Retirement savings plan

amlale

I took out an RNPFN (now LV) retirement savings plan in 1998, £75 per month for 25 years.
The lowest prediction for maturity was £37749.65 at 3.5% pa
The latest prediction is £24192.67
Does this mean the money has been terribly invested?
And can I do anything about it?

rothers

I’m no expert but considering the capital that you put in was £22,500 it doesn’t seem a great investment. Putting it into a regular saving calculator and playing with the interest rate it appears that you have averages about 0.57%. 

Unfortunately I doubt there will be much that you can do about it. 

dunstonh

The lowest prediction for maturity was £37749.65 at 3.5% pa

They are not predictions.  They are projections.   Synthetic assumptions are used to give an indication of what you could get if those assumptions turned out to be correct.

The latest prediction is £24192.67

again, a projection. Not a prediction.   However, the assumptions used in 2021 are difefrent to those used in 1998.  One of the biggest will be a further deduction of 2% p.a. to give a todays spending power figure rather than a monetary figure.

Does this mean the money has been terribly invested?

No.   

And can I do anything about it?

Compare it to other modern options and see if alternatives are better.

amlale

Thank you, it was thought to be one of the best policies available at the time as a medic.
I am not sure who advised me but they were clearly wrong.....

Albermarle

amlale said:

Thank you, it was thought to be one of the best policies available at the time as a medic.
I am not sure who advised me but they were clearly wrong.....

Not necessarily . As Dunstonh has said.

In the past the projections used to be overoptimistic and not take account of future inflation .
Nowadays it has swung around the other way and they tend to be too cautious.

I’m no expert but considering the capital that you put in was £22,500 it doesn’t seem a great investment. Putting it into a regular saving calculator and playing with the interest rate it appears that you have averages about 0.57%. 

That will be in real terms , so in fact the investment has grown by 0.57% + inflation .

Not exactly a stellar performance, but not as bad as it might appear at first glance at the figures/

amlale

thank you dunstonh
ok projections were very poor, and i would not have invested in this product if I had had more a accurate projection
the policy has only 2.5 years to run, so is it a good idea to look for other products now and move the capital now or wait until it matures?

amlale

So do RNFPN/LV bear no responsibility for giving me inaccurate projections to encourage me to buy the product?
Can I claim I was mis sold this investment product?

dunstonh

it was thought to be one of the best policies available at the time as a medic.

In 1998, pensions were undergoing a major change and most plans were
1 - either stakeholder friendly (i.e. match the new charging structure coming in with stakeholder pensions in 2001)
2 - or old fashioned end of line plans trying to rake some money in before charges dropped.
3 - sophisticated/advanced pensions (like SIPPs).

They did have a low cost stakeholder friendly version for a few years which put it near the top on low charges comparison tables when compared to pre-stakeholder friendly pensions but it used pretty poor quality investments.  By the time everyone had come out with their stakeholder friendly pensions in 98/99, there was virtually no difference in the charges.   Stakeholder pensions were then introduced in 2001 which made these old plans no longer available for new business and by 2005, personal pensions were already coming in cheaper than stakeholder pension (or stakeholder friendly pensions).

I am not sure who advised me but they were clearly wrong.....

Probably no-one as these were usually bought directly through marketing.

eskbanker

amlale said:

So do RNFPN/LV bear no responsibility for giving me inaccurate projections to encourage me to buy the product?

Generally projections use standardised high/medium/low rates specified by the regulator, so they're not the responsibility of the provider. 

amlale said:

Can I claim I was mis sold this investment product?

On what basis would you contend you were missold?  Weaker performance than projected wouldn't be a valid reason, but shortfalls against anything promised might be a different story, or if there was any material misrepresentation by whoever sold it to you - do you have any evidence of anything like that?

EthicsGradient

Albermarle said:

amlale said:

Thank you, it was thought to be one of the best policies available at the time as a medic.
I am not sure who advised me but they were clearly wrong.....

Not necessarily . As Dunstonh has said.

In the past the projections used to be overoptimistic and not take account of future inflation .
Nowadays it has swung around the other way and they tend to be too cautious.

I’m no expert but considering the capital that you put in was £22,500 it doesn’t seem a great investment. Putting it into a regular saving calculator and playing with the interest rate it appears that you have averages about 0.57%. 

That will be in real terms , so in fact the investment has grown by 0.57% + inflation .

Not exactly a stellar performance, but not as bad as it might appear at first glance at the figures/

I take the OP to say that the current projection, for the product into which they have already paid £75/month for 22.5 years, is £24,192. The only period in which inflation might matter is the comparison of purchasing power in 2.5 years' time and now. So you might add 7% or similar for predicted inflation in the next 2 years, but that doesn't make much difference. The performance over the past 23 years has been about 0.57%/year on average in absolute terms - ie it hasn't even kept up with inflation.

That has been really terribly invested. But that doesn't mean there is any action that can be taken against them.

dunstonh

It is worth noting that the current value will just include the annual bonuses to date.  It will not include any final bonus accrued to date.    The transfer value will show the "real" value.