Private Pension Terminal Bonus

brendamike

Hi, can anyone give me a quick answer to a simple question ..... OK I know nothing is simple!

What has the trend been for Scottish Equitable Private Pension Terminal Bonus Rates for 2007.

The reason I want to know is that between Feb 07 (when I had an anticipated figure of my TB) and April 07 (when my policy matured) the amount of TB had reduced by 20% ..... and I smell a rat.

All I want is a ball park figure so I know whether to shout or shut up!

Thanks
Mike

brendamike

Hi, would any of the IFA's logged on know if details of these Terminal Bonus Rates are published by Scottish Equitable (or by anyone else) so I can see if there really was a big drop between Feb and Apr 2007?
Thanks a lot,
Mike

dunstonh

If it has guaranteed annuity rates then a drop is possible. Plus there was a 10% correction in March and the April figures may have reduced because of that. The correction recovered quickly but your timing may not have been great.

The other thing is that if it is in one of their low equity with profits funds then the drop in terminal bonus wouldnt be a surprise as fixed interest funds have lost money over the last year mostly and property took a hit as well.

I dont have much Scot Eq stuff on my books. I dislike them as a provider and rarely transact with them. So, have no real reference points. Plus, they have so much legacy business with differing terms, it would be hard to say without knowing what version of product you are on.

brendamike

Hi,
Not fully sure what you mean by the version of product, but looking at the policy document, it says "Reflex Personal Pension Plan, With Profit Endowment".

Does this narrow it down?

Thanks,
Mike

dunstonh

Over the years, providers chop and change their products and you end up with different versions each time they make a change.

Reflex PPPs often have guarnateed annuity rates. Bonuses tend not to increase much on, if at all on these and do quite often go backwards more during poor periods.

brendamike

Hi,
Are there no figures published by the various companies or trade mags etc showing graphs of the rates paid out?

How else are people supposed to choose between companies (I know past performance is no guarantee of future performance, but in the absence of anything else it is a start).

Thanks Mike

dunstonh

Are there no figures published by the various companies or trade mags etc showing graphs of the rates paid out?

There are performance league tables on unit linked funds and some with profits funds but legacy with profit funds are harder to table. For example, you could have one plan with a lower basic sum assured but higher bonus rate vs a plan with a higher basic sum assured with lower bonus rate. Either could be best but the former would always appear better on a league table.

How else are people supposed to choose between companies (I know past performance is no guarantee of future performance, but in the absence of anything else it is a start).

Legacy with profit funds are not available for new business and havent been for some time. So, it isnt a problem there.

EdInvestor

Trouble is a pension is only a wrapper, in which an investor can choose a range of investments, usually funds.So each pension will be different.

In the (very) old days when With profits pensions were the norm (eg 1970s/early 80s) you might be able to compare, but most people have moved on from them now.

You could try comparing the returns for ScotEq endowments - the magazine Money Management publishes surveys twice a year and they are often reported in the press. They would be in the same fund, though not strictly comparable.

The latest survey report:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/05/12/cmendow12.xml


The likely cause of a TB fall at that time in an old style pension WP fund, which probably has a biggish chunk of gilts and bonds in it, would be the fall in the bond market earlier this year, which you can see in the chart here:

http://www.trustnet.com/ut/funds/?fund=192