Personal Pension Switch - UNFAIR CONTRACT TERMS

solarpvman

I have a personal pension from the 1990s with Phoenix Life (Originally Old Mutual). I'm not happy with the charges and want to switch.


I have tried various complaints to the company and to the Ombudsman but to no avail.


The issue I am faced with now is a VERY hefty switching fee. The transfer value is basically 10% less than the current value. ie a 10% charge over and above all the other annual charges.


I am sure I signed my life away and agreed to these charges initially.


Q: Do any of you think I have any scope to claim that this is an UNFAIR CONTRACT term.


From my admittedly limited knowledge of contract law that is a legal term that appears true in my case and that I could use to perhaps negate that element of the contract? Perhaps getting me a fairer switching value.

I am sure someone must have already tried this.

Thoughts please? Or other suggestions welcomed of course.

Your_Hero

solarpvman wrote: »

I have a personal pension from the 1990s with Phoenix Life (Originally Old Mutual). I'm not happy with the charges and want to switch.

I have tried various complaints to the company and to the Ombudsman but to no avail.

The issue I am faced with now is a VERY hefty switching fee. The transfer value is basically 10% less than the current value. ie a 10% charge over and above all the other annual charges.

What's the exact reason for the transfer value being 10% below the current value? Is this really a "switching fee" or a term you've branded yourself?

Is this a with-profits pension fund with an exit penalty (MVR)?

I am sure I signed my life away and agreed to these charges initially.

Q: Do any of you think I have any scope to claim that this is an UNFAIR CONTRACT term.

From my admittedly limited knowledge of contract law that is a legal term that appears true in my case and that I could use to perhaps negate that element of the contract? Perhaps getting me a fairer switching value.

Highly unlikely.

solarpvman

On my statement is says TRANSFER VALUE=xxx. and that is 10% less than the fund value.


There may well be other exit charges. I don't know TBH.


I don't think it is with profits as you describe.


Thank you for directly answering the points.

dunstonh

Q: Do any of you think I have any scope to claim that this is an UNFAIR CONTRACT term.

Probably not as the regulator is typically hot on this sort of thing and has done nothing. You could try an expensive court case as that is the only way to tell.

On my statement is says TRANSFER VALUE=xxx. and that is 10% less than the fund value.

Why is it less? Is it for recovery of fees/commission? (such as initial/capital units where the cost is spread over the term) or is it a market value reduction (as the underlying fund is worth less than the protected value? (which you only get if you stay until maturity)

in most cases, a transfer penalty is to recover costs incurred at the start which are not taken on day one but spread over the policy term. By not allowing it to do go the full term, they have to recover it as a lump on transfer out. You would have to persuade a judge that is unfair and to be honest, it isnt.

Old pensions were expensive, especially by todays terms. They were priced for a high inflation economy that went away. However, that does not make their terms unfair.

jamesd

My guess is that the current value is bogus because you may have the money invested in a with profits fund. The transfer value would be the real value.

System

Hi

If you want to switch, Switch.

If you stay paying charges you are not happy with, you may be losing value.

If you switch, and there are losses, I expect that you still could have redress for any earlier mal-administration or mis-selling or whatever.

But I see that some action is needed for your peace of mind.

Shop around.

Thrugelmir

solarpvman wrote: »

From my admittedly limited knowledge of contract law that is a legal term that appears true in my case and that I could use to perhaps negate that element of the contract?

It's only unfair in terms of your opinion not a legal perspective.

With profit funds have to protect themselves against a sudden withdrawl of funds. As many investments held are illiquid, i.e. commercial property. If the fund was forced to sell these assets at firesale prices. Then the underlying fund would be worth less to the detriment of all policyholders.