Charges on long forgotten pension?

ecoMike

Hi all
I received a letter around a year ago - 2018 - from Zurich saying they were trying to track me so I nervously filled out their form and posted it back, not remembering any dealings I ever had with them.
I've been self employed for most of my life pretty much living hand to mouth with no plans for the future and largely unable to afford any kind of pension. These days my life is much better thankfully.
Two weeks ago I received a statement from Zurich saying I had 800 odd pounds in a pension started in 1990 and due to mature on my 60th birthday in 3 years time, but nothing has been put into it for at least 25 years.
It also said amongst the half dozen pages that it would potentially be worth 500 odd pounds when it matures in 3 years time!! £300 LESS than it is today, presumably down to their charges, or the negative effects of Brexit or whatever. Needless to say, I did the decent thing and phoned them imediately to withdraw my money.
I now have to wait 6 days for the forms and then 10 days for the money withdrawal process.
I then got to thinking about how much I would lose per year over the next 3 years and how much I may have lost over the previous 25 years!!
I don't recall ever having an employment pension back then. I have now.
I bought a house with a mortgage around 1989 which I believe was Alliance and Leicester tied to an Allied Dunbar Pension which I think was supposed to pay it off after 25 years. Hard to remember exactly. The house and mortgage was 40k and then I took on a second mortgage of 20k if those figures help anybody's maths.
I had the mortgage for 5 years until 1994 and then got stuck in an impossible financial rut and went bankrupt.
I handed all of my financial paperwork to the official receiver and got the hell out of Dodge and never looked back. The last thing I expected was any kind of pension sitting dormant somewhere.
So my question is would my pension have had more money in it and diminished year by year, and if so would it be possible for me to get any of it back as potentially Allied Dunbar/Zurich should have made more effort to find me. I've hardly been hiding, and they made some effort a year ago but didn't follow it up for a year. There's £100 they cost me already.
Funny how a debt collector will find somebody in minutes but when they're holding my money and charging me for it each year it's not really in their interest to find me. That can't be right can it?

OldMusicGuy

AD/Zurich have done nothing wrong. They are contacting you probably because the pension is approaching the retirement date you originally specified. You could have taken this pension any time after you reached 55, but that's your choice, not theirs.

Unless this is some really old kind of pension product, they don't "mature". Also, you need to be a bit clearer about what this pension is "worth". The figure they give for the annual pension when you reach pension age is not what the pension is "worth". It is usually a guesstimate on their part about what you might get each year if you did something like buy an annuity (which you probably wouldn't do). The paperwork should quote somewhere a fund value, which is the total amount in your pension pot.

So could you clarify - is the £500 what you might get each year when you reach retirement age, or is it the total fund value?

dunstonh

It also said amongst the half dozen pages that it would potentially be worth 500 odd pounds when it matures in 3 years time!!

Not sure why you are incredulous. That is a potential scenario and the low projection rate often shows a negative example. Along with one or two others which show virtually no growth and relatively low growth.

it could be that there is an annual fixed amount policy charge that is doing the damage. Many old AD plans have no AMC once paid up by do charge an annual fixed product charge whether you have £100 or £100,000 in it.

presumably down to their charges, or the negative effects of Brexit or whatever.

No. Nothing to do with either.

Projections use synthetic figures and are just assumptions. They assume a rate for inflation to display it in today's terms. They assume a rate of growth or loss but it is not an actual rate. Just hypothetical.

I bought a house with a mortgage around 1989 which I believe was Alliance and Leicester tied to an Allied Dunbar Pension which I think was supposed to pay it off after 25 years.

Allied Dunbar was bought by Zurich. Given the small value, it looks like you stopped paying into the pension very quickly after starting it.

I had the mortgage for 5 years until 1994 and then got stuck in an impossible financial rut and went bankrupt.

That all ties in with the amount in the pension then.

So my question is would my pension have had more money in it and diminished year by year, and if so would it be possible for me to get any of it back as potentially Allied Dunbar/Zurich should have made more effort to find me.

no and no.

Your failure to notify Zurich of your change of address is your fault and not theirs. They are required to make attempts to locate you as you get closer to the retirement age range. Not earlier.

You agreed the contract with Allied Dunbar and Zurich have honoured the contract terms agreed.

There's £100 they cost me already.

Why £100? And its you that has caused this.

That can't be right can it?

You have jumped to a number of assumptions and gone finger wagging but there is no wrongdoing here.

ecoMike

Thank you for your very quick responses. The figures were slightly vague as I didnt have the statement with me when I posted the thread but I will check and post more accurately later.
The £800 odd pounds is a welcome windfall but I would be foolish not to check that figure is correct before signing for it.
My wife accepted a pension pot that paid her £17 per week a few years ago less tax, and the hassle that tiny amount kept causing us in different ways was ridiculous.
I hadn't noticed if it said it would pay £500 annually or £500 total value, so that will be the first thing I check.

