Standard Life Paid Up Pension

tony4147

I'm 50 and I have received a statement for a paid up pension I have with Standard Life. For information I have got other pensions as well.
I have had some concerns with this pension for a couple of years, the pension is split between two funds -

70% Pension Millennium With Profits
30% Pension With Profits Fund

The "Pension Millennium With Profits" has only grown by 0.5% in the last 12 months and by my memory it's been like this for several years. The only good thing with this fund is that it won't drop in value, but it is getting eroded by inflation, which is a concern to me.

The "Pension With Profits fund" has a guaranteed growth rate of 4%, and that is what it has made in the last 12 months.

They are both "with profits" and I can't say that I fully understand "with profits" but with past experience with endowments I may or may not get a final bonus, also for information there is no guaranteed annuity.

I have spoken to SL and they are telling me that I can move funds for no charge, and have sent me details of several funds. I'm not well up on this sort of thing and I would probably consider a managed fund, has anybody got any opinions on the SL Myfolio Managed III of IV funds?

I have an IFA who I have emailed the above, but in the past when I have spoken to him the conclusion has been to leave alone, but if I'm honest this doesn't sit well with me especially the 70% in the Pension Millennium With Profits

Thanks in advance

dunstonh

The "Pension Millennium With Profits" has only grown by 1.5% in the last 12 months and by my memory it's been like this for several years. The only good thing with this fund is that it won't drop in value, but it is getting eroded by inflation, which is a concern to me.

Where there are guarantees, the returns will be lower.

I have spoken to SL and they are telling me that I can move funds for no charge, and have sent me details of several funds. I'm not well up on this sort of thing and I would probably consider a managed fund, has anybody got any opinions on the SL Myfolio Managed III of IV funds?

See an IFA. If you are going to enter into such investments using a relatively expensive provider, the IFA should be able to do better for you.

I have an IFA who I have emailed the above, but in the past when I have spoken to him the conclusion has been to leave alone, but if I'm honest this doesn't sit well with me especially the 70% in the Pension Millennium With Profits

Have you told the IFA how you feel now? The IFA would do a cost comparison as well as a features/benefit analysis. They cant just switch willy nilly. There has to be a justifiable reason. If the IFA couldnt justify it before then why was that? Using Std Life's internal salesforce to retail you into another Std Life contract is unlikely to be the best solution.

tony4147

The IFA didn't set up this pension but he did say two years ago "would I recommend a with profits fund both now, and previously?’ the answer would be a categoric ‘no’. The reason for this is that I prefer to advise, and be invested in, funds that, for better or worse, you know the value of rather than potential bonuses or not…

Once that has been taken into account though you ought to also work with what you already have, and looking at the asset split as it stands within your WP funds I must say that this is stronger than many I’ve seen".


His advise at the time was to leave as is and increase my contributions into my other pension scheme....................which I did.
But, 0.5% growth on 70% of this pension doesn't rest easy with me with 15 years to go.

dunstonh

Tell him how you now feel. That said, I do think the response is a bit on the weak side. If it isnt what you would have now and there are no reasons for keeping it then you should change it. Maybe the charges at the time were too heavy (MVRs I am mainly thinking of).

tony4147

I will speak to him tomorrow, from what I understand there are no charges if I stay with Standard Life and the managed funds I mentioned have an AMC of 0.4% or am I missing something?

dunstonh

tony4147 wrote: »

I will speak to him tomorrow, from what I understand there are no charges if I stay with Standard Life and the managed funds I mentioned have an AMC of 0.4% or am I missing something?

The Std Life webpage has the myfolio funds listed at 0.8% plus addition expenses ranging from 0.40% through to 0.6% depending on which version. plus, a further charge of 0.1-0.20% depending on amount invested.

http://www.standardlife.co.uk/1/site/uk/pensions/products/ampp

i.e. total of 1.40% p.a. through to 1.6%. Your IFA can get 0.40% elsewhere

tony4147

My IFA has come back to me on this, he is suggesting moving the 70% Pension Millennium With Profits (as I'm unhappy with the growth) into the Standard Life Managed 50/50 One Pn4 fund.
Any comments most welcome

dunstonh

That fund is cheaper than the ones Std Life wanted to use and multi-asset. The existing contract may not have the fund range of the latest contracts. So, there is almost certainly a limitation on the funds you can have without doing a full transfer.

tony4147

dunstonh wrote: »

That fund is cheaper than the ones Std Life wanted to use and multi-asset. The existing contract may not have the fund range of the latest contracts. So, there is almost certainly a limitation on the funds you can have without doing a full transfer.

Thanks, after speaking to SL I can't transfer into that fund as it is SIPP only. So time to find another fund, email sent to IFA

sandsy

With profits funds pay you bonuses based on the investment returns achieved but these are paid in 2 ways:
- an annual bonus each year (the 0.5% and 4%, in your case)
- a terminal bonus at maturity.

The amount of the terminal bonus won't be finalised until you terminate your contract.

So just looking at the annual returns is only looking at part of the picture and means that comparisons with other funds might be invalidated.

You need to try and get an idea of how much that terminal bonus might be worth today if you were to transfer out of those funds then you can see what sort of return you've had until now. But note that this may not be the realistic value of its full worth if the firm applies any penalties on transferring out of the with profits funds.

tony4147

sandsy wrote: »

With profits funds pay you bonuses based on the investment returns achieved but these are paid in 2 ways:
- an annual bonus each year (the 0.5% and 4%, in your case)
- a terminal bonus at maturity.

The amount of the terminal bonus won't be finalised until you terminate your contract.

So just looking at the annual returns is only looking at part of the picture and means that comparisons with other funds might be invalidated.

The terminal/final bonus is not guaranteed, in fact I may not even get one according to the paperwork. So, yes I can see where it is NOW, but that doesn't help me if I leave the pension as is until I retire in 15 years time, there may be a bonus or there might not be a bonus.