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Transfer of Royal London pension by insistent client route.

Hi guys ,girls,
My first post so be gentle.
My wife is 53 and I'm 54. We plan to retire at 55 hopefully for various reasons I won't go into at the moment.
She has a defined benefit pension worth about £93k with RL. Any benefits are only payable if she pays in pension until she is 60. Now this doesn't tie in with our plans so retiring at 55 will mean she loses the benefits. Life insurance, better annuity rate , final bonus.
We are trying to move this to something she can access at 55 and the only benefit we would consider running the pension until she is 60 is the final bonus. However RL are not for giving any info on what they are currently paying as final bonus. We know they can't predict my wife's for 6 years in the future but we asked for an example of someone with a £93k pot retiring tomorrow and they will not say. From what I can read they are currently paying between 0-240% final bonus, but will not give any more information. Now there is clearly a big difference between bottom and top bonus figures there. 
From previous literature we have they reduced annual bonuses to allow larger final bonuses to be paid. However last year's bonus was £99 ...! For 14 years they paid no annual bonus..!
It seems like a dark art this business where they can tell you nothing and pay what they want all in secret.
So my question is how can we find out what sort of bonus we will lose if my wife transfers it now into a more accessible pension ready for retiring.
Has anybody retired with a RL pension recently and can give us an idea of what bonus they got?
Any help.is greatly appreciated. She will have to go insistent client route to move it as well.
Regards
Rob.
«13

Comments

  • coyrls
    coyrls Posts: 2,492 Forumite
    Tenth Anniversary 1,000 Posts Name Dropper
    A defined benefit pension does not have a final bonus,are you sure it's not a defined contribution pension invested in a with profits scheme?
  • dunstonh
    dunstonh Posts: 118,609 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    She has a defined benefit pension worth about £93k with RL.
    You mean defined contribution?   (or was she an employee of RL back when they offered employees a DB scheme?)

     Any benefits are only payable if she pays in pension until she is 60.
    What type of pension is this as that would be unusual.

    Now this doesn't tie in with our plans so retiring at 55 will mean she loses the benefits. Life insurance, better annuity rate , final bonus.
    DB schemes dont use annuities or have a final bonus.  So, it cannot be a DB scheme.

     However RL are not for giving any info on what they are currently paying as final bonus.
    They don't know what the future holds and there is no flat rate.   Each pension holder can see what their current final bonus situation is by looking at the difference between the current value and the transfer value.  For certain very old pensions (typically pre 1988) it may not be as easy as that.

    We know they can't predict my wife's for 6 years in the future but we asked for an example of someone with a £93k pot retiring tomorrow and they will not say.
    They cannot say because that is not enough to give an example.    How and when the contributions were made matters.

    From previous literature we have they reduced annual bonuses to allow larger final bonuses to be paid. However last year's bonus was £99 ...! For 14 years they paid no annual bonus..!
    Plans with GARs, GMP or guaranteed minimum maturity values typically have zero annual bonus but still accrue a final bonus.    The value is not in the bonus but the guarantees.

    It seems like a dark art this business where they can tell you nothing and pay what they want all in secret.
    They are not keeping it in secret.   You are just asking a question that they cannot answer.

    So my question is how can we find out what sort of bonus we will lose if my wife transfers it now into a more accessible pension ready for retiring.
    By looking at the transfer value and comparing it to the current value.

    Has anybody retired with a RL pension recently and can give us an idea of what bonus they got?
    Without knowing what type of pension she has, the particular version and the dates of all the contributions ever made into it, it is not possible to answer with any relevance to her situation.

    She will have to go insistent client route to move it as well.
    Why?

    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • njkmr
    njkmr Posts: 239 Forumite
    100 Posts First Anniversary
    coyrls said:
    A defined benefit pension does not have a final bonus,are you sure it's not a defined contribution pension invested in a with profits scheme?
    Yes sorry I think your right. It's defined contribution. Apologies for the misinformation.
  • njkmr
    njkmr Posts: 239 Forumite
    100 Posts First Anniversary
    dunstonh said:
    She has a defined benefit pension worth about £93k with RL.
    You mean defined contribution?   (or was she an employee of RL back when they offered employees a DB scheme?)

