previous advisers after many years. Obviously they are going to recommend changes because you go to someone new for a fresh approach.

Met Life offers a guaranteed minimum income and guaranteed lock-in on investment performance but with high charges.

It does seem complicated but that does not necessarily make it a bad thing.

If you don't need the income or lump sum then don't move into drawdown, there is simply no need to incur advisory charges or put yourself in an environment with a 55% tax on lump sum death benefits.

Can you simply not change investment strategy within the current SIPP?

Agreed complication is not necessarily a bad thing, however from what I remember the Met Life contract also has some pretty restrictive features, for example if you decide to annuitise I think the guarantee only then applies if you buy the annuity from Met Life?

The Canny Saver

jamesd

It's not correct that there are no benefits from going into drawdown early, there are substantal potential benefits. There's a discussion of those in the Annuity or Drawdown topic.

You can get some of the benefits of plans like the MetLife one by a combination of taking income now, investing that outside a pension and choosing investments within and outside the pension carefully.

If the capital guarantee interests you it's worth remembering that even the FTSE index pays around 4% in dividends each year. Over a number of years that income provides a significant degree of capital protection if all capital protection means is not going below the starting capital value.

wonderman

Hocroft wrote: »

Thanks for your responses. I do not need a lump sum drawdown or a pension income in the foreseeable future: I am presently in an Advisory potfolio SIPP with a very average performance record and average costs/charges.

As for my IFA; this is a recent appointment following a fallout with my previous advisers after many years. Obviously they are going to recommend changes because you go to someone new for a fresh approach.

Met Life offers a guaranteed minimum income and guaranteed lock-in on investment performance but with high charges.

It does seem complicated but that does not necessarily make it a bad thing.

Your last sentence should tell you to run away.

Follow Warren Buffets advice - if you do not understand it then dont invest in it.

Iancfp

I cannot really see why this is the recommendation - this is one of the so called 3rd way products
a bit of the growth element of drawdown wth a bit of the security of an annutiy

but if you dont want to draw income and dont want this type of lower risk - more expensive drawdown then it not the product for you.

Given the history of these products - when the going gets tough they seem to fold or put the costs up I think they remain questionable anyway

Drawdown can be de-risked using partial annuity and by investment choice which will be a much lower cost way of achieving it

financialdoll

I have done the maths of 3rd way v cheap sipp and cash deposits. SIPP wins given how low gilt yields are and how poor 3rd way returns are.

GBadger

This is actually a simple solution for clients that are looking to invest but pass on some of the risk by paying an explicit premium. FinancialDoll needs to undersand the returns and look at Blackrock actual returns before he compares to cash deposits. My father has enjoyed 8%+ over his first year in the product (after charges). They are an alternative to lifestyling in many instances (how much does it cost to reduce exposure to the perfoming asset class in a rising market) allowing clients the confidence to stay in because they know what their income is in the future.

MetLife stayed firm in 2008/2009 and costs for clients in the contract have not increased despite the massive turmoil. Many IFas seem to be obsessed with charges but if you have worked hard to already accumulate a pension / investment fund isn't protection what you have worked so hard to gain an important issue.

Ask an IFA who really understyands how these products work to demonstrate the returns and then you will see whether they are right for you. You may be very pleasantly surprised.

The IFA recommendation may be based on the death benefits in the plan which are (Secure Income Option) at least what you invest into the plan OR fund value (whichever is highest).
I would agree with CannySaver that delaying the 55% taxation is probably a good idea.

You can always take your fund value away later if you wish as you are not obliged to take income with MetLife.

martinwh

Not sure this product is good value. For the 55% equity based product you arrive at a charge of approx 2.8% before IFA remuneration. With remuneration the charges tend to stack up to about 3.5%+ for a tracker based product. A similar non guaranteed product would cost about 1.5% tops including remuneration. Thats an eye watering difference. On a £100K fund you are paying an extra £2000 per annum for the guarantee. The guaranteed income is very low (only 4.25% for a 65 year old). The fund value is not guaranteed, only the income that is taken from it.

The maximum equity content is only 55%.

Metlife also inserted a clause in their last T's and C's stating that they can increase the Guarantee charges at any time. If the markets went catastrophic, you could well find the cost going up. I'd compare these products to extended warranties on electricla goods. Probably give you some peace of mind, but what's guaranteed is not your fund value and you pay through the nose for if. If you can not afford to take the risk of investing in equities, then perhaps a more cautious portfolio would suit.