Phoenix Life pension - what to do with it?

blizeH

Hi,

My dad has a pension fund with Phoenix Life, his accountant told him a number of years ago that it was under performing and to halt the investment (missing out on all of the stock gains in the past few years!) but it's still stuck in the account.

They have an amount, labelled as 'personal rights' on one page and 'funds available to buy a pension from another pension provider'. There is also an option for annuity but it doesn't specify any sort of estimate for how much he could get.

I know the stock market is high right now, but my thoughts were to contact them to ask to transfer to the same company he has a stocks and shares ISA with (assuming Phoenix Life will let him) and open a SIPP account with them, or is that a bad idea?

Thanks!

Linton

You need to distinguish between where the pension is held (eg Phoenix or a SIPP) and what the pension is invested in. It's the latter which primarily determines the returns. Where the pension is held may make a marginal difference because of charges and it may limit the investment options you have. Also some old pensions provided guarantees on the investment return or on the pension to be paid after retirement. These guarantees would be lost if the pension was transferred. Whether the stock market is currently high or not doesnt make any difference because it may well be invested in the same things either with Phoenix or in a SIPP.

So your father needs to do a bit more investigation before simply moving the money. If after the investigation he does want to move the money to a SIPP he should ask the SIPP company to transfer-in, not ask the current pension company. The process is similar to moving an ISA.

I guess "personal rights" should be "protected rights". These have now been abolished but old pension schemes may still report them as it's not worth the pension company modifying the software.

If your father wants an annuity it could be provided by anyone. You can find market annuity rates on the net.

dunstonh

My dad has a pension fund with Phoenix Life, his accountant told him a number of years ago that it was under performing and to halt the investment (missing out on all of the stock gains in the past few years!) but it's still stuck in the account.

Unusual for an accountant to give such advice as most do not hold the permissions. A bit risky too as many of the old Phoenix WP plans have guaranteed annuity rates or guaranteed minimum maturity values that are far higher than the realistic return is ever going to make. Stopping contributions on those would be a costly mistake. They do have some rubbish ones as well but no general one-size-fits-all style comment like the account made should ever be given.

One assumes your dad then put those contributions he stopped into a new pension. If not the accountant has a lot to answer for. He has effectively lowered your dad's retirement fund and created extra taxation if no new pension was put in place (in addition to the possibility of reduced guarantees).

I know the stock market is high right now,

Is it?

but my thoughts were to contact them to ask to transfer to the same company he has a stocks and shares ISA with (assuming Phoenix Life will let him) and open a SIPP account with them, or is that a bad idea?

it could be a good idea. It could be a bad idea. The idea may be good but the chosen provider be not so good. We dont have enough to go on.