     Any benefits are only payable if she pays in pension until she is 60.
    What type of pension is this as that would be unusual.

    Now this doesn't tie in with our plans so retiring at 55 will mean she loses the benefits. Life insurance, better annuity rate , final bonus.
    DB schemes dont use annuities or have a final bonus.  So, it cannot be a DB scheme.

     However RL are not for giving any info on what they are currently paying as final bonus.
    They don't know what the future holds and there is no flat rate.   Each pension holder can see what their current final bonus situation is by looking at the difference between the current value and the transfer value.  For certain very old pensions (typically pre 1988) it may not be as easy as that.

    We know they can't predict my wife's for 6 years in the future but we asked for an example of someone with a £93k pot retiring tomorrow and they will not say.
    They cannot say because that is not enough to give an example.    How and when the contributions were made matters.

    From previous literature we have they reduced annual bonuses to allow larger final bonuses to be paid. However last year's bonus was £99 ...! For 14 years they paid no annual bonus..!
    Plans with GARs, GMP or guaranteed minimum maturity values typically have zero annual bonus but still accrue a final bonus.    The value is not in the bonus but the guarantees.

    It seems like a dark art this business where they can tell you nothing and pay what they want all in secret.
    They are not keeping it in secret.   You are just asking a question that they cannot answer.

    So my question is how can we find out what sort of bonus we will lose if my wife transfers it now into a more accessible pension ready for retiring.
    By looking at the transfer value and comparing it to the current value.

    Has anybody retired with a RL pension recently and can give us an idea of what bonus they got?
    Without knowing what type of pension she has, the particular version and the dates of all the contributions ever made into it, it is not possible to answer with any relevance to her situation.

    She will have to go insistent client route to move it as well.
    Why?

    Again apologies mis leading you on the pension .it is defined contribution.
    It has the GARS  attached to it, which retiring early she will lose . Not an issue with that as it's our choice . 
    Transfer value is currently £93k with a guaranteed £68k if markets etc crashed it would not pay less than that I believe.
    Does this make any more sense?
    Really not clued up on pensions to be honest hence my questions as not wanting to lose money on a wrong decision.
    Thanks for the info so far .
    Regards
    Rob.
  • QrizB
    QrizB Posts: 15,358 Forumite
    10,000 Posts Third Anniversary Photogenic Name Dropper
    What is the Guaranteed Annuity Rate, in percent? Some of them are worth keeping, others aren't.
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  • njkmr
    njkmr Posts: 239 Forumite
    100 Posts First Anniversary
    QrizB said:
    What is the Guaranteed Annuity Rate, in percent? Some of them are worth keeping, others aren't.
    Hi
    I think the actual sums were annuity rate giving £4200 a year but my wife was guaranteed £5200 a year aged 60. So maybe about 6% but this was set for life so £5200 from day one until the end . No increase for inflation and becoming less value as it went on.
    Regards
    Rob.
  • njkmr
    njkmr Posts: 239 Forumite
    100 Posts First Anniversary
    QrizB said:
    What is the Guaranteed Annuity Rate, in percent? Some of them are worth keeping, others aren't.
    Hi
    I think the actual sums were annuity rate giving £4200 a year but my wife was guaranteed £5200 a year aged 60. So maybe about 6% but this was set for life so £5200 from day one until the end . No increase for inflation and becoming less value as it went on.
    Regards
    Rob.
  • dunstonh
    dunstonh Posts: 118,609 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    edited 15 September 2023 am30 7:46AM
    It has the GARS  attached to it, which retiring early she will lose . Not an issue with that as it's our choice . 
    Royal London Talisman plans, for example, often get into double digits.  Whereas ex CIS plans now controlled by RL often have rather poor GARs.

    Transfer value is currently £93k with a guaranteed £68k if markets etc crashed it would not pay less than that I believe.
    Does this make any more sense?

    So, the difference is the terminal bonus accrued to date.   The annual bonus, one added, cannot be taken away.  That forms the guaranteed figure.  The terminal bonus is the rest.   However, there may be penalties in there as well. 

