Attn Dunstoh Poor Pension plans

dunstonh

but think a return that is less than 19% of what was offered (I choose the word carefully!) is worthy of some investigation.

They would have had to achieve an average annual bonus rate of 6.03% to meet their forecast, and yet based on their figures only the last two of the 18 years prior to the policy coming into force exceeded 6%, and the average over those 18 years was 4.89%. Surely smoothing policies should be equally applied during the selling process?

The annual bonus rates are lower nowadays with the bulk of the returns being put into the terminal bonus instead. You need to look at the terminal bonuses as well.

On their advice I took my complaint to the Financial Ombudsman, who told me it was outside the scope of the complaints they look at, as the policy doesn't mature until 2012.

That is not grounds for a rejection. More likely they rejected it based on when you took it out (pre-regulation).

Have you actually done a full analysis of the plan or have you just picked a few bits? What are the guaranteed annuity rates (if any)? What is the terminal bonus? What is the transfer penalty? How do ongoing charges compare to modern alternatives?

EdInvestor

chriskn wrote: »

I left a company pension scheme after 14 years, and decided the best option was to put the money accumulated into a one time payment with-profits policy with one of the major institutions.

When was this? There was a lot of misselling of PPs to people with company pensions in the late 80s/early 90s, so much so that it was eventually the subject of a formal misselling review. Was the original pension a final salary one?

dunstonh

I read that bit too Ed but left it alone as chriskn siad " I.....decided the best option" rather than "I was told the best option..."

chriskn

Thanks for the replies, I will try to fill in a little more detail. I left the original company in 1983 and received advice from a company of financial advisers who are no longer in existence. I originally accepted an offer through them from a large insurer which was subsequently withdrawn which caused some delay. My quote was issued in July 1986, and the policy was finally issued in March 1988, but with a currency date of August 1986.

The policy does have a guaranteed minimum pension, which is the figure I am being offered, i.e. less than 19% of the quote. When I started the queries in August 2007 with the company they provided me with an illustration of possible future retirement benefits based on 5, 6 and 7% growth each year. They would all produce exactly the same guaranteed pension, but the 7% would also provide a tax free cash sum of £11,600. As it is highly unlikely it will grow at even 5% I can see why they would therefore elect to continue adding 0% for the remaining years.

The terminal bonus is obviously not known at this stage, but in reality it is not going to have any impact, I will get the GMP. So was I mis-sold? Their Marketing material says, " If you are a member of a company pension scheme and have left service you may be faced with a rather cool prospect - a 'frozen pension'.... If you are faced with this situation you have every right to be concerned. But you needn't settle for a 'frozen pension' - we can offer you a warm welcome to the Norwich Transfer Plan 32. The aim of the plan is to produce a Total Fund at retirement out of which you will receive higher benefits than may otherwise be available." The overall tag line is, "For pensions you're better off the Norwich way."

It doesn't feel that way to me.

Chris

Retired_I.F.A.

For all I know Chriskin it could have been me who sold you that. As far as I'm concerned it was best advice for the vast majority at the time, but with hindsight its not worked out that way.

As the bumper sticker says... !!!! happens.