Standard Life Free Standing AVC Plan

Party_Animal

I've just received my yearly statement for the above policy which was meant to top up my pension fund. Its appalling and I would have been better putting the money into the Building Society. Does anyone know the best way forward?
I have no intention of increasing my monthly payments. Can I freeze it or draw it? I seem stuck with a naff policy and I know there are tax implications if I could draw it.. I'm reluctant to put good money after bad.
Thanks

Pal

What are you appauled about? Did you choose the wrong Standard Life fund to invest in?

Subject to any penalty charges you can transfer to different funds or can move the policy to another provider if you think it will improve things going forward, however you cannot take your benefits until you retire.

Party_Animal

Pal wrote:

What are you appauled about? Did you choose the wrong Standard Life fund to invest in?

Subject to any penalty charges you can transfer to different funds or can move the policy to another provider if you think it will improve things going forward, however you cannot take your benefits until you retire.

I'm actually appalled that the projected monthly payment is roughly 25% of the figure originally quoted , and that figure is decreasing yearly, and that wasn't the kind of response I was looking for. As for choosing the wrong plan, this plan was recommended by a financial advisor 12 years ago.

dunstonh

I'm actually appalled that the projected monthly payment is roughly 25% of the figure originally quoted , and that figure is decreasing yearly, and that wasn't the kind of response I was looking for. As for choosing the wrong plan, this plan was recommended by a financial advisor 12 years ago.

Of course the projections are lower. Standard Life now use SMPI basis projections, which means that they use projection rates based on the fund potential rather than the standard intermediate rate (with none being higher than that intermediate rate) and then deduct 2.5% a year off that to take into account inflation.

12 years ago you would have seen projection rates of around 9 to 13% a year with no deduction for inflation. They would have been the rates set by the regulator at that time. Over the years, the economy has moved to a lower inflation, more stable basis and the regulator has said that projections have to come down in line with that. They are far more realistic today than 12 years ago. However, had the economic cycle of 12 years ago remained, then they could have been accurate and the current ones miles off.

They are only projections. They are not what you are going to get, just examples of what you may get if that rate of return is achieved and that rate of inflation is used.

Almost certainly, over 12 years, you would not have been better off paying the money into a building society.

AVCs are coming to the end of their life due to the introduction of stakeholder pensions but with Standard Life making their charging structure on legacy pensions match stakeholder and the changes to lump sum entitlement from April 2006, I do not see any reason why you would want to or should stop it.

Party_Animal

Thanks Dunstonh, so would you continue paying in?

dunstonh

Party_Animal wrote:

Thanks Dunstonh, so would you continue paying in?

It wouldnt be any harm giving it a review after 12 years to make sure the funds are still suitable.

There may be other means which are more suitable for you depending on your time left to retirement, type of occ scheme and your goals but from a product point of view, charging, fund availabilty and the forthcoming changes, there is nothing wrong with it.

Party_Animal

Thanks very much.