NPI Pension

Newbie2saving

Hi,

Just wondering what to do with a very small pension pot I have with NPI. I left my first company >10yrs ago and the company have now closed. The pension was invested with NPI in Dec 2011 for a sum of £6,500 in the Phoenix NPI Pension Managed Series 2 fund. Valuation put it at £8,100 today.

I am in my mid 30's and unsure what to do with this pot, I can leave it or transfer at no cost to the likes of HL (where I have my S&S ISA). However, unsure of future charges etc. My current company pension will not accept transfers in.

Any thoughts on this? No experience of NPI, so not sure if I am managing this pot in the best way possible.

Thanks in advance.

Any

Are you sure there are no exit charges?
I recently transfered my OH's NPII pension and there was rather large exit charge, but given that they performance was absolutely rubbish I would have match their returns without loosing the exit fee by his retirement age (in 15 years) even if the pot only grew 2% a year... that is how bad the performance was and so I thought I haven't got that much to loose then.

Google Phoenix NPI Pension Managed Series 2 fund and see their past perfomance.. also don't forget to have a look at their charges, they make big difference.

His NPI pension was rather old though, newer ones might have better terms as to keep up with the current market.

Newbie2saving

Any wrote: »

Are you sure there are no exit charges?
I recently transfered my OH's NPII pension and there was rather large exit charge, but given that they performance was absolutely rubbish I would have match their returns without loosing the exit fee by his retirement age (in 15 years) even if the pot only grew 2% a year... that is how bad the performance was and so I thought I haven't got that much to loose then.

Google Phoenix NPI Pension Managed Series 2 fund and see their past perfomance.. also don't forget to have a look at their charges, they make big difference.

His NPI pension was rather old though, newer ones might have better terms as to keep up with the current market.

Thanks for the response.

I just called and that was the information given verbally. Checked the 'Group Money Purchase Plan Buy Out Policy' documentation (which isn't that clear) and seems to state first switch is free any subsequent incur a charge (?!?!). There seems to be two NPI series 2 on the market which is confusing me, one is keeping pace with the ABI index and the other is performing terribly (fund states CAP at the end), so could do with confirming which I have.

In terms of Management cost, it is confusing in the literature. It states the charge is 0.75-1% per annum. No administration charge.

Seems I could do with asking some questions to NPI.

Any

Yes, I thik you will have to. I found my OH's literature confusing too.
I came accross the exit fee and terms stated absolutely clearly on literature from when he authorised the Review service to ask about an update on his pension and they sent us copy, with transfer value and exit fees etc. And I then came accross it and took the matter to my own hands.

I was also confused which pension it was, but I found fortunately few statements from few different years and was able to judge it properly then. You won't have that chance if you are only with them for a year and a bit obviously, so I would ask them for clarification.

Also my OH's charges were nightmare - there was a set one and discretionary one, that was set by pension managers at year end and that one was a killer, so watch out for that.

But again - this was very old pension and obviously things in the market change, his pension's T&C were the norm in that time..

Never the less it was a rip off. He lost 30% of value on transfer, and the next transfer free period was basicaly his retirement... Nowadays you would never lock yourself away like that!

Newbie2saving

Just off the phone....Looks actually to be quite good. Management fees are 1%, no admin, policy or transfer fees. However there is a bid offer of 5% (is this the norm?!?!?!).

The fund is the Series 2 keeping pace with ABI. Mixed investment 40-85% shares. Top Ten Holdings are as follows;

1 ROYAL DUTCH SHELL
2 HSBC HLDGS
3 GLAXOSMITHKLINE
4 VODAFONE GROUP
5 BP
6 RIO TINTO
7 ASTRAZENECA PLC
8 DIAGEO
9 REED ELSEVIER
10 IMPERIAL TOBACCO GROUP

Any

Well, have a look here how they are doing...

http://www.morningstar.co.uk/uk/snapshot/snapshot.aspx?id=VAUSA05T31&tab=1&InvestmentType=SA

I think it is this one..

Spread shouldn't interest you now much though, it is a bit too late for that. Basically you buy higher then the price would be if you immediately sold again... Now you are only interested in sell price.
It is the same as initial charge (which you could do without if you bought through fund supermarket), but it is already done..

dunstonh

. Checked the 'Group Money Purchase Plan Buy Out Policy'

This means it is not a personal pension but a section 32 buy out bond. These frequently come with guarantees. The performance on these can be low where there are guarantees as guarantees inevitably have to be funded and that means the investments are being made to fund the guarnatee liability rather than taking risk.

Section 32 buy out bonds also get automatic transitional relief which can mean they can have a higher than 25% tax free cash payment as well.

Some pension providers will not accept transfers in of section 32 buyout bonds without an IFA signing off on them first given the increased risk of transfers in that area.

Newbie2saving

dunstonh wrote: »

This means it is not a personal pension but a section 32 buy out bond. These frequently come with guarantees. The performance on these can be low where there are guarantees as guarantees inevitably have to be funded and that means the investments are being made to fund the guarnatee liability rather than taking risk.

Section 32 buy out bonds also get automatic transitional relief which can mean they can have a higher than 25% tax free cash payment as well.

Some pension providers will not accept transfers in of section 32 buyout bonds without an IFA signing off on them first given the increased risk of transfers in that area.

Thanks for the information dunstonh. The document doesn't mention section 32 or a buy out bond, but I know you will know all about this. It is called a 'no protected rights' scheme. Within the document is the section which refers to the lump sum and it states "will normally be 25% of the total value of your contract. However depending on your personal circumstances, the maximum may be higher or lower than 25%." it goes on to say the maximum tax free lump sum may be higher if it is protected under schedule 36 to the Act, or lower if allowed to take more lump sums from other registered pension schemes.

There doesn't appear to be any other guarantees stated.

I am confused!

dunstonh

The document doesn't mention section 32 or a buy out bond

I took it as being a S32 from your comment that said: " Checked the 'Group Money Purchase Plan Buy Out Policy' documentation"

Within the document is the section which refers to the lump sum and it states "will normally be 25% of the total value of your contract. However depending on your personal circumstances, the maximum may be higher or lower than 25%." it goes on to say the maximum tax free lump sum may be higher if it is protected under schedule 36 to the Act, or lower if allowed to take more lump sums from other registered pension schemes.

Rule changes in 2006 changed the lump sum available on pensions. Most pensions were changed to match 25%. However, there were reliefs available to allow people to protect entitlements to higher amounts. S32 buy out bonds got auto transitional relief. They didnt need to be applied for.