Baffled by Aegon letter -changes to With ProfitsInvestment

okydoky

I know there is another thread on this, but did not wish to hijack it!!


I've had this Aegon policy since 1990 and despite mediocre performance have hung on in. My NRD is 60 which is June 2016.


Online valuation is £85K with Transfer value £98K. So TB is£13k but on last years valuation TB was £15K so dropping.
My investment split is £40K in Mixed and balance of £45K split between High Equity WP Fund(£24K) and WP Endowment(£21K). So you can see the TB is significant boosting the WP elements by about 33%, but as I say it appears to be dropping.


So with these changes coming along, including "the fund is reducing the unit price that applies before your pension date", question is, do I hang on in for another 16 months and hope for the best, or do I bite the bullet and move now and get the TV including the current TB?


I am presently retired and drawing down from a SIPP - the idea was to add this to my SIPP after my 60th birthday but not so sure now?


Realise that this is a highly technical issue and any answers will be from someone familiar with these Aegon changes, but all responses appreciated.


Thanks

Imnoexpert_2

I too was baffled by the letter, and like you hold
High Equity With Profits
With Profits Endowment
Mixed Units

I've spent some time reading through all my information and printed off the fund datasheets, phoned my financial adviser and phoned Aegon.

My thoughts are that the mixed fund is hopeless and could be transferred elsewhere. The WPE fund if held to retirement is getting 'around' 5.5% pa actually seems to be around 5.48 and is guaranteed to continue do so. There is currently no terminal bonus though there may be in the future (but I don't think there will be). So could it do better elsewhere? The High Equity With Profits is a real dog which of late has been growing by 1.5% and which I seem to have a terminal bonus on but which isn't guaranteed but they expect to increase (though if it's all in fixed interest it won't be by much).

The thing I don't understand and they don't explain as far as I can see is how much the unit price is going to reduce and when the reduction will happen. I think the effect will be to reduce the surrender value of the WPE fund if cashed in early.

When I phoned Aegon and asked my questions and after dialling the number on the letter I spent 17 minutes talking to a guy who didn't know about the letter, had to go away and ask someone else for the answers, and then found out there was a special team dealing with it. After another 9 minutes trying to get me to this team he promised to get someone to phone me back (which hasn't happened).

I have also sent the letter to my IFA (the one who set up and advised on this awful pension is long since retired) who said he'll call me tomorrow.

Looking through the documentation makes me realise how much money has been made out of me by the Pension Industry. I suppose I was young foolish and busy at the time and at the start it was only a small amount of money. Being a company scheme I had little real choice but to join and didn't really understand much. Good job house prices, inheritances and other investments over the years have helped. If I only had this pension I'd be stuffed.

Hope someone more knowledgeable can help.

Please don't take the above as advice or even accurate as Imnoexpert.

okydoky

Thanks for taking the time to respond.

In fact you have confused me further - easily done!

You say there is no terminal bonus on the WPE but there is on mine, at least at the moment! This is what worries me, might it disappear over time?

I too have experienced their woeful service levels, people on the phone who are frankly clueless and repeatedly ignored emails do nothing to inspire confidence. On top of poor investment returns they have the audacity to charge 1% management fee which costs me over £850pa - for what?

I think I'll probably let mine run to my 60th birthday next year and transfer it then to my SIPP, it does irk me when loyalty on my part, a customer for over 25 years, is taken for granted like this.

Imnoexpert_2

Shame it's just the two of us!

I obtained a termination value from Aegon yesterday which like the statements is just a figure added to the current value, without accounting for which fund has accrued it so I asked and was told that the full amount was due to the HEWP and none on the WPE. I didn't expect that, and will query it if Aegon ever get back to me. Certainly the WPE does have a terminal bonus element.

I have done some fag packet calcs can't work it out how terminal bonuses are accrued but if they are right then my £13k in HEWP accounts for £9k of terminal bonus.

Like many things 25 years ago was a different world and it was difficult to get information on stuff like this - we just trusted the 'experts'.

Imnoexpert_2

Aegon didn't phone back! When I tried again I got through to someone who was polite, helpful and knowledgeable. He hadn't any record that I was waiting a call back.

The answers to my questions were.

The unit values for the WPE haven't changed yet but will do so sometime before the end of June. The reduction will be 2% each year but of course if you hold to retirement they will be worth £1 a unit so you won't lose out.

If you cash in early the shortfall because of the lower unit price it will be made up by an increase in the terminal bonus.

The HEWP fund has already had the terminal bonus reduced (Jan-Oct) by 7% but has since been increased in January. I noticed this from my last statement. I still can't understand why the long term performance is so poor.

Incidentally sorry for the confusion about Terminal bonus on the WPE. What I was told on the phone in my first call which seemed wrong (and I think I knew that but didn't have the confidence to dispute) was in fact wrong. There is a Terminal Bonus.

The Aegon guy subsequently sent me a useful guide to WP funds which may help me work out how they do the calculations but curiously though Dunstan and Aegon tell me they don't do it like that my rough calculations were reasonably accurate.

I still await my IFA advice (which I guess will be to sell out). I have 5 years to go (unlike your retirement date at age 60) until 65.

I feel foolish to have kept this pension so long. It does have some guarantees in that apart from the TB the value won't fall and a 5% growth (WPE) is better than some banks however I will probably dump it next year.