In a Pickle

Kayserrant

Hi there

I have, what i thought was a fixed pension which is due to pay out a modest sum at age 60.
It was called a guaranteed income plan, with metlife,through an ifa.
I have since discovered that ‘guaranteed’ is just a name , and not a guarantee, and my income from this is now projected at 2k less than i thought
I have about 170k in it.
Can anyone tell me where i could invest this until 60 in a safe environment(as i thought i already had?)
It was scarcely going to be enough to live off before, but now i am going to be in a real mess.
Thanks

Joey_Soap

There are no safe environments where you will get anything like a return on the money. And it sounds like you need to make up some lost time. It's not possible to suggest much because you haven't even told us how old you are and what other assets/savings you have.


As it stands, taking on board some risk, a pot that size might pay an income of arounf GBP 6800 in a SIPP. But it isn't "safe". Not much is really. You need to define "safe".

dunstonh

I have since discovered that ‘guaranteed’ is just a name , and not a guarantee, and my income from this is now projected at 2k less than i thought

I never used it personally as i thought it was rubbish and you could avoid it by educating your client. However, from memory, the protected element was on the capital growth/loss side. They had a couple of versions over the years.

If you aimed to use an annuity at retirement, then you would get the market annuity rates that apply at the time.

Providers are not allowed to use the word "guarantee" unless that word means it. WHich is why you rarely see it.

Can anyone tell me where i could invest this until 60 in a safe environment(as i thought i already had?)

No such place exists. You can get capital security at no risk of investment loss. However, you then suffer inflation risk and shortfall risk and those risks can actually be greater than investment risk at a sensible level.

Your risk views have cost you money and you have suffered shortfall risk that could have been avoided with a little understanding.

Pun

dunstonh wrote: »

Your risk views have cost you money and you have suffered shortfall risk that could have been avoided with a little understanding.

Can't you just feel the finger wagging at you like a child being ticked off... Maybe the correct phrase would be 'could have been avoided if the IFA had given a better explanation'.

Kayserrant

Hi there. Thanks for the responses. The ifa had catagorically told me it was guaranteed. The money had been in a balanced portfolio, but he approached me with this pension as he said it would safeguard my funds and at least i knew where i would be. He said it had “lock ins” ...ie once the money had reached a certain point, it couldnt go back down again. I had no reason to dibelieve him as he had been a friend for some time. He was as surprised as i was when i found out. I spoke to the fscs about this and they told me that this plan was”already on their radar” but they could do little about it. I am devastated really.

Ok i will define my new “safe” . Low risk with not ridiculois annual fees to erode my pension.

Brynsam

Kayserrant wrote: »

The ifa had catagorically told me it was guaranteed. The money had been in a balanced portfolio, but he approached me with this pension as he said it would safeguard my funds and at least i knew where i would be. He said it had “lock ins” ...ie once the money had reached a certain point, it couldnt go back down again. I had no reason to dibelieve him as he had been a friend for some time. He was as surprised as i was when i found out.

Doesn't say much for the IFA, does it? Are you sure that's what he was, not just a salesman with a smart job title? Either way, make a formal complaint to his firm (or him, as appropriate). The fact he's a friend is neither here nor there in this situation, difficult as it may be.

Brynsam

Kayserrant wrote: »

Ok i will define my new “safe” . Low risk with not ridiculois annual fees to erode my pension.

The snag is that your 'low risk' presumably relates to capital...and if protecting that is your top priority, other risks (e.g. inflation risk) creep in and can have an even worst impact on the outcome.

Kayserrant

Brynsam wrote: »

Doesn't say much for the IFA, does it? Are you sure that's what he was, not just a salesman with a smart job title? Either way, make a formal complaint to his firm (or him, as appropriate). The fact he's a friend is neither here nor there in this situation, difficult as it may be.

No definetely an ifa, who i have known for years. I honestly dont think he had a clue till i told him. I am making a complaint to the fscs , as the advisers network is now no longer in being and he works somewhere else.

Albermarle

Ok i will define my new “safe” . Low risk with not ridiculois annual fees to erode my pension.

You may not be aware that charges have generally come down in recent years and the issue of them eating into your pension is less of a problem than it used to be.
There is usually a charge for the pension and then another charge for the funds actually invested in . This is how SIPPs work but Personal pensions tend to just have one charge for everything . Usually you get a discount over a certain amount

Overall charge can be between 0.5% and 1.5% , depending on the provider and the type of funds invested in but typically will be around 1%. Going through an IFA you could get a cheaper charge but they will then add on their charge of course.

xylophone

I have, what i thought was a fixed pension

You are sure that this is a pension policy and not an insurance bond of some description?

Looking at the documents you have, what exactly was guaranteed?

xylophone

Your risk views have cost you money and you have suffered shortfall risk that could have been avoided with a little understanding.

The OP appears to have sought advice from an Independent Financial Adviser.

The failure appears to have been on his side?