In a Pickle

Kayserrant

Would it be possible for me to open a sipp by myself and place the money where I wish...am a bit wary now.

Kayserrant

xylophone wrote: »

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?

No defo a pension..i transferred my pension pot into it

I cant upload a photo but it says
“The secure income option provides a guaranteed minimum income for life.”.....
When you take an income at age 60, your secure income base will be no less than£173,605.20. Based on this age, the secure income base will be multiplied by 3.50% to give you a guaranteed minimum income would be £6080....”

The idea was, this product had “lock ins” so once it has reached a certain level, it cant go back down again.

sandsy

What has made you think the income will be less than the guarantee? Some standard projections don't show guaranteed amounts, only what you might get if you bought an annuity income on the open market. So don't rely on one of these to make a decision without checking with MetLife first or you could make a costly mistake.

Kayserrant

sandsy wrote: »

What has made you think the income will be less than the guarantee? Some standard projections don't show guaranteed amounts, only what you might get if you bought an annuity income on the open market. So don't rely on one of these to make a decision without checking with MetLife first or you could make a costly mistake.

Well, what happened was, i received a statement through at the back end of last year, and noticed the guaranteed sum had gone down. I spoke to my adviser who didnt understand it but thought it might be a clerical error. But it was bugging me , so i rang the company up direct. They then told me my pension was on track for 4200 a year, and the ‘guarantee’ bit , in lyour guaranteed income” was simply the name of that feature, and was not a guarantee. I feel like i have been scammed

xylophone

Is it this?

https://www.ftadviser.com/2015/09/29/pensions/product-review-metlife-guaranteed-income-uDXS58S6HyYZ65wD1Jyd9K/article.html

Kayserrant

xylophone wrote: »

Is it this

Thats it . The figures are slightly different, mine was supposed to increase by 4.25pc a year for every year after 60 i deferred it.
My personal figures were also based on an offer metlife were doing with ifa’s where there was no fees from my fund but metlife paid them direct apparently, they stopped this after about the first few months i believe.

dunstonh

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.

Did the IFA specifically tell you that it was guaranteed? After all, the sentence that followed said it would safeguard. Safeguard is a word you would expect to be used on this contract rather than guaranteed. Although the credit crunch changed how the words were guarnteed. Guaranteed took on a different meaning post credit crunch. So, date it was sold would impact on the wording.

Lock-ins are linked to growth and loss. Not income.

. I had no reason to dibelieve him as he had been a friend for some time.

And the description is pretty much what it does. So, there appears to be no issue there.

Your first thread talked about income. But you have switched to capital. Can you explain what the product isnt doing in your eyes as your explanation fits what it did.

Well, what happened was, i received a statement through at the back end of last year, and noticed the guaranteed sum had gone down. I spoke to my adviser who didnt understand it but thought it might be a clerical error. But it was bugging me , so i rang the company up direct. They then told me my pension was on track for 4200 a year, and the ‘guarantee’ bit , in lyour guaranteed income” was simply the name of that feature, and was not a guarantee. I feel like i have been scammed

The statements show an example guaranteed income. They are nothing to do with what you will actually get. They are artificial projections using a range of assumptions in a method defined and set by the FCA. They typically understate reality by quite a bit and have been falling in recent years. Even though the real situation has largely increased in recent years.

These synthetic projections have nothing to do with the product terms.

The figures are slightly different, mine was supposed to increase by 4.25pc a year for every year after 60 i deferred it.

The guaranteed income plan was a second stage you could buy once you went from the accumulation stage into the income stage. What you described earlier with the lock-ins is the accumulation product. It was possible to buy the income version early (and not draw the income) but the "lock-in" funds were a different product.

The product itself had flaws. The locks were not based on the investment value but the unit price. However, charges were met through sale of units. So, right from day one, as the unit count fell, so did the safeguared value. The expectation was growth would outstrip that. And it has. But it did mean the safeguarded value was not as high as it could have been.

