Help understanding old pension plan

Consumer3

I have a family member who is paying into a personal pension plan since 1994. Back then it was called the Pearl Prosperity Pension Plan.
It’s now with Phoenix Life, and called Prosperity Pension Plan unit-linked. The pot is around £90k. 

The fund it’s in is the Phoenix Pearl Pens Mixed. Mostly in ‘accumulation units’ and then ‘capital units’ which I can see from a statement is the current year’s contributions. There is also an early claim charge of just over £2k which ends on their noted retirement date in 2038. It doesn’t appear to have any protected benefits.

After sifting through nearly 30 years of paperwork and getting it in order, I found there was only one page that actually listed the annual charges in figures rather than percentages, £1,316 in 2022. The accumulation units are charged at 1% and the capital units at 4%, there is also an admin fee of around £90. 

So my questions:
Should they stop paying into this plan and think about transferring or starting a new modern plan. 4% on a years contributions seems excessive.
I don’t know anything about this sort of pension or the fund itself and would be grateful for some insight on it.
I guess that early exit fee has to be paid even if it’s transferred to another plan. 

To try and understand the options with it, we managed to get an online login to Phoenix Life to view the plan but there’s not a lot of detail on there. We also called their customer services in the hope of drilling down the options, but the advisor must have literally been reading off the statement we already have and was getting things mixed up, saying things like the 4% charge was on the accumulation units. It didn’t give me much faith and stopped me asking further questions! 

dunstonh

Should they stop paying into this plan and think about transferring or starting a new modern plan. 4% on a years contributions seems excessive.

The Pearl prosperity plan (also known as the V1) went obsolete around 1997, in terms of charges.  Pearl themselves offered a V2 (and later V3 and V4).  All of which were cheaper.

I have transferred more pearl plans then any other pension and apart from their S226 RACs, never found one cheaper than modern options.

xylophone

Is your relative currently a member of a workplace scheme?

Is a transfer in possible and if so, would he wish to explore the possibility of a transfer in?

Otherwise, he has a wide choice of pension providers who would accept a transfer in.



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Consumer3

@xylophone No he is self employed so no current workplace pension, although he does have an old workplace pension from 2013 with Scottish Widows. It’s a Lifestyle one where the funds are starting to move this year, currently in Scottish Widows Pension Portfolio Two (series 2). It only has a tiny amount in it at the moment. I guess he will still have to pay the exit fee on the Pearl one to transfer into the Scottish Widows (or any other plan).

@dunstonh Thanks for the info will definitely look to move it, it appears he was contracted out for part of it and also has another plan number with Pearl (same pension fund details) where he’d put a lump sum in and Pearl said he couldn’t contribute to that one and that it had to be separate from the one he is contributing to. No 4% charge on that, just the 1% on the whole fund. 

He unfortunately didn’t take advantage of other workplace pensions but does have full state pension. 

Consumer3

Just to add, I quizzed him about how he came to take out this pension and why he didn’t take advantage of all the other (generous) workplace pensions he could have had.

As a teenager he was actually sold the plan by a ‘Pearl Man’ who had come to the house for his Mum and Dad to sell Life Insurance or something similar. He had just started working for the Co-op but the Pearl man told him not to bother taking out the Co-op pension as the Pearl one would be better, then sold him the Pearl pension plan.
He only worked for the Co-op for a couple of years after that but he realises now that as he thought he had a ‘better’ Pearl pension that he would pay into for many years, he didn’t need to bother with any of the workplace ones. Other than the Scottish Windows one which was part of the auto enrolment drive.

Marcon

Consumer3 said:

I have a family member who is paying into a personal pension plan since 1994. Back then it was called the Pearl Prosperity Pension Plan.
It’s now with Phoenix Life, and called Prosperity Pension Plan unit-linked. The pot is around £90k. 

The fund it’s in is the Phoenix Pearl Pens Mixed. Mostly in ‘accumulation units’ and then ‘capital units’ which I can see from a statement is the current year’s contributions. There is also an early claim charge of just over £2k which ends on their noted retirement date in 2038. It doesn’t appear to have any protected benefits.

