Scottish widows pension ; property fund trading suspended

garmeg

dunstonh said:

Apodemus said:

Mistermeaner said:

This also throws another spanner in my plans to transfer away from scottish widows (albeit it is only 5% of my holdings)

I'm in the same boat and really want to transfer out of my SW pension.  They tell me that the scheme does not permit a partial transfer, so the frozen property fund ties the whole lot up.  Nearly six months on from freezing the property fund, would it not seem reasonable in the circumstances for them to waive the partial transfer rule?

It is not a rule really.  It is a software capability issue.    They have to weigh up the choice of paying what could bemillions of pounds to recode a pension contract that is no longer available for a transaction that is rarely required.

When I did a partial transfer from SW , they called me and asked which funds I wanted to use for the transfer.
Could be it is different from your experience as mine is an ex Zurich workplace pension , which SW took over about three years ago but still they  operate it separately , different staff/office etc .

The product version is on different software. 

They could easily manually surrender the other unit holdings and pay the partial transfer, followed by a unit adjustment in the policy database to reflect said partial transfer. Would be TCF but they obviously cannot be bothered.

Poliies rarely stay on the systems they were originally held on when those policies were sold. They would have been migrated, possibly more than once, to a more modern system and possibly flagged for manual intervention if the policy count wasnt significant enough to go to the effort to code in all the policy T's and C's eg surrender / transfer calculations.

At the end of the day, it just seems like they cannot be bothered to accommodate what appears to be a straightforward and not unreasonable request.

[Deleted User]

I don’t see the freezing of property funds as reasonable at this point. People still can buy and sell houses and offices. This is an unfortunate example of the industry screwing clients. Might not be Scottish Widow’s fault but someone is using Covid as an excuse. 

Prism

Deleted_User said:

I don’t see the freezing of property funds as reasonable at this point. People still can buy and sell houses and offices. This is an unfortunate example of the industry screwing clients. Might not be Scottish Widow’s fault but someone is using Covid as an excuse. 

The frozen ones seem typically to have a high exposure to retail. The rents haven't been paid and its still difficult to know how many will go bust. The valuations are partly based on future rents from business tenants which is why its up in the air.

The problem seems to be that the older type of pension funds don't all allow access to investment trusts, and in this case REITs. Therefore people use open ended funds for property exposure.

dunstonh

Apodemus said:

Thanks, Dunstonh, that's interesting.  Does the system not leave scope for manual handling of exceptions?  

if the software cannot physically do partial transfers then there are no exceptions.  Some of the providers have found ways to get their software changed cheaply and quickly but others can be on systems that are no longer developed and are effectively cast in stone in their current position unless a regulatory or legal reason forces them to change.

Property funds are starting to open up again.  Two did during the week and a number of others are expecting to do so at their monthly review point.  Only the ones with poor liquidity are likely to remain shut.

AnotherJoe

I don't see how it's supportable that their software issue means they can force clients to be stuck in their pensions indefinitely. And they can always come up with a manual fix to do a partial removal, what do they do about divorcing couple for example, say they can't split it because their pension software doesn't allow it? Or those who woudl like to take an annuity right now? "Say "you'll have to wait until times change?" 

A manual adjustment will always be doable. They clearly just don't want to as it's inconvenient for them. 

OP I would start with making an official complaint. 

Apodemus

Dunstonh,  its good to hear that some property funds are re-opening.  Fingers crossed that SW is considering theirs.

AnotherJoe, I did ask SW about reviewing my case and was told that the only route was a formal complaint, which is now in the system.  I'm not entirely certain that their call-handler understood the basis of my complaint and he mentioned other issues that I have no complaint about. I got no copy of whatever he submitted and it took a week for SW to send an acknowledgement, (which essentially said "Don't call us..."), so I don't have a lot of confidence in them taking it seriously.  I guess, also that they will be quite happy to kick the can down the road in the hope that the fund will re-open before they have to do anything.

dunstonh

I don't see how it's supportable that their software issue means they can force clients to be stuck in their pensions indefinitely.

That is a bit like asking why a black & white TV from the past cannot display ultra high definition.   They were not built to.     These older pensions are the same.  They were not built to.

Many years ago, we found an inconsistency in a product that required something like 5 words to be changed.    We notified the provider and they acknowledged it but said it would cost over £250,000 to make that change and that they did not feel the cost was worth it as the plan was in decline and they expected it to be replaced in the future.

Just for reference, I am not trying to be an apologist for this.   I am just explaining why this is the case.

And they can always come up with a manual fix to do a partial removal, what do they do about divorcing couple for example, say they can't split it because their pension software doesn't allow it? Or those who woudl like to take an annuity right now? "Say "you'll have to wait until times change?" A manual adjustment will always be doable. They clearly just don't want to as it's inconvenient for them.

That is certainly a fair comment.    And some providers are doing that.