Terminal bonus Phoenix Life

Jenny16

I have a pension plan with Phoenix Life (was originally a Sun Alliance policy). It has a guaranteed annuity rate and is a with profits fund. I've been paying into the policy for 29 years and it matures in 2 years time. It's not a PALAL fund.

I'm trying to decide whether to take the annuity now or wait until maturity. I've emailed and phoned Phoenix several times to ask what terminal bonuses they are paying at the moment for this type of policy (I've explained that I know they can't tell me what final bonus I will get, but it would be helpful to have some idea of what people are getting this year). Each time I'm told someone will call me back but they never do.

Does anyone know what sort of terminal bonuses people are getting at the moment on this type of policy?

dunstonh

Too many variables to even guess. Terminal bonus is linked to version of plan, timescale, frequency and amounts of payments over the period etc.

As it is an old section 226 retirement annuity contract, you should be able to get a good idea from the transfer value as that would include any terminal bonus accrued to date minus a potential early transfer penalty.

Jenny16

Thanks for the reply dunstonh. I have got a quote for what the value of the fund would be if I took it now (£33,000). This included about £10,000 of annual bonuses. I have paid £50 a month in for the last 25 years and £30 a month for the first 3 years. I'm still paying the £50 a month.

The guarantee is for a fund of at least £27,000 plus annual bonuses. So if I leave it until maturity it will be worth at least £37,000.

It is a section 226 policy.

As far as I understand, a terminal bonus is only paid at maturity, so it hasn't accrued. I have had a annual bonus each year, but that has only been £19 over the last few years.

Does that help at all, and has anyone here got a terminal bonus on this type of policy over the last few years?

dunstonh

As far as I understand, a terminal bonus is only paid at maturity, so it hasn't accrued.

No. It accrues as you go along. Some will tell you the information. Some will not and only supply it to advisers. The transfer value would include what has accrued to date.

Jenny16

Thanks again dunstonh. Now I'm getting confused though. It's clear some policies currently provide 0% terminal bonus. So how can a bonus accrue over the years and then end up being 0%?

I must have misunderstood something!

mania112

Final bonus is accrued each year (and rarely shown until the end of the term). It's actually called Final bonus because it can pay at maturity (terminal) or on surrender.

Although you may have accrued a bonus, you also may not have - that's when it shows 0%.

Also, there may be a reduction - known as a Market Value Reduction, this could offset the bonus and again, show 0%.

We shouldn't really be talking about percentages either, it's a monetary value, based on a shed-load of actuarial calculations. If you talk about %'s it's easier to confuse it with annual bonus.

The regulator doesn't like With Profits and this is why, they're unnecessarily complicated - charges are hidden and bonuses don't need to be explained/proved.