JFM and ReAssure

RD69

A friend of mine explained to me she had a stakeholder pension with Legal and General (via Nationwide) that had recently been "moved" to JFM (https://www.jfml.co.uk/) and she was a bit nervous about the lack of communication and the inability to get on-line access to statements etc.

She then explained that in a similarly out-of-the-blue manner, her company pension that was with HSBC has been moved to ReAssure (https://www.reassure.co.uk) - another company she had never heard of.

There is a similar lack of quality communication, and no on-line access.

Both pensions are being contributed to.

The ReAssure web site describes the company as "...buys and administers closed books of business from other companies.".

JFM declares itself to be "part of Capita plc"; ReAssure is part of Admin Re with £27b of assets.

But it all smells a bit fishy to her, and to me.

Anyone care to share a view.

Thanks

sandsy

The transfer of business from HSBC to ReAssure is well documented.
I hadn't heard of the other one but some quick googling suggested it was all above board.

None of these transfers of business would have been permitted if the regulator thought there was anything fishy going on, and all involve regulated firms.

dunstonh

and she was a bit nervous about the lack of communication and the inability to get on-line access to statements etc.

its a stakeholder pension. its not geared or meant to give all the bells and whistles of a personal pension or SIPP.

She then explained that in a similarly out-of-the-blue manner, her company pension that was with HSBC has been moved to ReAssure (https://www.reassure.co.uk) - another company she had never heard of.

There is a similar lack of quality communication, and no on-line access.

Reassure buy up dead or or near dead insurance companies from firms that no longer want the book. They run the books down using the old software and consolidate wherever it is possible.

But it all smells a bit fishy to her, and to me.

What smells fishy?

RD69

Thanks for responding.

“Reassure buy up dead or or near dead insurance companies from firms that no longer want the book. They run the books down using the old software and consolidate wherever it is possible.”

“What smells fishy?”

The household-name companies that were selling the pension provision ten years ago would not have been marketing their schemes as having the potential to become: “dead or near dead”. And just what does “dead” mean in this context.

After saving into (two) pensions for over ten years, to then have them described as dead or part of a “closed book” is at best bad marketing.

A customer may well feel that they’ve been kippered.

Everything is above board, signed off by the FSA, a court etc. but there must be some underlying financial imperatives and I doubt it is for the eventual benefit of the customer.

Building a lower operating cost model and transferring dead business to it. I wonder what will happen to the small untraceable pension pots in years to come?

Linton

RD69 wrote: »

Thanks for responding.

“Reassure buy up dead or or near dead insurance companies from firms that no longer want the book. They run the books down using the old software and consolidate wherever it is possible.”

“What smells fishy?”

The household-name companies that were selling the pension provision ten years ago would not have been marketing their schemes as having the potential to become: “dead or near dead”. And just what does “dead” mean in this context.

After saving into (two) pensions for over ten years, to then have them described as dead or part of a “closed book” is at best bad marketing.

A customer may well feel that they’ve been kippered.

Everything is above board, signed off by the FSA, a court etc. but there must be some underlying financial imperatives and I doubt it is for the eventual benefit of the customer.

Building a lower operating cost model and transferring dead business to it. I wonder what will happen to the small untraceable pension pots in years to come?

Dead or closed book means that it is no longer being sold to new customers. So there will in the shorter or longer term be more money going out then coming in. The problem with such schemes is that they are typically run with bespoke software possibly on old computers. This is expensive for the active insurance companies to maintain and a distraction from their main focus. So companies have been formed that specialise in running these old policies and as they arent interested in selling new products dont have to bear the overheads of marketing and a sales force.

My main pension is run by one of these companies, Phoenix. My experience has been that they are very efficient and their customer support has been very good. More so than the previous manager.

The companies running the closed book policies arent well known to the general public because they dont need or want to advertise. However they can be quite large businesses and are certainly not shady in any way.

dunstonh

The household-name companies that were selling the pension provision ten years ago would not have been marketing their schemes as having the potential to become: “dead or near dead”. And just what does “dead” mean in this context.

Neither Nationwide or HSBC are household names in respect of pensions. They were tiny players selling products to people who didnt know what they were buying (if you did, you wouldnt be buying from them).

You probably wouldn't recognise most of the the names of the biggest players. This is because over 70% of pension business is done via IFAs. If you don't use an IFA, then you will not be aware of the products available. For example, the UK's biggest pension income drawdown provider is Scottish Life (just rebranded to the parent name of Royal London). You probably have never heard of them. The UK's biggest investment platform is Old Mutual Wealth. Again, you are unlikely to have heard of them. One of the most popular investment houses in the UK is Invesco Perpetual. Again, probably means nothing to you unless you move off the high street. Banks have a really poor reputation in pensions, investments and insurance. Expensive and low quality products retailed via low quality staff (historically on sales targets that put pressure on to mis-sale). However, you knew their name.