    I think the actual sums were annuity rate giving £4200 a year but my wife was guaranteed £5200 a year aged 60. So maybe about 6% but this was set for life so £5200 from day one until the end . No increase for inflation and becoming less value as it went on.
    You will need to employ an IFA to move this pension.  And the IFA will have to investigate the rates.   If its a Talisman plan then you would be hard pushed, in most cases, to get an IFA to recommend moving it.    RL usually allow the GAR terms to be changed with the GAR rate being the starting point (rather than open market rates).   However, if you have other forms of guaranteed income and are capital heavy, then the guarantee itself becomes less important.

    An IFA overriding a GAR is almost as high a risk to the adviser as a DB pension transfer.  PI insurers ask IFAs about every GAR override they have done.  not just by volume of cases but a summary of each and every case and that effectively means that the adviser firm is paying for that every year for evermore.    So, it's not a cheap transaction for the adviser and that will be reflected in the cost of advice.

    The rate you think it may be seems very low for a GAR (that's more CIS level than Royal London original level).




    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Marcon
    Marcon Posts: 13,016 Forumite
    Eighth Anniversary 10,000 Posts Name Dropper Combo Breaker
    njkmr said:

    Any help.is greatly appreciated. She will have to go insistent client route to move it as well.
    Regards
    Rob.
    Not if she sets up a stakeholder pension and transfers to that. Both can be done on a DIY basis (ie no intermediary involvement required). 

    njkmr said:

    Really not clued up on pensions to be honest hence my questions as not wanting to lose money on a wrong decision.

    She'll still need to receive regulated advice because the pot is over £30K and has 'safeguarded benefits'  but she doesn't have to follow it - although you might both do well to pay heed to what you are told if the advice is not to transfer, given your comment above.
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • njkmr
    njkmr Posts: 239 Forumite
    100 Posts First Anniversary
    dunstonh said:
    It has the GARS  attached to it, which retiring early she will lose . Not an issue with that as it's our choice . 
    Royal London Talisman plans, for example, often get into double digits.  Whereas ex CIS plans now controlled by RL often have rather poor GARs.

    Transfer value is currently £93k with a guaranteed £68k if markets etc crashed it would not pay less than that I believe.
    Does this make any more sense?

    So, the difference is the terminal bonus accrued to date.   The annual bonus, one added, cannot be taken away.  That forms the guaranteed figure.  The terminal bonus is the rest.   However, there may be penalties in there as well. 

    I think the actual sums were annuity rate giving £4200 a year but my wife was guaranteed £5200 a year aged 60. So maybe about 6% but this was set for life so £5200 from day one until the end . No increase for inflation and becoming less value as it went on.
    You will need to employ an IFA to move this pension.  And the IFA will have to investigate the rates.   If its a Talisman plan then you would be hard pushed, in most cases, to get an IFA to recommend moving it.    RL usually allow the GAR terms to be changed with the GAR rate being the starting point (rather than open market rates).   However, if you have other forms of guaranteed income and are capital heavy, then the guarantee itself becomes less important.

    An IFA overriding a GAR is almost as high a risk to the adviser as a DB pension transfer.  PI insurers ask IFAs about every GAR override they have done.  not just by volume of cases but a summary of each and every case and that effectively means that the adviser firm is paying for that every year for evermore.    So, it's not a cheap transaction for the adviser and that will be reflected in the cost of advice.

    The rate you think it may be seems very low for a GAR (that's more CIS level than Royal London original level).




    Thanks dunstonh it is ex cis pension .
    It's the terminal bonus that we are most nervous about losing to be honest. Which is why we tried to get an indication of current bonuses being paid. If terminal bonus is anything like annual bonuses that have been added then really we have nothing to lose as they have been poor to say the least. And we would not hang on until my wife is 60 to collect it.
    We have had to go to a specialist company to go through the transfer process and it costs about £3k to do it. They have come back and advised not to because of the GARS but as we will be retiring at 55 these GARS  are worthless to us. Now if we were told a 50% bonus would be added at aged 60 on policy maturity then we may think twice about keeping it until then and use other means to support our retirement. It's this info we cannot get. We have other life cover so this part of the is not essential for us .
    We are not fans of annuities and would prefer draw down for our funds so again guaranteed annuity although paying maybe 25% more than a standard one is not a draw for us either .
    Our IFA could not do the transfer for us hence we are using the specialist company.
    Appreciate your thoughts and comments on it.
    Regards
    Rob.
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