Friends Life Historical pensions

mvteng

I feel guilty. I have historical pensions that I have not looked at in years. A few recent posts have spurred me into digging them out and having a look. I'm 48, so i'm fully aware I should at least have taken some reviewing action before now

I have :

Aviva Stakeholder Pension - fund value £64k - currently paying in £200 per month - split 50:50 between Aviva Pension managed FP & Aviva Pension Stewardship Managed FP. Annual Management Cost = 1% a year.

Aviva Personal Pension - fund value £76k - historical. Not paid into it in a long time- split approx 50:50 between Aviva FP With Profits Sub-Fund (Main Series 1,4,21) & Aviva Pension Stewardship FPP. Aviva advise there is no annual management cost on With Profits funds & 0.75% on Stewardship fund.

Are these still reasonable options?

Thanks in advance

kidmugsy

I'd like to know whether these are the sort of insurance company pensions that get 100% cover in case of fraud, bankruptcy and whatnot, or whether they get only the £50k cover that my SIPP at HL gets.

Then I'd look at costs. By modern standards 1% seems high to me. And that's not allowing for the fact that I wonder whether the 1% is all-embracing. (Why might I doubt it? Because of the ludicrous claim - or should that be implication? - that the With Profits fund somehow incurs no costs.)

I'd ask whether there were any lovely add-ons, e.g. guaranteed annuity rates.

Finally I'd look at the allocation of assets - on which I can say nowt because what you've told me is so unhelpful.

mvteng

Thanks for the quick reply Kidmugsy

kidmugsy wrote: »

Then I'd look at costs. By modern standards 1% seems high to me. And that's not allowing for the fact that I wonder whether the 1% is all-embracing. (Why might I doubt it? Because of the ludicrous claim - or should that be implication? - that the With Profits fund somehow incurs no costs.)

I had a look at a SIPP with HL which has a charge of 0.45%, which is partly what got me started. Aviva are certain there is no annual charge on the WP funds.

kidmugsy wrote: »

I'd ask whether there we're any lovely add-ons, e.g. guaranteed annuity rates.

No mention of annuity rates

kidmugsy wrote: »

Finally I'd look at the allocation of assets - on which I can say nowt because what you've told me is so unhelpful.

ok, sorry, wasnt meant to be unhelpful.

Stewardship fund lists 92.7% in UK equities, 4.9% in money market, 2.4% in Europe

With Profits lists 25.7% UK gilts, 27.8 % UK shares, 17.8% UK non gilts, 16.7% overseas shares, 8% Property

dunstonh

Are these still reasonable options?

You could improve upon those by about 2005 and much more so by 2009 and a lot more today.

I'd like to know whether these are the sort of insurance company pensions that get 100% cover in case of fraud, bankruptcy and whatnot, or whether they get only the £50k cover that my SIPP at HL gets.

These are internal insured funds so get 100% FSCS protection (unlike the SIPP).

Modern versions of the same funds are available all in with Aviva for around 0.3%. Excluding the WP fund but you wouldnt want to be in that anyway unless there is some exciting contractural reason that stands out.

No mention of annuity rates

They wont mention unless asked. That pretty much goes for all safeguarded benefits.

mvteng

dunstonh wrote: »

You could improve upon those by about 2005 and much more so by 2009 and a lot more today.

Modern versions of the same funds are available all in with Aviva for around 0.3%.

ok. Thanks, I suspected as much

dunstonh wrote: »

Excluding the WP fund but you wouldnt want to be in that anyway unless there is some exciting contractural reason that stands out.

ok, sorry, I'm trying to get a grip of this. Maybe a stupid question, but why wouldnt I want to be in the WP fund?

Thanks again

dunstonh

ok, sorry, I'm trying to get a grip of this. Maybe a stupid question, but why wouldnt I want to be in the WP fund?

Its an obsolete way of investing. That doesnt mean its an automatic "get out" of that fund as there are a few gems around that are still viable. Often linked to the contract terms. Such as guaranteed annuity rates, GMP, protected tax free cash etc where no alternative choice of fund exists. However, if you were investing the money today as a new investor, you wouldnt even consider a WP fund. There are so few left available for new business.

Financial products are like any retail product. Sometimes they are built to last. Sometimes they are built for the current trend. Sometimes they are built for a specific purpose but not great for all purposes and your circumstances change. Sometimes you can have an old product that can be massively improved upon by a modern product. Sometimes the old product is so much better than the modern versions.

In general, if you are in a WP fund you would likely look to move out of it unless there is something about it or the product you are in that makes it viable and sensible to stay put.

mvteng

dunstonh wrote: »

In general, if you are in a WP fund you would likely look to move out of it unless there is something about it or the product you are in that makes it viable and sensible to stay put.

Thanks. Looking at my annual statement, on the negative side there is an early withdrawal charge of approx £2k, they indicate they may apply a MVR, and also that they may make a deduction to cover charges .

On the plus side, they indicate a final bonus of WP fund of approx £12k.

I guess the non WP funds are easier to deal with i.e. just transfer to a similar fund with lower costs.

For the WP funds, I assume to ask them for a transfer value to another fund (including MVR, bonus...) and then reassess based on the response

dunstonh

Thanks. Looking at my annual statement, on the negative side there is an early withdrawal charge of approx £2k, they indicate they may apply a MVR, and also that they may make a deduction to cover charges .

That may be one of those things that make you decide to keep it. Although a change to a modern contract at a third of the cost may mean the costs over the remaining term could offset that. Of if your investment objective is changing. For example, unit-linked funds in equities would have gone down around 10-12% over the last fortnight. Losing 5% on an MVR to invest in a fund(s) that have just gone down 10% may be viable.

For the WP funds, I assume to ask them for a transfer value to another fund (including MVR, bonus...) and then reassess based on the response

Aviva retail via advisers. So, to get that 0.3% cost you would need an IFA. They dont do direct to consumer (D2C) on their platform. The likes of HL mentioned higher up are D2C only.

mvteng

dunstonh wrote: »

Aviva retail via advisers. So, to get that 0.3% cost you would need an IFA. They dont do direct to consumer (D2C) on their platform. The likes of HL mentioned higher up are D2C only.

Thanks again. Thats really helpful.

According to my online account I should be able to transfer to different funds without issue?

Thrugelmir

mvteng wrote: »

I had a look at a SIPP with HL which has a charge of 0.45%, which is partly what got me started.

That's for wrapper only.

Nor do they pay interest on cash deposits (a source of their own income).

Albermarle

I have a WP fund with Scottish Widows as part of one pension. There is no annual charge as such but when I queried it , they said the charge was hidden in the complicated way WP funds operate but was effectively a max 1%. I guess the Aviva one might be the same .
Although the advice from the professional advisors is that they are old hat , they still have some supporters as they give some protection against market downturns . Also if you have one , sometimes just easier to leave things as they are ( lazy I know but …)