Equitable Life with profits pension / takeover.

tomargyll

Well thats all my paperwork split into what has to be read before 30/10/2019 and what has to be read post 30/10/2019 and the result of the vote. There was so much duplication of paperwork my poor shredder has been busy all day tyding up everything. Still not sure how I am going to vote though. As someone in his early 60's a short term view is going to be more important than lomg term. My biggest concern is Three people, One is a terrorist supporting politician, The Second is a Marxist politician who wants to take money ofF people who have worked hard all ther life and give it to lazy sods who havn't done a days work in their lives. The Third is a Fund Manager who recently has !!!!ed Up !! could that happen with Utmost ?? Must go now, time to close up for the night.

Scot_39

Found a slighly bettter definition of the GIRs initial base - 2009 annual report

"For the majorityof RSP policies issued before 1 July 1996, each premium (after charges) secures a Guaranteed Investment Return(“GIR”), typically at the rate of 3.5% p.a."

I know there used to be an initital investment charge - but not sure the size - but essentially since run off - and we stopped contributions - simply 3.5% of last years value applies - as described above.
Still unsure if the GAR corrections - the 16% and 10 % cuts to policy values - see(* in part 1) were also applied to the GIR level - but could also help explain why the GIRs are in play in the projections for some members it they weren't.

Share of Capital Reserve
I really don't know enough to help here.
Effectively the Utmost scheme offers nearly 73% of total policy values in uplifts. So by comparison - yes the 35% seems poor - especially if we are sitting on a supposed high asset value.
But as long as the ELWP scheme stay open and in with profits run off - it is pointless to speculate - you can only leave with the current 35% or your GIR (if it is higher AND if you leave when it applies - e.g. over 55 I believe etc).
EL set the 35% capital distribution - and in fact the 2% bonus return rate to some extent - based on the need to protect the scheme - and it should really be set on the cautious side.
The 35% is not guaranteed - but it is forecast to be flat for five years - rise to say 40 after five years almost as a step - then progressively to 55 in ten years - from graph in the 2018 report etc. But it could still fall - it was at risk of doing so - back in 2016 - and the Oct supplementary report casts doubt on it's short term growth.
You could argue that EL are reducing the reserves slowly - to benefit those currently leaving without a GIR option / higher GIR - by keeping the 2% bonus rates on our policy values - as this is higher than the fund returns - and has no offset for AMC - we get full 2% declared.

On AMC levels - charge of 1.0 for expenses + 0.5% for guarantees - anyone know how this latter part works ?

Anyway reading the annual reports - after a quick scan to find the part 1 returns figues - kind of "did my head in". In the end - I came away confused by some of the figures - but generally with some more re-inforcement for my concerns over the potential long term downside risks to the scheme in it's current form - e.g. surplus cash measure down by 25% in last two years and GIR capital risk compounded by deferred retirement were biggies.
I wish to be honest I had read bits of them sooner and understood them more. In the event of Utmost proposal rejection - I will need to be a less lazy investor - and keep my eyes on them.

tomargyll

I read your posts Scot_39 and although I am extremely wary of the Proposal I was interested in your points below.


2) The uplift is "guaranteed" money now - the GIRs, forecasts etc - are uncertain promises based on assumptions. 2.1) Taking the large uplift now on my fund - in 6 figures after uplift - is a very large sum of cash so gives me options including bringing retirement or more likely going part time by a few years
2.2) the uplift should cover a reasonable investment risk profile - to seek real growth elsewhere.
I am yet to decide if Utmost is a hop or my choice for investment - but the EL section scheme looks credible.


In truth your points above were very similar to my own thought process. I have less than 5 years before getting the state pension, so if the Proposal goes through then my uplift which is larger than the average would allow my too to cut my business back and reduce my hours. Not as fit to work these long hours as I use to be. So finally depsite my reservations I voted for the Proposal, now we shall just wait and see what way it goes.

Scot_39

tomargyll wrote: »

I read your posts Scot_39 and although I am extremely wary of the Proposal I was interested in your points below.

Hope I didn't push you over the edge - it was not my intention.


To be fair - others have made the same observation - allong the lines of taking cash and voting for - as the difference - even if lock into a zero return cash fund for a few years - would be better than waiting for GIRs



I think your 5 year window decision was in the more difficult zone - and hope whatever happens it works out well.

tomargyll

Hope I didn't push you over the edge - it was not my intention.

No not at all Scot_39. All you did was to articulate my thought process, thankyou.

In reality I am not going wait until I received the state pension before accessing my private pension. Since this proposal first came forward I have worked on and formulated a plan to be implemented in 2020.

If the proposal is successful then the uplift ( with out going into details is substantial ) will be an extra bonus on my plans

Time I took it a bit easier, time too cash in my chips as they say and enjoy what is left of my life before it is too late. Life is far too short.

Teutanic

Dear All,

From the specific viewpoint of a German WP-policyholder, the proposed approach of EL leaves unfortunately some key issues not convincingly explained.