OldMusicGuy

My wife had a long-forgotten AD pension and was contacted by Zurich. When we got an up to date plan statement, there were three numbers quoted:

- A current value of the fund
- An estimate of what the plan would be worth at projected retirement date after allowing for inflation
- An estimated yearly income from the pension

The number that matters is the first one, the current fund value, because that's what you get when you take the cash out or transfer it to another pension. The others can be ignored.

lisyloo

Some also give transfer values that are lower after charges, so you really need to clarify what the figures are.

ecoMike

I now have the statement to hand...
Plan start date 1 May 1990
Planned retirement date and age 23/03/3032. Age 60 years
Plan value £853.39
Transfer value £855.85
"Allowing for inflation we estimate that by your planned retirement date your plan could be worth the equivalent of £544 in today's prices."
"This could give you a guaranteed income for life (annuity) equivalent to less than £25 a year in today's prices."
Annual management charge 0.75%
Capital unit charge 3.50%
Policy charge currently £7.18 per month

The statement is titled ZURICH PERSONAL PENSION PLAN and appears to run from May 1990 until March 2022, 32 years and I don't remember starting this policy and I went bankrupt in 1994 and assumed all of my financial commitments ended at that point and I started new ones that I've managed perfectly ever since.
Until 1994 I had an Allied Dunbar endowment mortgage which would have lasted for 25 years from 1989 so I don't think this is the endowment mortgage.
Zurich have confirmed that this pension plan started life as an Allied Dunbar plan but have no more info than that. And I have always been self employed so it's doubtful that it's any kind of employment related pension plan.
There is a possibility that my late mother could have initiated tgis plan for me in my name, but she died 8 years ago so I can't ask her.

From the figures on the statement there has been a monthly charge every month for the past 29 years.
I paid into the plan presumably for the first 4 years until I went bankrupt and assumed the plan to be dead and buried.
Therefore I am assuming that whatever I had paid in in those for years has been substantially reduced by the charges over the next 25 years?
I responded to Zurichs attempt to trace me almost exactly 1 year before I received my recent 1st yearly statement.
So how come the 12 month delay? In those 12 months Zurich have charged my pension plan 12 monthly charges of around £7 totalling £84.
They made some effort to find me but not until 24 years had passed potentially earning themselves hundreds of pounds of my money.
So, is it correct and indeed legal and is there a body that strives to ensure that businesses such as Zurich shouldn't be able to operate in this way?
I should probably mention that since my bankrupt all those years ago I became much more cautious with money and did rather well for myself. My frustration is not about the fairly small amount of money, but more about what's ethically right and wrong and making sure I get correctly what's due to me as I'm certain Martin Lewis would.
My greater knowledge would be in employment law and I've had frequent battles on behalf of the little man against the big companies who ride roughshod over the law. The law protects the little man but too often it takes a braver man to research and fight for what's right while many others tell me that I have no chance.
There is nearly always a little know rule to protect the little man.
When somebody says heres a free 800 quid, I'm not going to grab it and run without asking questions.

Lokolo

So you didn't look after your own financial matters and are now blaming the provider because they have high charges?

It is YOUR pension and therefore YOUR responsibility.

Are the charges high? For your amount in pension yes. I am currently charged £15 a month for my pension.

lisyloo

It’s not up to them to find you, it’s up to you to advise companies when you move address.
As for 12 months, did you not chase, phone, email.
I have a list of things to chase (very easy with today’s tech).

dunstonh

"Allowing for inflation we estimate that by your planned retirement date your plan could be worth the equivalent of £544 in today's prices."

So, straight away you have an annual reduction of 2.5% for inflation on this synthetic calculation.

What rate of growth or loss did they use in the example?

Policy charge currently £7.18 per month

That is the one I referred to earlier about a standing charge that is the same whether you have £100 or £100,000 or £1m.

I paid into the plan presumably for the first 4 years until I went bankrupt and assumed the plan to be dead and buried.

That was an incorrect assumption to make. Pensions back then could not be accessed in the event of bankruptcy.

So how come the 12 month delay? In those 12 months Zurich have charged my pension plan 12 monthly charges of around £7 totalling £84.

Statements on legacy pensions are typically issued annually. Once they traced you, they updated their address.

. My frustration is not about the fairly small amount of money, but more about what's ethically right and wrong and making sure I get correctly what's due to me as I'm certain Martin Lewis would.

There are no ethics issues here. They paid a lot of money to a tracing company to find you. They found you and updated their records.

ecoMike

A bit harsh!! Remember to chase something you've no idea is there!!
And remember to keep them informed.

An hours research this morning reveals to me that lost and dormant pensions pots affect thousands of people and millions of pounds are being lost to them.
Also I have discovered that the Financial Conducts Authority have legislation type guidelines for businesses such as Zurich called CASS.
CASS 6.6 Records, accounts and reconcilliations:
6.6. Basically says the "firm" must keep it's clients records up to date, implying the onus is on the firm to ensure this,

It's a big handbook so will take some time for me to study.
It would be helpful to me and any other people in a similar predicament who stumble across this thread in search of similar answers, if comments about the onus being on me to keep an eye on my own pension pots could be backed up by some legislation.
Please please if it says somewhere in the law of the land or FCA guidelines that the onus is on the client to keep his details up to date, I need to see it.
Until then I'm heading down the line of the onus being on the Financial body to keep it's records up to date and I believe I've found the rule that covers that. I'll fine tune it hopefully.
Zurich eventually found and contacted me but it took 25 years.
Why did they contact me? Were they required to by law? If so that opens a huge can of worms. If not required by law, are they employing people to do jobs that they don't have to do? Who's paying for that then?