Legal & General Blocking Pension Transfers

shinytop

paulbyrne60 said:

Prism said:

Why do people invest in something they don't understand and then blame someone else when it does exactly what its supposed to do.

Mate, that's not the point, the property fund is less than 5% of my portfolio yet L&G are blocking the whole portfolio, so no partial xfers allowed, which is stopping my plans to draw-down an income

Yup I think it's kind of OK to not understand 5% of your investments (I've certainly been in that situation) but I'd be upset if this stopped me accessing the other 95%.  

dunstonh

Duns you are missing the point, Mate,  the property fund is less than 5% of my portfolio yet L&G are blocking the whole portfolio, so no partial xfers allowed, which is stopping my plans to draw-down an income, no draw-down no income, surely as a so called FA you can see the problem here, Yes.

I'm not an FA.  I am an IFA.

You have a product (probably an older one seeing as its L&G) and it doesn't offer the functionality of a modern plan.    Why do you think it should?   Do you moan that old black & white TVs don't display ultra high definition?  Or iPhone 1s don't do what the latest Iphone does?

It is normally recommended that you plan in advance of retirement. i.e. put your pension in the position you want it in around 6-12 months prior to drawing on it and not leave it to last minute. 

I can understand your frustration certainly.  However, you cannot blame L&G.

AnotherJoe

Dunston, I do find it surprising that L&G dont allow partial transfers.

Is this common?

dunstonh

AnotherJoe said:

Dunston, I do find it surprising that L&G dont allow partial transfers.

Is this common?

I dont have a great deal of experience  to draw on as its not a common request.   However, you do tend to find it is the older plans that are more restrictive compared to the modern plans.  L&G never developed a "modern" plan apart from some movement in recent workplace pension versions.    It is only a more recent occurrence that people ask for partial transfers and mainly in workplace pensions.

Brynsam

shinytop said:

paulbyrne60 said:

Prism said:

Why do people invest in something they don't understand and then blame someone else when it does exactly what its supposed to do.

Mate, that's not the point, the property fund is less than 5% of my portfolio yet L&G are blocking the whole portfolio, so no partial xfers allowed, which is stopping my plans to draw-down an income

Yup I think it's kind of OK to not understand 5% of your investments (I've certainly been in that situation) but I'd be upset if this stopped me accessing the other 95%.  

Which is why it probably isn't kind of OK not to understand at least the basic features of 100% of your investments - that small % can have a big impact.

[Deleted User]

So, you have a bunch of funds in a single account. One of these funds is a property fund. An L&G won’t allow ANY way for you to access any of your money? 

That’s outrage as far as I am concerned, regardless of the small print. I would first reas all the small print, to make sure it says what they claim. Then I would formally complain and outline your situation in more detail, in writing.  If the answer is “no” then newspapers ought to be interested. 

This guy claims you should be able to access the rest of your portfolio https://www.matthewdouglas.co.uk/legal-general-uk-property-fund-trading-suspension/

Also, I don’t buy “property can’t be valued” line of argument. REITS are trading. Down but liquid. British houses are being sold and bought.  Me thinks they are scared there’ll be a run on it. 

Malthusian

paulbyrne60 said:

AnotherJoe said:

How about, sell all the other funds and then do a partial transfer of what is now just the cash element ?

Who are you using to do the transfer?

L&g wont allow partial transfers 

Assuming your pension is not already in drawdown, make a formal complaint to Legal & General. This is an "unreasonable post-sale barrier to transferring out". There is absolutely nothing stopping them from doing a partial transfer. If L&G fail to offer redress within eight weeks, complain to the Financial Ombudsman.

If your pension is already in drawdown then L&G are right and you are stuck (HMRC rules). Unless your pension is invested in unit trusts and OEICs. In this case you should be able to transfer in-specie to another provider. However, if you have an insured pension in drawdown invested in the L&G Property pension fund, then you are stuck.

Malthusian

Deleted_User said:

Also, I don’t buy “property can’t be valued” line of argument. REITS are trading. Down but liquid. British houses are being sold and bought.  Me thinks they are scared there’ll be a run on it. 

It's now an FCA requirement that if there is a "material uncertainty" over 20% or more of an open-ended fund's assets, the fund has to be suspended.

People trading shares on open markets are free to offer whatever price they like for closed-ended property funds.  If they offer too much and they lose money when the fund swings to its true value, tough luck, that's the market. Professional valuers are not free to put whatever value they like on a fund's assets.

An open-ended fund manager has to honour redemption requests at an accurate NAV. Nobody is required to trade closed-ended funds at an accurate valuation of its NAV. That is why they have a discount/premium.

Malthusian

Brynsam said:

Which is why it probably isn't kind of OK not to understand at least the basic features of 100% of your investments - that small % can have a big impact.

Assuming the OP's pension is not an insured pension in drawdown, he was being entirely reasonable in assuming that having 5% of his pension invested in property would not stop him accessing 100% of his money. Whether he looked into the ins and outs of how commercial property fund suspensions work is neither here nor there. L&G are perfectly capable of allowing him to access the other 95% of his fund, and their refusal to do so is an unreasonable post-sale barrier to transfer.

Consumers are allowed to assume that companies will not act unreasonably and breach regulatory principles. Otherwise almost nobody would take out financial products.

This is a "why didn't you read the small print" argument. Reading the small print is usually a waste of time. If a company does something unreasonable and their only justification is "the small print says wah wah", a court will strike it out. In this case hopefully the FOS will do that job.

If there was a prominent warning at the point of sale (e.g. the Key Features document) that L&G would not allow partial transfers, they might have a defence. I suspect it didn't cross their minds.

[Deleted User]

Malthusian said:

Deleted_User said:

Also, I don’t buy “property can’t be valued” line of argument. REITS are trading. Down but liquid. British houses are being sold and bought.  Me thinks they are scared there’ll be a run on it. 

It's now an FCA requirement that if there is a "material uncertainty" over 20% or more of an open-ended fund's assets, the fund has to be suspended.

People trading shares on open markets are free to offer whatever price they like for closed-ended property funds.  If they offer too much and they lose money when the fund swings to its true value, tough luck, that's the market. Professional valuers are not free to put whatever value they like on a fund's assets.

An open-ended fund manager has to honour redemption requests at an accurate NAV. Nobody is required to trade closed-ended funds at an accurate valuation of its NAV. That is why they have a discount/premium.

I understand closed vs open. What I don’t understand is how they define “20% uncertainty”. Who decides it? Why? 

If property is bought and sold, if properties are rented out and make money then there is a price. Future price is of course uncertain but today property can be and is valued. The price of REITS is one of the mechanisms for price discovery.