Transfer and lose "bonuses"??

onthecontrary

I'm considering consolidating various old pensions (except a couple of final salary ones) into a SIPP.

I enquired about one just now with Aegon and they offered a transfer value of 31K but the plan value with "bonuses" is £38.5K. If I transfer out before retiring, I will lose said bonuses.

The last time I checked in 2013 the transfer value of this plan was 25.5K. So without the bonuses, it has grown by a mere 22% versus 50% including the bonuses.

My other pensions have performed along similar lines since 2013 - 50-60% growth - without charging any significant penalty to transfer out.

Is it permitted for them to charge such a punitive penalty for transferring out? How can I challenge it?

Thanks in advance for any advice.

LHW99

Is this a "With Profits" pension?

They were rather like endowments, so you don't get such a good deal if you transfer before the selected "end date"

dunstonh

I enquired about one just now with Aegon and they offered a transfer value of 31K but the plan value with "bonuses" is £38.5K. If I transfer out before retiring, I will lose said bonuses.

You shouldnt lose any bonus. However, if it is a conventional with profits plan then you would see a reduction in the basic sum assured. Also, if you are under 55, you could see an exit penalty greater than 1%.

There is the potential for a market value reduction where applicable.

The last time I checked in 2013 the transfer value of this plan was 25.5K. So without the bonuses, it has grown by a mere 22% versus 50% including the bonuses.

Why whould you not include the bonus in your total return calculation?
The bulk of the return on WP funds nowadays is in the final bonus. You have to include it when looking at the total return.
Not including the final bonus is a bit like not including the dividends on shares or unit trusts.

Is it permitted for them to charge such a punitive penalty for transferring out?

Yes. Although you dont say what the penalty amount or type is or your age.

How can I challenge it?

Become friends with Doctor Who and ask him to get his TARDIS to take you back to when you bought it and buy a different pension instead.

ffacoffipawb

dunstonh wrote: »

You shouldnt lose any bonus. However, if it is a conventional with profits plan then you would see a reduction in the basic sum assured. Also, if you are under 55, you could see an exit penalty greater than 1%.

There is no 1% cap on transfer penalties on conventional with profits policies, even for 55's and over. Essentially the transfer value is a share of the assets (with adjustments), there is no unit value per se.

onthecontrary

Yes it's with profits and I'm 51. I will leave it where it is till I'm 55 then as it seems to be performing reasonbly well and the annual fee is 1%. Thanks all for taking the time to reply!