When MVRs cannot be applied

Cleeve

I have two with-profit pension policies (Equitable Life and NPI) which do not specify a retirement age providing I choose a time after the age of 60 and before 75. I asked both companies about MVRs if I retire at 60. Equitable said there is no penalty providing it is "contractual" (i.e. after 60) and the policy is "crytalised" (i.e paying out a regular pension). That seems fair.

NPI seem to have applied a 20% MVR if I choose to retire before the age of 65. That seems as if they are ignoring the "contractual" aspect of the policy. Can they do this?

dunstonh

which do not specify a retirement age providing I choose a time after the age of 60 and before 75.

All pensions have a selected retirement age. You can tell what it is from the annual illustrations which will be put to a certain age. What you describe is the old retirement annuity contract retirement age range (that was abolished in 2006 and standardised with personal pensions at 55-75).

NPI seem to have applied a 20% MVR if I choose to retire before the age of 65. That seems as if they are ignoring the "contractual" aspect of the policy. Can they do this?

That would indicate that the scheme age is 65. They can apply an MVR before the scheme age as its only MVR free at scheme age.

Cleeve

Dunstonh, After your previous replies (see Trustnet question), I have to ask if I can rely on your reply as accurate & complete.
The E.L policy is a section 226 retirement annuity but they seem to accept retirement from the age of 55 as stated in the policy. Of course, during the discussion, they may have used wording which allowed me to continue an erroneous preconception that 60 was still valid in respect of the policy. Your response suggests that my interpretation of E.L's advice is incorrect and 60 is no longer considered a "contractual" retirement age. They never corrected me. Are you sure it is now 65?
As for NPI: that was a personal pension and is split into two policies - one with-profits and one N.I contributions. I asked for a copy of the policy but they have lost it (you prviously answered saying they don't need to keep copies - but obviously I don't need my own signature, just the T&Cs --- which they must keep). The copy I found relates to an older transfer in, not the with-profits policy. They never advised me of a change to the T&Cs in respect of retirement age. For N.I contributions I agree it will be 65, but is that definitely true for the with-profits element.

dunstonh

The E.L policy is a section 226 retirement annuity but they seem to accept retirement from the age of 55 as stated in the policy.

I'm not sure how they could state 55 in the policy as retirement annuity contracts had a minimum age of 60. It was only after personal pensions came in and later legislation took place that the age was reduced to 50 then 55 to match personal pensions.

Your response suggests that my interpretation of E.L's advice is incorrect and 60 is no longer considered a "contractual" retirement age. They never corrected me. Are you sure it is now 65?

There are two issues to be aware of. One is pension legislation that may currently allow 55 to 75 (60-75 when you took the RAC out). The other is the scheme retirement age at which no penalty will apply. The change in legislation had no impact on the scheme retirement age. So, if the scheme age was say 65, you could take it at 60 but it could be subject to MVR.

you prviously answered saying they don't need to keep copies - but obviously I don't need my own signature, just the T&Cs --- which they must keep

They keep the individual policy terms in non-personalised form.

They never advised me of a change to the T&Cs in respect of retirement age. For N.I contributions I agree it will be 65, but is that definitely true for the with-profits element.

Protected rights from NI rebates had legislation changes in 2006 and that allowed for them to be taken earlier (and with tax free cash). Most of the providers included a mini brochure of the changes in the statements leading up to "A" day changes in 2006.

Cleeve

I don't know why I typed 55 as I know that minimum age for the S226 policy was 60. I thought the policy was flexible on retirement age and I can't find any reference to 65. In the 1st endorsement (attached as the last page of the policy which states the first premium), it says "if age 60yrs is chosen as the retirement....[illustration of benefits]...." ('60' has been typed in by E.L in the otherwise pre-printed paragraph). Does this confirm my understanding that 60 is the "contractual" age and there is no MVR at 60.
As for NPI personal pension I'm even more confused. Are you saying that with-profits is definitely 65 (so I don't need the policy to confirm that) and both W-P and the NI element can be taken earlier but both subject to MVR. But, most importantly, that the W-P is 65?
Sorry to be pedantic but I don't want to lose 20% (or 5 years) due to a misunderstanding on my part.

dunstonh

it says "if age 60yrs is chosen as the retirement....[illustration of benefits]...." ('60' has been typed in by E.L in the otherwise pre-printed paragraph). Does this confirm my understanding that 60 is the "contractual" age and there is no MVR at 60.

Should do as the illustration of benefits is to the scheme age.

As for NPI personal pension I'm even more confused. Are you saying that with-profits is definitely 65 (so I don't need the policy to confirm that) and both W-P and the NI element can be taken earlier but both subject to MVR. But, most importantly, that the W-P is 65?

Go on the same principle as above. Whatever the pension illustration of benefits is to then that is the age they dont apply MVRs.

If you want to make doubly sure then ask both of them to tell you what age can you take benefits without having to be concerned about an MVR. Ask it in writing so you get it back in writing.