Deferred DC Pension Standard Life

kbfanclub

Got a letter from Standard Life re an old pension fund which is deferred with no contributions going in. The letter basically says that as it has 5 years to go to maturity they are going to start tranferring to their Annuity Purchase fund. I believe it is an old style with profits fund and I have to purchase an annuity at that time or transfer out. The letter also says there are valuable guarantees which I would lose by transferring.

I don't intend touching it for 5 years but also unlikely to be buying an annuity. Should I leave it as is, transfer everything now or stop the annuity transfer bit. Value is 85K plus 15K final bonus - transfer value 100K. There are four funds including the annuity purchase bit.

Is the guarantee the final bonus? There is no guaranteed annuity.

dunstonh

Got a letter from Standard Life re an old pension fund which is deferred with no contributions going in.

It wont be deferred. It will be paid up.

The letter basically says that as it has 5 years to go to maturity they are going to start tranferring to their Annuity Purchase fund. I believe it is an old style with profits fund and I have to purchase an annuity at that time or transfer out.

There is no requirement for you to buy an annuity.
Lifestyling risk reduction was popular when the majority of people used annuities. Now, its is being phased out with most providers pulling their lifestyle options.

Should I leave it as is, transfer everything now or stop the annuity transfer bit.

What best fits your objectives? How does this plan compare to the alternatives available? Are other fund options available?

Is the guarantee the final bonus? There is no guaranteed annuity.

Final bonus is not a guarantee. If there is no GAR then it could be a guaranteed minimum bonus rate. Unlikely to be GMP (unless its a section 32 buy out bond).

xylophone

Presumably you have the policy document - what are the "valuable guarantees"?

kbfanclub

dunstonh wrote: »

It wont be deferred. It will be paid up.

Not sure of the terminology. It's an old style former work pension to which no further funds can be added.

There is no requirement for you to buy an annuity.
Lifestyling risk reduction was popular when the majority of people used annuities. Now, its is being phased out with most providers pulling their lifestyle options.

There is a requirement to buy an annuity with this fund. As I said it is an old lifestyle type of fund.

What best fits your objectives? How does this plan compare to the alternatives available? Are other fund options available?

No intention of drawing anything over the next five years and don't think I would be buying an annuity then so just looking for the best way to grow the fund over this period. Fund is split With Profits 29K, Managed Pension 5K, Multi Asset 20-60% shares 45K and Annuity Purchase 6K. The With Profits is locked and they will move the Managed & Multi bits into the Annuity over the next five years. It is pretty much locked and controlled by the Trustees (my former employers) and I can only move between the last three parts. Or I could transfer the whole amount to a sipp.

Final bonus is not a guarantee. If there is no GAR then it could be a guaranteed minimum bonus rate. Unlikely to be GMP (unless its a section 32 buy out bond).

The guarantee is the With Profits part will not reduce. It is reviewed anually but as it stands cannot go below 29K

kbfanclub

xylophone wrote: »

Presumably you have the policy document - what are the "valuable guarantees"?

As above, the guarantee is that the With Profits part of the fund (currently 29K) will not decrease.

dunstonh

There is a requirement to buy an annuity with this fund. As I said it is an old lifestyle type of fund.

That will not be the case. Whilst that particular product may only offer an in-house annuity, it does not mean you have to buy one. The other option the plan will have is transfer.

kbfanclub

dunstonh wrote: »

That will not be the case. Whilst that particular product may only offer an in-house annuity, it does not mean you have to buy one. The other option the plan will have is transfer.

That was what my first question was. I wanted opinions on whether to 1)leave as is then transfer after 5 years, 2)stop the Annuity Purchase bit and use say the Multi Asset bit then transfer after 5 years or 3) transfer the whole fund now but that would lose the guarantee bit.

davieg11

With all possibility of a market crash within the next 5 years, I would keep it for the £29k guarantee. I would move the rest to a low risk fund.

tony4147

I'm guessing that the valuable guarantee with it being an old with profits type could be the guarantee of 4% growth rate if it is in the 'with profits' fund, I have two paid up SL pensions with this guarantee. Also if it is he same as mine there is no guarantee of a final bonus

OldMusicGuy

I was in a similar situation. I had a pension with Standard Life that included an old with profits pension sat in their with profits fund. I had put off transferring this to my HL SIPP because advisers all said I may lose the final bonus element, which was only £3,900 out of about 130K. I had to do a fair bit of digging to find the only "valuable guarantee" was the final bonus, there was no GAR or anything else. The SL website showed the full final bonus in the transfer value but when I asked SL they were always noncommital about the actual transfer value. The only way to find out was to ask my SIPP provider to request a transfer from SL and that way I got an actual quote for the transfer value. It included the full value of the final bonus, so I transferred the whole ampount to my SIPP with no issue.

dunstonh

With all possibility of a market crash within the next 5 years, I would keep it for the £29k guarantee. I would move the rest to a low risk fund.

There was a market crash 18 months ago. In the next 5 years you would expect a couple. You are always expecting them.

I had put off transferring this to my HL SIPP because advisers all said I may lose the final bonus element

which is a daft reason as they pay you the terminal bonus you have accrued to date when you transfer. it is only on conventional with profits plans where it can be an issue and you would have to go back to pre 1988 plans for that.

The SL website showed the full final bonus in the transfer value but when I asked SL they were always noncommital about the actual transfer value.

SL provide daily values. However, the value will change daily.

The only way to find out was to ask my SIPP provider to request a transfer from SL and that way I got an actual quote for the transfer value.

Or ask SL for the transfer value or ask your IFA (if you had one) what it is.