After sifting through nearly 30 years of paperwork and getting it in order, I found there was only one page that actually listed the annual charges in figures rather than percentages, £1,316 in 2022. The accumulation units are charged at 1% and the capital units at 4%, there is also an admin fee of around £90. 

So my questions:
Should they stop paying into this plan and think about transferring or starting a new modern plan. 4% on a years contributions seems excessive.
I don’t know anything about this sort of pension or the fund itself and would be grateful for some insight on it.
I guess that early exit fee has to be paid even if it’s transferred to another plan. 

There's a good explanation here of the various types of charges: https://www.moneyhelper.org.uk/en/pensions-and-retirement/pensions-basics/pension-scheme-charges

If your relative's pot is around £90K, then stopping payments into this plan without starting another one would only be a good idea if they have plenty of other savings on which to live in retirement.

Consumer3 said:

To try and understand the options with it, we managed to get an online login to Phoenix Life to view the plan but there’s not a lot of detail on there. We also called their customer services in the hope of drilling down the options, but the advisor must have literally been reading off the statement we already have and was getting things mixed up, saying things like the 4% charge was on the accumulation units. It didn’t give me much faith and stopped me asking further questions! 

Can quite understand your reaction, but it is important to pursue your enquiries (do so in writing if necessary) to be quite sure of the options open to your relative and the respective costs and charges - especially the £2K 'early claim charge' and how that might apply if he transfers the cash to another plan.

Consumer3

@Marcon thanks for the link, I thought I’d read everything on the moneyhelper site but must have missed that page on charges, very helpful. 

We did ask Phoenix to send out to us all the info on the plan as well. He does have the original paperwork, a 12 page book in tiny writing with lots of tables and assumptions. 

He definitely won’t stop paying into one, even if it means contributing to the Scottish Widows one for now. 

xylophone

He unfortunately didn’t take advantage of other workplace pensions but does have full state pension. 

What exactly does your relative's state pension forecast show?

https://www.gov.uk/check-state-pension

Is a Contracted Out Pension Equivalent (COPE) shown?

Thanks for the info will definitely look to move it, it appears he was contracted out for part of it and also has another plan number with Pearl (same pension fund details) where he’d put a lump sum in and Pearl said he couldn’t contribute to that one and that it had to be separate from the one he is contributing to. No 4% charge on that, just the 1% on the whole fund. 

Could you give more details of these two arrangements?

Are you sure that there are no "safeguarded benefits"?

xylophone

Would your relative benefit from financial advice from an Independent Financial Adviser?

If so, he could try

https://adviserbook.co.uk/

He would tick "confirmed independent" and other specialisms required when the menu comes up.

dunstonh

He definitely won’t stop paying into one, even if it means contributing to the Scottish Widows one for now.

If may be better to stop if it is like all the other ones I have seen.  Obviously, there needs to be individual research but redirecting the premiums to a modern cheaper plan could well be the better option.  Transfer may be too.

Consumer3

@xylophone

Will have to come back on the State Pension after he's logged back into it.

Re the Pearl plans, after more reading I can see the following:

Pot A, start date Jan 1994 called Pearl Pensions Mixed Fund, this is the plan he is still contributing to. The contribution, monthly policy fee and capital unit obligation increasing each year in line with NAE (Index of National Earnings).

Pot B, start date April 1993, then missing paperwork until a 1996 statement calling it Prosperity Pension Plan (Protected Rights). 
Then a letter from 2003 saying 'contracted out payments have not been received from the National Contributions Office'.
This was the plan he believed he started with a lump sum, however as the paperwork is missing I can't tell. It looks as if this one only had the contributions that would have gone into SERPS. 
In the current statements from Phoenix it's called Prosperity Pension Plan Unit-Linked, which is made up of Former Protected Rights (the whole of this pot). 

It looks like both plans may have been started at the same time as there is only 6 digits difference in plan numbering. With Pot B being 'backdated' to take advantage of that tax year.

Thanks