CIS Personal Pension - With Profits?

Nickolai

I have an old CIS Personal Pension which basically contains £5200 of opted out SERPS contributions. I took it out when I got my first real job after leaving college over 23 years ago.

I transferred the actual contributions to a DB scheme over a decade a go. Up until recently I was unable to touch the SERPS contributions.

I recently tried to transfer the balance to my current DC scheme but this was refused as it is a 'With Profits' scheme.

I get an annual CIS statement which totally confuses me. Every year I get a protected payments figure of the £5200 (the SERPS contributions) plus an annual bonus attaching after bonus declaration for the year, always £500, giving a total guaranteed fund of £5700. I may be very naive here but I don't understand the bonus thing at all. The pension I may receive at 65 figure always comes in around the £7000-8000 mark, £200-300 per annum.

Next year there's no mention of the previous years bonus anywhere? I know it's only £5200 but it just looks like it's stagnating.

Anyone?

Your_Hero

The transfer is probably refused because of a shortfall in the GMP (guaranteed minimum pension) element. The current value of your pension isn't enough to meet the GMP so they have the right to refuse transfers out.

If this is indeed the case, then the CIS will foot the bill when you reach 65 and cover this shortfall out of their own pockets to give you the GMP.

As for the bonus, that is added to your guaranteed fund value and cannot be withdrawn - this is how a with-profits fund works. So the bonuses are all included in that figure although there may be a final bonus payable.

dunstonh

I recently tried to transfer the balance to my current DC scheme but this was refused as it is a 'With Profits' scheme.

That sounds like misinformation or miscommunication. With profits is an investment fund. It would not prevent transfer. Is it possible it was refused because it was protected rights?

xylophone

Is it possible it was refused because it was protected rights?

I recently tried to transfer the balance to my current DC scheme but this was refused as it is a 'With Profits' scheme.

But protected rights are no more?

http://www.wwfp.net/abolition-of-protected-rights.html

xylophone

http://www.royallondongroup.co.uk/Documents/Coop/pdf/PP_Product_Guide_MKT2613.pdf

"This guide applies to all variations of
The CIS Personal Pension product
(sold prior to April 2001), including:
– Voluntary contributions
– State Earnings Related Pension Scheme
(SERPS)/State 2nd Pension
(S2P) contributions
– Free-standing AVC contributions."

"Guaranteed Annuity Rates (GARs)
If your policy, or add-on was purchased before 1st March
1999 then we will guarantee a certain level of pension for
you should you retire at your Chosen Retirement Date and
take your pension with us.
This may boost your pension above pension rates
that are available in the market.
These Guaranteed Annuity Rates are specified in your
original Policy Schedule.
These Guaranteed Annuity Rates are specified in your
original Policy Schedule."

Transferring your pension
You can transfer your pension to another pension provider
at any time before you retire. However, this will result in you
losing your Fund Guarantees and Guaranteed Annuity Rate.
You should seek independent financial advice if you are
considering this option."

Is any of the above relevant to the OP's case?

amandajc

Many apologies for hijacking the thread but I also have a CIS "with profits" personal pension (although mine is a FSAVC) and I have been wondering about whether to transfer it into my SIPP but I am worried that by doing so I will be losing benefit.

The "Retirement Benefits" section of my schedule states "Premium £57.00. Cash sum £18216 (with profits), Normal Retirement Date .....2019, Guaranteed pension Rate £60.00"

Can anyone tell me what that £60 actually is? and whether transferring is a good idea (I have been paying £57.00 per month (with tax relief taken into account) since Sept 1996). Current transfer value around £17,500.

Thanks in advance

Nickolai

xylophone wrote: »

"This guide applies to all variations of
The CIS Personal Pension product
(sold prior to April 2001), including:
– Voluntary contributions
– State Earnings Related Pension Scheme
(SERPS)/State 2nd Pension
(S2P) contributions
– Free-standing AVC contributions."

"Guaranteed Annuity Rates (GARs)
If your policy, or add-on was purchased before 1st March
1999 then we will guarantee a certain level of pension for
you should you retire at your Chosen Retirement Date and
take your pension with us.
This may boost your pension above pension rates
that are available in the market.
These Guaranteed Annuity Rates are specified in your
original Policy Schedule.
These Guaranteed Annuity Rates are specified in your
original Policy Schedule."

Transferring your pension
You can transfer your pension to another pension provider
at any time before you retire. However, this will result in you
losing your Fund Guarantees and Guaranteed Annuity Rate.
You should seek independent financial advice if you are
considering this option."

Is any of the above relevant to the OP's case?

OK, nothing I have recieved from CIS has ever been in plain English, thank god I'm in a company scheme.

Every mention of the GAR refers me back to my original policy. At the time I believe this was referred to as protected rights?

After wading through some transfer paperwork, it appears to be £50 per annum for every £1000. £250 per annum on £5k ?. No annual bonus had been added since 2003.

Everything is very vague even on the transfer documents. "A final bonus may be added"

If that's correct I just think over the next 20 years before I retire it could be performing better elsewhere.

xylophone

Guaranteed pension Rate £60.00"

Does this mean £60 per £1000? You could check with CIS?

http://www.telegraph.co.uk/finance/personalfinance/pensions/9937300/The-annuities-that-can-double-your-money.html

might be worth a read for interest but remember that changes are coming post Budget 2014.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/332714/pensions_response_online.pdf

Your_Hero

amandajc wrote: »

Many apologies for hijacking the thread but I also have a CIS "with profits" personal pension (although mine is a FSAVC) and I have been wondering about whether to transfer it into my SIPP but I am worried that by doing so I will be losing benefit.

The "Retirement Benefits" section of my schedule states "Premium £57.00. Cash sum £18216 (with profits), Normal Retirement Date .....2019, Guaranteed pension Rate £60.00"

Can anyone tell me what that £60 actually is? and whether transferring is a good idea (I have been paying £57.00 per month (with tax relief taken into account) since Sept 1996). Current transfer value around £17,500.

Thanks in advance

The £60 is the Guaranteed Annuity Rate (GAR). The rate is £60 for every. £1,000 in your pot, i.e. 6%.

A transfer may be favourable because the GAR is relatively low, same with the guaranteed cash sum. But there may be other factors to consider. You may wish to seek advice to confirm my thoughts.

xylophone

Every mention of the GAR refers me back to my original policy. At the time I believe this was referred to as protected rights?

Have you read through the booklet (link in post 5) - it covers the ending of the restrictions on protected rights.

There is also a contact number- you might find out some more if you ring?

And don't forget upcoming changes - see link in post 8.

amandajc

Thanks both for that very useful information.

I have a DB pension that kicks in when I'm 66 but I would like to use the CIS fund (along with a small SIPP which I am building up as fast as I can) to help me retire at 60 (in 4 years time) and defer my main pension to avoid having to take an actuarial reduction.

I'm hoping that the new rules mean that I should be able to take the money over the 6 years at a rate to keep me just below the tax threshold and supplement my income from my ISA investments.

It would make things easier if I transferred the CIS fund into the SIPP so that I can manage it as as whole and from what you've said that doesn't sound as if it would be a bad move. The money is worth a lot more to me at 60 - 66 than it would be as a small ongoing pension and, as it seems I'm wouldn't be completely shooting myself in the foot, I think I'll go ahead and do it (I 'll probably wait till after next April though when the details of the changes are clearer.)

Thanks again and good luck to Nickolai.