aviva pp protected rights - stay or transfer

hyperhypo

I have had contracted out PP with Norwich Union since 1989.

Nothing has been paid into it since 2000 as i have been in (initially) a final salary company scheme from 2000 - 2012 and now in a company stakeholder.

I believe the amount paid in until c 2001 was around 8-9k and its present transfer value is 23k. The majority of it is held in something called "Series 1 Av With Profit Guaranteed" which has a regular bonus of 4 %.

I no longer contribute to this fund......does it seem to make sense to simply leave it be until i'm 65 (i'm 53 now) when it provides 89 pcm in today's money.....or transfer it into something a little more adventurous such as s SIPP.

I 've really no idea whether to regard it as a fortunate bonus as a result of contracting out in 1989 - when i had no idea of the consequences - or a stagnant pot that i'd do better with elsewhere.

The AMC is 0.85%.

dunstonh

does it seem to make sense to simply leave it be until i'm 65 (i'm 53 now) when it provides 89 pcm in today's money.....or transfer it into something a little more adventurous such as s SIPP.

A SIPP is not more adventurous. It will have more investment options but it is just a personal pension in the same was the existing personal pension is. The existing plan may have a smaller range of investments available and its the investments that carry the risk.

An experienced investor who can afford to take risks may well consider the more advanced options available under a SIPP more attractive. However, an inexperienced investor may end up paying more and getting less (as may an experienced investor but they would know that is a possibility and make an informed choice)

hyperhypo

dunstonh

fair enough.

However, how, short of paying someone to answer a specific question whether to transfer there must be a generic view regarding the status of these type of legacy early contracted out PPs..... i would imagine there a quite a few in my position, ie where the pension is effectively frozen (because of past membership of other schemes).

My hunch is that i could do better.

At least i'm after an opinion on the present scheme .....the guaranteed regular bonus of 4% in with profits means nothing to me .... can't form a view wther its good or bad.

Would i be daft to transfer my £23k into a Vantage SIPP?

dunstonh

there must be a generic view regarding the status of these type of legacy early contracted out PPs

There isnt. They are not all the same. Even the same provider and same version can be set up at different cost levels. Let alone different versions, different providers etc.

i would imagine there a quite a few in my position, ie where the pension is effectively frozen

Its not frozen.

Would i be daft to transfer my £23k into a Vantage SIPP?

We cant answer that. My gut at this stage says yes you would be daft as you looking at one product type and another product type without focusing on the investments and costs.

At least i'm after an opinion on the present scheme .....the guaranteed regular bonus of 4% in with profits means nothing to me .... can't form a view wther its good or bad.

It can be good or bad depending on your risk profile, investment experience, timescale and what alternatives you would use in its place.

PaulCooper

Here's my thoughts for what it's worth.
I have something very similar, all of my contracted out entitlements went into an Aviva pension fund, it's worth around £33k at the moment.
I get a statement every year and every year it has seemed to perform well. I really have no idea why it has performed well ( I certainly don't manage it) The management fees are really quite negliable. I could transfer this money to an existing SIPP that I have, but as the existing SIPP is cash, I've decided to keep the fund in Aviva and 'let it roll'
One other mitigating factor to influence me to leave it where it is, is the hassle that is going to happen with the Guaranteed Minimum State Pension

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A majority of the time I've been contracted out, a couple of years I was contracted in, I think I've got the necessary years to qualify for a full Basic pension

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So I'd preffer to see the Contracted out money 'ringfenced' so that I can see if it remains a neutral outcome for me
Paul

hyperhypo

Thanks to you both .

Your points about comparing apples and pears well made.

I feel as if i'm coming to all this a bit late, having been in a final salary scheme until last june .....running from 2000, which was when the protected rights fund payments ceased.

I've realised that i never had to question how to invest before because it wasn't an issue in the DB scheme.

I shall keep hands off for the time being.