Pension date selection penalty

Panjandrum

I have moved this to Pensions following advice from QuietWaters:

My personal pension fund with the Prudential is in two parts, 'Protected' and 'Unprotected Rights' - this is to do with contracting out of the state scheme and then back in. When I asked them to defer my 'Selected Retirement Date' (SRD) for four months to match my 65th birthday, they wrote back to say that part of my fund had been accordingly deferred, the other part for five years to 2020. When I challenged this they said that was the rule. I notice from the fine print (four box files of Pru correspondence) that while it cost nothing to defer my pension, they would apply a 'Market Value Reduction' if I want to bring it forward. I wrote to ask if that was why they had deferred my pension for five years, to force me to ask them to bring it forward again, but they have not replied. I can't help thinking I have been duped (would not be the first time I have fallen out with the Pru).

Sorry this is a bit complicated (that's how they like it). Does anyone have any insights or similar experience?

Thanks

dunstonh

My personal pension fund with the Prudential is in two parts, 'Protected' and 'Unprotected Rights' - this is to do with contracting out of the state scheme and then back in.

Not any more it isnt. Protected rights was abolished back in 2012. It is all non-protected rights now. However, legacy pensions do still frequently seperate the two into non-protected rights and former protected rights but that is just due to legacy computer issues.

When I asked them to defer my 'Selected Retirement Date' (SRD) for four months to match my 65th birthday, they wrote back to say that part of my fund had been accordingly deferred, the other part for five years to 2020. When I challenged this they said that was the rule.

Selected retirement date has little use. It serves just a few purposes
1 - the date used for statement projections
2 - a trigger for the insurer to be proactive in contacting you
3 - in with profits investments, it is usually linked to being MVR at selected retirement age.

If the last point worries you then take it out of with profits.

xylophone

I am puzzled - "protected rights" are "former protected rights"?

https://www.pru.co.uk/pdf/IPPB6369.pdf - see page 15

dunstonh

xylophone wrote: »

I am puzzled - "protected rights" are "former protected rights"?

https://www.pru.co.uk/pdf/IPPB6369.pdf - see page 15

Protected rights has gone. However, a lot of the old computer systems cannot be cost effectively changed. to combine them. So, the insurers use the "former protected rights" classification as a cheap way to solve the issue. If the pension was to be transferred into a modern option, the two segments would be merged into non-protected rights.

Panjandrum

Yes, I guess I meant to say former protected rights. The point is I asked for January 2017 but it was deferred (against my wishes) to 2020. I have since had a partial reply to my letter which seems to confirm that to restore it to January 2017 will incur a penalty of uncertain or arbitrary size merely because I wish to bring it forward. It was the Pru, not I, who decided to defer my pension to 2020, they must have known this would be unacceptable since the remaining portion's "SRD" is January 2017.

xylophone

I still don't understand what has happened - have you requested an explanation in writing from the Pru?

Or perhaps TPAS could help?

http://www.pensionsadvisoryservice.org.uk/

Or can you transfer the lot into a SIPP without penalty?

Malthusian

A market value reduction may be applied on pensions invested in With Profits outside normal retirement date. But I don't know of any pension providers that are applying them at the moment whether it's your normal retirement date or not. Except on With Profits funds that have to pay valuable guaranteed benefits.

How much of an MVR are they currently applying to your fund if you were to transfer it?