Old GAPPP with-profits. Transfer value?

msallen

I would appreciate some guidance from those who understand these types of policy please.

Back around the turn of the millenium I contracted out of SERPS for about a year or so into a Group Appropriate Personal Pension Plan with Royal & Sun Alliance.

Some years ago this scheme was closed to new members and transferred to Phoenix.

I only have a small sum in this scheme, but every year when I get my annual statement I think that maybe I should transfer it to my SIPP or my current employer's DC pension - more for reasons of "simplicity of management" / "clarity of value" than because it will provide better growth (although I suspect it will do that too from reading around how this type of with-profits fund has to reduce its equity and increase its bond holdings as the number of remaining members decreases, and how costs may also increase too).

Looking back through my annual statements I get two figures - the current fund value and the current transfer value.

Up until about 3 or 4 years ago, these figures were always either identical, or very near to each other, but since then the current value has changed very little, whilst the transfer value has roughly doubled.

I understand that an MVR may be payable if I transfer before normal retirement age (I am 49).

What I am looking for is an answer to two questions -

1. If I transfer this to my SIPP would the amount transferred really be roughly double my current fund value (discounting the effects of an MVR for this question)?

2. If an MVR (or any other charges) were to be applied to the quoted transfer value, can anyone give me an idea of a ball park cost (1%, 10%, 50%...)?

There are no guarantees on this scheme.

The values given in this year's statement, received today, are:
Value of pension fund : £7788
Transfer value : £15531

Thanks

dunstonh

I would appreciate some guidance from those who understand these types of policy please.

rare beasts but changes in 2006-2010 meant that they are generic now.

Group appropriate personal pensions all became reclassified as group personal pensions. Group personal pensions are exactly the same as individual personal pensions on the whole.

Looking back through my annual statements I get two figures - the current fund value and the current transfer value.

All money purchase pensions, including SIPPS have two figures. Modern plans tend to be the same but older ones can have differences.

I understand that an MVR may be payable if I transfer before normal retirement age (I am 49).

This would act as deduction on the transfer value. The opposite of what you are seeing.

Up until about 3 or 4 years ago, these figures were always either identical, or very near to each other, but since then the current value has changed very little, whilst the transfer value has roughly doubled.

The final bonus accrued to date is usually added to the transfer value but usually not added to the current value. That is not a 100% rule but most do it that way.

With WP funds, you tend to largely ignore the current value and focus on the transfer value (unless transfer value is lower).

1. If I transfer this to my SIPP would the amount transferred really be roughly double my current fund value (discounting the effects of an MVR for this question)?

it will be the transfer value (which is inclusive of MVR, Final bonus and any other charges)

2. If an MVR (or any other charges) were to be applied to the quoted transfer value, can anyone give me an idea of a ball park cost (1%, 10%, 50%...)?

The whole point of telling you the transfer value is to allow you to compare it to the current value.

msallen

Thanks very much dunstonh. That explains all I needed to know.

agarnett

The whole point of telling you the transfer value is to allow you to compare it to the current value.

ANd would that be to compare apples with apples? Or might the "current value" be a grossly manipulated reduced value because original policy expectations have been unilaterally discarded by the insurance company.

With-Profits policies were and still are expected (by those that bought them as long term contracts in days when a with-profits contract to perform as expected was a contract to perform as promised) to exhibit steady growth year on year. The insurance company holds back distribution of higher than average profits in very good years and uses them to smooth out distributions in less good years where lower than average profits would otherwise be distributed as "regular bonus" or "reversionary bonus".

So when did the steady growth stop and why?

When did it become at all useful to compare current values which are artificially low, due to no regular bonuses any longer declared, or much reduced bonuses being declared (perhaps for many years now) with an arbitrarily higher figure that includes a non-guaranteed "final bonus" of a type not even described in many of the original policies?

What is generic or normal about any of it?
'
The implied useful comparison of "value" is a confidence trick.

Which value is best? "The low 'current' value, or this much bigger transfer value we are offering you to transfer out now - only guaranteed 30 days? ... Ooh the big one please ... that's much bigger - aren't I lucky? Thank you Mr insurance man!!"

msallen wrote: »

Thanks very much dunstonh. That explains all I needed to know.

Er ... it probably doesn't, not by a long chalk ... but folk that do understand it would prefer we keep it simple and that the little people don't worry their pretty heads

msallen

agarnett wrote: »

Er ... it probably doesn't, not by a long chalk ... but folk that do understand it would prefer we keep it simple and that the little people don't worry their pretty heads

Actually it does explain all I need to know. I have no interest whatsoever in being part of your ongoing agenda thank you.

agarnett

That's ok msallen. Some people are just not up for a fight against the wrongs of massive corporates. Others will do some fighting and you might eventually benefit in some way from their protests against wrong, or you might not, but for now you don't have to worry your head over it.

Guess which company I once worked for? Don't be fooled into thinking I was a disgruntled employee either. I prospered.

Look who is at the helm since 2014 ... 3 or 4 years would that be? Not exactly a shining example of customer focussed CEO-ship ... some said he loved his Mum the best!

But the race to the bottom of With-Profits where the riches are hid started much earlier.

Have a nice day