A number of these have been classed as missold. The product was considered overly complicated and oversold. Mainly to people who didnt need security but were placed in it anyway. Those secure options cost money and the charges were expensive. That said, I am not sure yet whether you have a valid complaint reason or you just misunderstand the product or the documents you are looking at.

US companies have an awful record in the UK. MetLife, Hartford and others have all tried to crack the UK but failed. These third-way products were fashionable with some for a period. Especially low skilled/low knowledge advisers. Despite their flaws and issues, most haven't actually failed to achieve their objective.

Kayserrant

Hi Dustonh . Thanks for the reply. Here is an excerpt from the suitability letter i was sent...

“...in addition if investment returns are good, your guaranteed income could rise. With the Secure income option you have the safety net of knowing even if your fund value falls to zero your income will not fall”

When you say the locks were not based on the investment amount, but the unit price, that was not made clear ... although looking at the statement above, how on earth could a fund value fall to zero if it was locked in? But the bit my attention was drawn to was ....your income will not fall...

Ps the adviser agrees with all i have said. When i complain to the fcsc will they write to him for his view bearing in mind he is no longer at the same company as such ( difft network)

dunstonh

When you say the locks were not based on the investment amount, but the unit price, that was not made clear ... although looking at the statement above, how on earth could a fund value fall to zero if it was locked in? But the bit my attention was drawn to was ....your income will not fall...

It was the responsibility of your adviser to make you aware of this. It was in plain sight for any adviser to see.

The fund value wouldnt fall to zero. The value is determined by number of units multipled by unit price. The number of units would fall as units were sold to cover charges. But the unit price would zig zag in value but periodically lock-in and could not fall below the protected price.

Another quirk is that the unit price could and would fall below the lock-in price and the protection, whilst still there and correct, it would not be taken into account in the statements. So, for example, the recent falls in the markets would see statements issued over Oct-Dec have a lower value as the lock-in would not be included in the projection, even though it did still exist. I haven't seen a MetLife statement for a very very long time. So, I don't know if they have altered that issue.

The lock-in worked by having the unit price locked in. Not the number of units.
So, lets take a scenario of where you had 10,000 units at 100p at the start and the first lock-in occurred at 120p a unit By the time it got to 120p a unit, a number of units were sold to pay charges and your new protected level would not be 10,000 x 120p but say 9,970 x 120p.

If the 120p lock-in price fell to say 115p, you would still be protected to 120p on the number of units you had but the projections would be from the current value and not the protected value.

Again, just a reminder that they had different versions.

“...in addition if investment returns are good, your guaranteed income could rise. With the Secure income option you have the safety net of knowing even if your fund value falls to zero your income will not fall”

I am wondering what you actually had that option though. i.e. it was an option on the plan but not an option that was an option that was in force that particular time. As I said, it was usually either the lock-in or the so-called-guarantee for life

Ps the adviser agrees with all i have said.

This is the adviser that potentially missold you the product and has admitted to you that they didn't know how it worked. In 2019, network advisers tend to be at the lower end in respect of quality and knowledge (big generalisation with exceptions but it is broadly the case).

When i complain to the fcsc will they write to him for his view bearing in mind he is no longer at the same company as such ( difft network)

The FSCS will quite possibly come after him for the money. Did his network actually go under or did it just close for investment business?

Which investment fund were you in? It would help identify which protection level you had.

Kayserrant

Its called the Metlife managed wealth portfolio ..min - guarantee option-secure inc option
75pc of my money went in there.


25pc went into the same thing ... but no guarantee inc option (which i thought meant lump sum)

Believe it or not i like to think i am not totally stupid, i worked for an insurance co for years (20 years ago) and i briefly did about 8 active months as an ifa after that (albeit network as you say, so total rookie...also regrettably xferred my final salary scheme out while i was there.....no , i take it back....i am stupid).