legal and general with profits

een705

Im 55yrs old in Jan 2016 and have two with profits pension policies called "personal pension plan no 1" with L and G. My questions are how and when do I see the final bonus added or terminal bonus and what is my normal retirement date?
It says on a 2012 doc my selected retirement age is 65 yrs does that mean if I take a 25% out of each policy I don't get a final bonus if I take it at 55yrs.
Hope some knowledgeable people will explain how I can find out. Do I just tell them I want the 25% then they add the final or terminal bonus Im at a loss.

xylophone

Either telephone or write to L&G and ask?

http://www.legalandgeneral.com/pensions-retirement/contact-us/

SnowMan

I am not surprised you are confused. With profits policies are notoriously opaque, and it can be difficult to work out what is going on if you cash them in or transfer before you reach the selected retirement age for your policy.

The basic set up of a with profits pension is that you get a regular bonus each year and then a final or terminal bonus when you reach the selected retirement age. They aim through the final bonus to smooth the returns for different generations of policyholders so there is a bit of cross-subsidisation between policyholders.

However if you access the pension before you reach the selected retirement age it can be difficult to work out whether you are getting full value for your pension, by being granted the full accrued amount of the final bonus.

Some with profits policies are unitised with profits (don't worry about the jargon there, it just means that the policy is worth the number of units x the price of each unit). With those then they may reduce the amount if you take it early by a market value adjustor (MVA).

Some with profit policies are not unitised, but instead do not give you your full accrued final bonus if you cash them in or transfer before the selected retirement age.

And some with profit policies will apply a stated exit charge, which they will detail, if you cash them in before the selected retirement age.

Also some pensions (including many taken out in the 80s and 90s) have a guaranteed annuity rate, see here for an explanation, which you need to consider before accessing your pension early. If you have your original pension policy documents you should be able to find mention of any guaranteed annuity rates there, and correspondence from L&G may mention it.

Many with profit pension providers won't let you access just the 25% tax free element say at age 55 and leave the rest invested (in drawdown). So if you want to do that then you have to transfer away to access just the 25% cash and that effectively means removing your whole fund, so the exit charges will apply to the whole fund.

For those with profit pension companies who do allow you just to take just the 25% tax free cash through drawdown, it will depend on the company whether they allow you leave the remaining 75% in the same with profits fund. If they do then it may be that the early payment exit charge may only apply to the quarter of the fund accessed. But otherwise you may still suffer the full exit charge for the whole fund.

So the sort of questions you probably need to be asking L&G for each policy are:

1. When is the selected retirement age for my policy?

2. Is there any guaranteed annuity rate on my pension policies? If there is please provide full details of those guaranteed annuity rates

3. Will L&G allow me to take just the 25% tax free cash from my policy at age 55 and leave the rest invested in my policy?

4. If I transfer my policy what exit charges or penalties will apply, including any MVA, loss of final bonus or other explicit or non explicit exit charge?

It may be best to ask for a written reply, because my experience is that many insurers don't give clear or accurate answers to these questions over the phone.

kidmugsy

For one w/p pension that I know of (personal pension with Liverpool Victoria) they let you change your retirement date as long as you give them many months notice. So in your shoes I'd phone L & G.

dunstonh

My questions are how and when do I see the final bonus added or terminal bonus and what is my normal retirement date?

It accrues as you go along. So, you get a value of the final bonus any time. However, it not guaranteed and can go down as well as up.

and what is my normal retirement date?

Whatever you want it to be. However, in terms of market value reductions, it will usually be the scheme pension age. It has no relevance to the final bonus though.

een705

Thanks for all who answered especially Snowman will write as well as ring them to clarify things

een705

Just to let you know I have spoken to L and G today and I can take 25% tax free and go into flexi drawdown at 55 years old there are no guaranteed annuities rates and the final bonuses I can find out in Nov 2015.
They are sending me paperwork on all the above as well as how much its worth if I buy an annuity