Phoenix Life SERP with profit

Paspatur

Hi I wonder if anyone can advise my (60 this year brother) re this pension
Self Employed Retirement Plan with Profit originally with NPI then Pearl now Phoenix
Started 1984
It seems very confusing
Payment used to be £1,200 per annum however latest paper work states Single contribution £400
Pension was made Paid Up April 2000 due to my brother moving overseas to work, he has since returned to the UK and is again self employed but not started any new pensions or added to this one
Death benefit is £15,300 and is stated to be the sum of contributions paid so where does £400 come from??
Latest statement received March 2014 for year to 31/12/13 - we cannot find 2014 due to change of address
Assumed pension date xx/xx/2026 aged 70 years
Guaranteed yearly pension £9,082.73 being basic annual pension £3,054 and total added annual bonuses £6,028.73
No final bonus payable at date of update
Looking at prior statements they used to use age 60 for illustration and we have one from 2007 which shows 60 and 65 and 70
In the 2007 statement guaranteed pension is as follows
age 60 £4,232 age 65 £5,960 age 70 same as now £9,083
Seems like a big jump from 65 to 70 and guessing the 2007 numbers will not have changed as no further payments gone in
My brother would like to retire before age 70 but I can see no sense in him touching this pension until age 70
Please confirm if my conclusion is sound
Transfer value £30k - why would you???
My brother is not married to his long term live in girlfriend
Many thanks

dunstonh

For the benefit of others, NPI abbreviated their self employed retirement plan to SERP. It has nothing to do with SERPS.

Payment used to be £1,200 per annum however latest paper work states Single contribution £400

Maybe there was a single premium at some point.

Seems like a big jump from 65 to 70 and guessing the 2007 numbers will not have changed as no further payments gone in

It would be a big difference as he is 5 years closer to death. Yes, it would be changed since 2007. Projection assumptions have changed and investment values will be different.

My brother would like to retire before age 70 but I can see no sense in him touching this pension until age 70

Why? You havent actually stated your reasons.

Paspatur

Hi and thank you for replying
I thought maybe the values on this pension are frozen since the guaranteed pension at age 70 advised in 2014 is the same as in 2007 - as these numbers are guaranteed rather than projected?


I thought he should take it at 70 since it goes up by such a high % but I suppose that all depends on what age he lives to - mother was 64 father 75 and brother is a heavy smoker - so maybe sooner is better in value terms

dunstonh

I thought maybe the values on this pension are frozen since the guaranteed pension at age 70 advised in 2014 is the same as in 2007 - as these numbers are guaranteed rather than projected?

The pension age is not guaranteed. The projections are not guaranteed. They are examples using assumptions. The projections are just a selection of assumptions and not reality.

The pension is not frozen either.

Paspatur

Sorry I do not understand as all of the paperwork states guaranteed pension amounts
Basic annual pension - this is the basic guaranteed benefit of the paid up plan £3,054 pa
Total annual bonuses previously added £6,028.73 pa
Guaranteed yearly pension at age 70 is £9,082.73
This as per 2013
Exactly same values as at 2007
No annual bonuses added for some time and none expected and very little chance of a final bonus
Prior to the pension becoming paid up in 2000 projections were given at various growth rates on the annual statement but not since it became paid up

Paspatur

Quote from annual plan update
"Your plan is a with-profits plan. This means it shares in any profits arising from the with-profits fund. Any available profits are added to plans in the form of bonuses - either annual bonuses or final bonuses.
Our primary goal is to ensure that all planholder's guaranteed benefits are protected. Such guarantees, which include any annual bonuses added n the past, represent our minimum commitment to you
As previously advised, our current approach is not to add any new annual bonuses, but to allocate additional returns by way of a final bonus instead.
Final bonuses are reviewed regularly and are not guaranteed"
From their website I have ascertained that final bonuses are not currently being paid due to lack of funds to pay the guaranteed amounts

xylophone

http://www.phoenixlife.co.uk/customer-centre/PeterboroughP/with-profits/serpproductguide.aspx

may be of interest to your brother.

He should contact Phoenix to discuss his options?

Paspatur

Thank you very much he will contact them to find out his options prior to his 60th in November

agarnett

Looks like your brother has a valuable little policy which should be husbanded very very carefully. For the time being it appears that your brother can start this pension at age 60 but from the link that xylophone has found for you, it appears from your best info so far that the first payment (of £4,232 annually in arrears) would not be paid until his 61st birthday even if he does make a decision to start it at age 60.

The current death benefit would again from your best info appear to be £15,200 or about 3½ years worth of pension so your brother would need to survive (best info so far) at least until age 64½ before he breaks even on that score if he has not opted to take the pension at age 60 (age 61 in reality for his first received pension payment).

If however he fancies his chances of surviving to age 66 i.e the age at which his state pension starts then he can (best info so far) expect in 2022 not only his state pension to begin but his first annual payment of £5,960 from Phoenix Life.

Your questions to Phoenix should perhaps not be so much about what options your brother has but more in clarifying what he is already entitled to.

This graph shows roughly the comparison based on best info so far between the actual cumulative amount of pension received over up to 40 years (age 100) using the three different retirement age options:



You can see there are a couple or three crossover points. However, the following are some of the first questions I would ask if it were my pension:

What is the death benefit payable:

• Prior to opting to take pension - and what if I opt to take it yearly in arrears at age 60 and die at age 60½ before I have received a penny?
• After opting to take pension (at whatever age).

Does it vary?

Is the pension guaranteed only for life or is it guaranteed for say a minimum of 5 years after opting to take it ?