After the retail distribution review in 2012, it became uneconomical for most banks to continue providing advice. So, they no longer had a need for insurance company products. So, if you dont need something and it has a value, you sell it. And that is what they did.

Dead insurance companies are those that are closed for new business and in run-down (keep what they have but over time, it will decline to nothing).

After saving into (two) pensions for over ten years, to then have them described as dead or part of a “closed book” is at best bad marketing.

I'm an IFA. I'm not marketing anything to you. I am telling you how it is. If you want marketing, stick with the banks.

Everything is above board, signed off by the FSA, a court etc. but there must be some underlying financial imperatives and I doubt it is for the eventual benefit of the customer.

It certainly isnt for your benefit. However, it won't be detrimental either. You didn't have the best options to begin with and you still wont have the best options if you stay with them. You have the same you always had.

As Linton mentions above, sometimes things improve. Pearl Assurance was bought by Phoenix. Phoenix have improved the service compared to Pearl.

Building a lower operating cost model and transferring dead business to it. I wonder what will happen to the small untraceable pension pots in years to come?

It is not a business plan to fail and have to close and sell the book. In 2000, they didnt have a clue that the RDR of 2012 was going to come. Many are now reconsidering re-entering following the Financial Markets and Review (FMAR) of 2016 (due to published with the Spring Budget).

RD69

Thanks again for your contribution.

One wonders what the Nationwide were doing. Though they made clear that the actual provider was Legal & General, I think my friend took the view that a mutual building society would be a long-term trustworthy place for her hard earned. HSBC was not her choice, but the company she worked for.

(Personally I have a number of investments, including Old Mutual and too many others, which is why she asked me. And I’m free.)
[FONT=&quot][FONT=&quot]

[FONT="]"[/FONT]After saving into (two) pensions for over ten years, to then have them described as dead or part of a “closed book” is at best bad marketing.”

[/FONT][/FONT]

“I'm an IFA. I'm not marketing anything to you. I am telling you how it is. If you want marketing, stick with the banks.”

[FONT=&quot]
My apologies, the marketing comments were not directed at you, but about the financial services industry in general.

[/FONT] [FONT=&quot]Interestingly, the Phoenix Life website “Jargon Buster” has no matches for “Closed Book” or indeed “Dead” (in any sense).[/FONT]

sandsy

RD69 wrote: »

Thanks for responding.

“Reassure buy up dead or or near dead insurance companies from firms that no longer want the book. They run the books down using the old software and consolidate wherever it is possible.”

“What smells fishy?”

The household-name companies that were selling the pension provision ten years ago would not have been marketing their schemes as having the potential to become: “dead or near dead”. And just what does “dead” mean in this context.

After saving into (two) pensions for over ten years, to then have them described as dead or part of a “closed book” is at best bad marketing.

A customer may well feel that they’ve been kippered.

Everything is above board, signed off by the FSA, a court etc. but there must be some underlying financial imperatives and I doubt it is for the eventual benefit of the customer.

Building a lower operating cost model and transferring dead business to it. I wonder what will happen to the small untraceable pension pots in years to come?

The word "closed" generally means that whilst the existing business is administered, no new business is accepted for administration.

Dead is a poor word. In general, the companies who have offloaded books of business do so because they can't administer it on viable terms. Where's the companies they sell to specialise in administering small books of business and can operate it in a way that benefits both them and the policyholders.

dunstonh

One wonders what the Nationwide were doing. Though they made clear that the actual provider was Legal & General, I think my friend took the view that a mutual building society would be a long-term trustworthy place for her hard earned.

It was common for the banks and building societies to tie up to an insurer and use their brand name for marketing. However, you didnt get the IFA version of the product. You got a more expensive or cut down version. L&G products through Nationwide carried a (N) after them and the charges were more expensive than the IFA version.

Interestingly, the Phoenix Life website “Jargon Buster” has no matches for “Closed Book” or indeed “Dead” (in any sense).

Its outside jargon. Phoenix dont want to tell their customers that they deal with old closed books that are being run down. Use of the word dead is the extreme. There are a couple that were close to death if they had not been bought. However, most were just closed and inefficient and no longer wanted.

Lloyds still own Scottish Widows. Scottish Widows was a very strong brand that was well regarded. Lloyds have starved it of funds and its now a shadow of its former self. That is the sort of company that ends up be bought by the likes of Phoenix etc. Even good strong companies sometimes do it. Pru have considered dumping their UK book previously. They are still open and their product range is still ok. They just felt they could make more money in Asia than they can make in the UK. They decided to stay open in the end but it shows that there can be other reasons to end up finding your policy moving house.