Can Pru Change my Flexible Plan?

superladybb

Hi there,

I started a pension plan with Prudential one year ago through an FSA-registered independent financial advisor, on the understanding that the contributions were entirely flexible. I knew I'd be having time out of work to go to uni/have kids in the future and didn't want to be tied into a set monthly payment amount.

I've just called the Pru to reduce my monthly contribution amount and have been informed that the rules of my plan have since changed - if I choose to reduce my payment amount I can never increase it again for the duration of the policy!

This seems very strange to me. Can anyone advise on whether this is legitimate, and if I can do anything about it?

Pensions are confusing enough, and having taken the leap to have one (as anyone my age - 28 - is being encouraged to do) I am really disappointed that it's not what I thought it was.

Thanks,

superladybb

dunstonh

I dont know the terms of your policy but a lot of providers have pulled their pre-RDR (retail distribution review) product following its introduction on January 1st. It is no longer possible for some providers to increment pensions set up prior to that date. Some contracts can still be incremented but need a set of new forms or an internal conversion to the post RDR version.

As it was the regulator that made these changes, the answer is yes the provider can do it and has to do it otherwise they breach the rules set by the regulator.

I don't know the Pru product that well off by heart but I suspect what they are actually saying is that you will not be able to increase it again under commission terms but you will be able to increase it again under fee terms. You can go back to your IFA to verify that.

superladybb

Thanks so much for your reply. I will contact the IFA who organised my plan as you advise.

Could I just ask what the difference is between commission terms and fee terms?

Best wishes

dunstonh

Could I just ask what the difference is between commission terms and fee terms?

Commission no longer exists for new business or increments. It has to be processed on fee basis. Commission was paid to the adviser and was set by the provider. Fee is agreed between the adviser and client. It can still be paid via the product though and if the fee amount is the same as commission amount then there is actually no monetary difference. It is just a different name for remuneration with different forms.