Is there any widows pension type benefit if I die in retirement?

Is there any annual uplift in guaranteed benefits e.g. annually by RPI?

Are there any remaining options for me to pay further lump sums into the policy to secure higher benefits?

And finally, more out of curiosity than anything else, because the writing on the wall seems to suggest that they'd like nothing better than for policyholders to all transfer out with NIL Final Bonus and be rid of them ...
What is the transfer value you are currently quoting for this policy? How is the final bonus calculated on a good day?

Oh perhaps one more I would ask because I am a little more curious than most about where the real funds are hidden in these knackers yard controlled with-profits funds ...
Is there any likelihood of a special distribution of inherited estate to policyholders like me in the short or medium term, or has the inherited estate been depleted deliberately to fund the guaranteed benefits?

You've seen in this thread how the guaranteed benefits have been so carelessly dismissed as "just a selection of assumptions and not reality". That seems to have been some dangerously misleading claptrap in this case and it'll be interesting to see if any apology is forthcoming.

As we can see you are well aware, it is important that you help your brother establish exactly what he is entitled to and when under this valuable little policy that he has. It would be very unwise to be satisfied at the word of anyone on the internet (whether or not an IFA as you have already seen) or of the pension provider in offering opinions as to the value of various options. What you need to solicit from them is hard facts.

Be careful in how you assess the "options" which Phoenix Life might offer. First and foremost they were created as a vulture company to amass the remains of other companies' abdicated books of business and to suck the bones dry if they can get away with it.

Clearly your brother's policy if left alone is a potential burden to their business so they would love to persuade your brother to transfer out into something that more closely resembles dunstonh's apparent ideas of what reality.

Once again, the same "best info" comparisons of the cumulative pension potentially gotten out of the policy using the three age options can be shown graphically and this time I have used a column chart with Actual age along the bottom as opposed to number of years survived past Age 60.


Both these raw ('best info available on the thread at the moment') graphs show that with the Take@70 option, if your bro lives to 100, and there are no automatic uplifts and no widows pension paid to a surviving partner, he could still live to see himself take a cool £250,000 plus out of the policy whereas if he lives that long and has started earlier then he'll be at least £50,000 short of that!


This is where reality kicks in i.e. personalised life expectancy. It can be see that Age 83 would probably be the target age to start beating the banker (deal or no deal?!) by having delayed taking the benefits to age 70. Up to Age 83, there's barely a difference worth shouting about between the three options.

You don't say if your bro is working at the moment. There would seem little point in taking any pension if it is going to get taxed alongside earned income or if by taking it, welfare benefits will get reduced. Might be easier to think about if it can be married to the same date as State Pension kicks in i.e. the middle option, but I am sure others will chip in with ideas.

My parents are both nearer 90 than 83 and although I am only less than a year behind your brother, I would hope I might make it well past 83 too, so I might go for the age 70 option and trust that Phoenix Life i still keeping its guaranteed annuity promises by then. However, everyone is different in terms of life expectancy and their idea of what is acceptable if not likely sudden changes in the financial services business.

Also, depending on the answers you get from Phoenix, the graphs should perhaps be revisited with better info.

Tell your bro to Live Long And Prosper!

Paspatur

Thank you so much for such a detailed response and for confirming my thoughts that this is indeed a valuable little policy which needs careful handling. For a moment there I thought I was wrong but although I know next to nothing about pensions I can understand statements like guaranteed pension and minimum commitment.


Here are the answers to some of your questions, taken from the very helpful link from xylophone but we will of course get this confirmed by Phoenix
What is the death benefit payable: £15,300

• Prior to opting to take pension £15,300- and what if I opt to take it yearly in arrears at age 60 and die at age 60½ before I have received a penny? Good question and we will ask them
• After opting to take pension (at whatever age). Looks like nil once in payment

Does it vary? No it is a return of contributions only

Is the pension guaranteed only for life or is it guaranteed for say a minimum of 5 years after opting to take it ? Life only

Is there any widows pension type benefit if I die in retirement? No but this is not important. Not married to partner, she is much younger than my brother and can work and will inherit the Thailand house

Is there any annual uplift in guaranteed benefits e.g. annually by RPI? No

Are there any remaining options for me to pay further lump sums into the policy to secure higher benefits? Looks like any new contributions are held separately and not subject to bonuses so probably not worth it at this stage

What is the transfer value you are currently quoting for this policy? How is the final bonus calculated on a good day? Current transfer value is £30k but that will change when he reaches 60 and it will then be of a value to secure the guaranteed £4,232 pa on open market

How is the final bonus calculated on a good day? They are currently not paying final bonuses on policies issued after 1977 and this one was 1984
You don't say if your bro is working at the moment. There would seem little point in taking any pension if it is going to get taxed alongside earned income or if by taking it, welfare benefits will get reduced My brother is currently working and will not take the pension alongside his 40% tax bracket income
Just trying to work out when he can retire, currently having a house built in Thailand for retirement and cost of living low so looking at whether he needs to wait until 66 - there is another pension also with Phoenix with retirement age of 60 but not high value but have to investigate the final bonuses status on that - no nice guarantee on the other one - and he has savings


Very happy you still have your parents but mum died at 64 with lung cancer and we just lost one of our brothers 3 weeks ago with same at age 60
And this brother is a heavy smoker so the 100 year goal is very unlikely


Thank you again for such a helpful response

xylophone

Remember that your brother can make an appointment here
https://www.pensionwise.gov.uk/#

and/or consult an independent financial adviser

http://www.thepfs.org/yourmoney/find-an-adviser/