• The personalised letter states that the policy will be continued after January in the framework of a with-profits fund (sic) of the new EL as subsidiary of Utmost with no change in the conditions and under safeguarding of the guaranteed value. The letter warns additionally, however, that the value of the policy will most likely vary in the future. Somehow a “guaranteed with-profits” policy backed up by essentially unit-linked assets seems in my eyes a contradiction in terms.

• A contractual term in my actual policy stipulates that cashing-in can only happen after a notice period of three years. Therefore withdrawing from EL, Utmost or whatever after January 2020 can only happen in 2023 at the earliest. In essence the whole contractual basis for starting the policy in the first place (=long-term planning stability) is toppled to the detriment of the policyholder by the proposed change: EL and Utmost retain unilaterally full flexibility to do with the underlying assets as they please, whereas the policyholder is still kept “captive” for years, exposed to the risks emanating out of these management actions but not enjoying any policy value protection.
• Nonetheless the above still constitutes the “best case scenario”: in the amended Articles of Association, Chapter II-3, the future EL fully indemnifies Utmost for past, present and future claims against EL. Solely the capital assets of EL will have to “cough up” for all such compensations. And what are these assets left to EL after 1.1.20? The capital backing-up the captive German (Irish and maybe other niche markets) policyholders!

Since the 15th of September I have not been able to receive any response from EL on what provisions will be in place after the transfer to “ring-fence” my policy against the above risks. Even my complaint to the Court does not seem to bother EL either, and two days before the deadline there is still a deafening silence from their part to address these existential risks to my policy.

Though this less than satisfactory state of affairs may arguably affect only a small percentage of the current WP assets of EL, it still speaks loudly in my view on what lays ahead after January if the transfer were to proceed.

In my view the affected groups of policyholders, at the very least, should be very critical to what is planned upon them through this transfer. And the others, who hope to cash-in and go in January, they shall better ask themselves who guarantees that, at the time they will be allowed by Utmost to cash-in their policy, its value will still match that declared on the 1.1.20.

Keep well and besides the voting don’t forget also the route of a formal complaint.

Notnobody

I have left it too late to vote, but wasn't sure which way. I'm well into retirement and live in France (small 2 bed house, not worth much). I left my EL pot because I couldn't transfer it to another small pension pot and the pension would be tiny. I still don't know what to do with it as I can't open a UK savings account and French ones have low interest rates (also the Brexit effect means fewer euros for my £). How will we know when/whether the bonus has been added, if the vote is for Utmost? Would it be better to take the money asap?

Joey_Soap

I have a fairly small AVC pot that is with EL attached to a deferred final salary pension from a previous employer. I have heard nothing from EL, from Utmost or from the pension trustees (Mercer). What will have happened to the AVC pot that is/was invested in the EL with profits fund? If it is of consequence, I am due to start taking the final salary pension in two and a half years time. I inquired a couple if years back about transferring the AVC to a SIPP. They told me it was attached to the final salary pension plan and even though it was AVCs it couldn't be separated for the purpose of transferring it. I hope I will be able to draw it as a lump sum at 65 as it's likely to be less than GBP 10k even if it gets an uplift from EL/Utmost. Thanks.

pafpcg

Notnobody wrote: »

I have left it too late to vote, but wasn't sure which way.

If you have internet access, you can still place your votes upto 10:00 on Wed 30th Oct - you just need to follow the instructions on your printed voting form (which should have the codes you'll need).

How will we know when/whether the bonus has been added, if the vote is for Utmost?

If the Proposal is agreed, then officially you'll be entitled to the primary uplift on 1st January, but the latest information is that Utmost won't be able to add the uplift to policyholders' funds for two weeks, so second-half of January is probably the earliest we will be able to confirm the value of our "new" funds.

Would it be better to take the money asap?

Some of us will "take the money and run"; others won't! It depends on individual circumstances. Equitable are subsidising the cost of professional advice (from Hargreaves Lansdown) for individual policyholders. No doubt there'll be further debate in this forum on the options available once we know next month whether or not the transfer will proceed.

pafpcg

Joey_Soap wrote: »

I have a fairly small AVC pot that is with EL attached to a deferred final salary pension from a previous employer. I have heard nothing from EL, from Utmost or from the pension trustees (Mercer). What will have happened to the AVC pot that is/was invested in the EL with profits fund? If it is of consequence, I am due to start taking the final salary pension in two and a half years time. I inquired a couple if years back about transferring the AVC to a SIPP. They told me it was attached to the final salary pension plan and even though it was AVCs it couldn't be separated for the purpose of transferring it. I hope I will be able to draw it as a lump sum at 65 as it's likely to be less than GBP 10k even if it gets an uplift from EL/Utmost. Thanks.

If you have heard nothing from EquitableLife, then I'd assume that you are a member of a Group Scheme and you need to get answers from the trustees of your scheme. It sounds like your trustees are behaving like the NHS group trustees in not involving individual members in the voting process - see the posts earlier in this thread.