Transfer of Royal London pension by insistent client route.

njkmr

Marcon said:

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.

Marcon said:

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.

Hi Marcon
We have been told we were not able to transfer without using a specialist company due to the benefits attached to this pension. Our IFA could not do it for us but referred us to a specialist.
Regards
Rob.

dunstonh

Thanks dunstonh it is ex cis pension .

If its former protected rights, then its very easy to justify overriding.   If its non-protected rights, the GAR is a bit better but not dissimilar to current open market option.  So, still relatively easy to justify.

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.

The terminal bonus is the investment element effectively. It goes up and down with the markets.       The annual bonus is low as the cost of the liability for providing the GAR is reflected in the annual bonus but not the terminal bonus.

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. 

Overriding a GAR does not require specialist companies.   Any IFA should be able to do it.  FAs are less likely to be able to do it because of the systems and controls put in place by their employer.

A GAR is a safeguarded benefit but it doesn't require a pension transfer specialist to override it.   It just requires the a normal advice firm to hold a limited permission from the FCA in that area.  It costs the IFA firm nothing to have it and requires no extra/further qualifications.   I would be surprised to see an IFA that doesn't have it.      Whereas FAs not having the permission would be expected as FAs frequently refuse to transact in high-risk areas.

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. 

Impossible to answer as it would require knowing what future returns would be.

Our IFA could not do the transfer for us hence we are using the specialist company.

Are you sure they are an IFA and not an FA?  (note my comments above)

Appreciate your thoughts and comments on it.

In general, the CIS GARs are nothing special.   If you are cash/investments rich and the pension is just a small part of the overall investible worth, then overriding it to transfer out is easier to justify (especially if you wish to retain the funds in the pension wrapper post age 75 - ex CIS plans have to be taken before age 75).  Same if you have defined benefit pensions or secure income and don't need the RL pension for income provision.    However, it can equally be sensible to defer the transfer out until later and use other assets to fund the gap from 55+ (such as other pensions without guarantees).    Then you make the decision on the RL plan later on.  i.e. you retain the option for GAR or to transfer rather than forcing your hand now.

The key is your objectives and all the things you have to fund your objectives and how they fit in with each other.   Its a holistic scenario rather than looking at the product in isolation.  If looked at in isolation, it would be harder to justify.   If the remainder of your lifetime has been mapped out and your income/savings/investments have been modelled, and a holistic view is available, then justification may be easier. 

njkmr

dunstonh said:

Thanks dunstonh it is ex cis pension .

If its former protected rights, then its very easy to justify overriding.   If its non-protected rights, the GAR is a bit better but not dissimilar to current open market option.  So, still relatively easy to justify.

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.

The terminal bonus is the investment element effectively. It goes up and down with the markets.       The annual bonus is low as the cost of the liability for providing the GAR is reflected in the annual bonus but not the terminal bonus.

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. 

Overriding a GAR does not require specialist companies.   Any IFA should be able to do it.  FAs are less likely to be able to do it because of the systems and controls put in place by their employer.

A GAR is a safeguarded benefit but it doesn't require a pension transfer specialist to override it.   It just requires the a normal advice firm to hold a limited permission from the FCA in that area.  It costs the IFA firm nothing to have it and requires no extra/further qualifications.   I would be surprised to see an IFA that doesn't have it.      Whereas FAs not having the permission would be expected as FAs frequently refuse to transact in high-risk areas.

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. 

Impossible to answer as it would require knowing what future returns would be.

Our IFA could not do the transfer for us hence we are using the specialist company.

Are you sure they are an IFA and not an FA?  (note my comments above)

Appreciate your thoughts and comments on it.

In general, the CIS GARs are nothing special.   If you are cash/investments rich and the pension is just a small part of the overall investible worth, then overriding it to transfer out is easier to justify (especially if you wish to retain the funds in the pension wrapper post age 75 - ex CIS plans have to be taken before age 75).  Same if you have defined benefit pensions or secure income and don't need the RL pension for income provision.    However, it can equally be sensible to defer the transfer out until later and use other assets to fund the gap from 55+ (such as other pensions without guarantees).    Then you make the decision on the RL plan later on.  i.e. you retain the option for GAR or to transfer rather than forcing your hand now.

The key is your objectives and all the things you have to fund your objectives and how they fit in with each other.   Its a holistic scenario rather than looking at the product in isolation.  If looked at in isolation, it would be harder to justify.   If the remainder of your lifetime has been mapped out and your income/savings/investments have been modelled, and a holistic view is available, then justification may be easier. 

Hi dunstonh
Yep again your correct I think our guy is an FA . Not an IFA hence why he put us in touch with Grove the company who can move it for us possibly. They have already advised it's against what they would advise though. They take no fee so far unless the actual move takes place so it's not a" give us the money do what you want" scenario and they are taking some persuading to do it for us.  
The thing on the bonus is I wanted a real life bonus example paid ,say last week, so we can make an informed choice.
Like , the guy last week with £100k pot got a terminal bonus of £15k or the woman yesterday with a £120k pot got a £60k terminal bonus. This then makes our decision based on actual events. We would be pretty naffed off if we waited until my wife was 60 and received a terminal bonus of £50 quid or something. If you get what I mean. So we did not ask them for a prediction of my wife's terminal bonus but a current recent paid example. I didn't think that was too difficult for them to offer us really in my simple world.I
I think on the situation we are in we will go ahead and transfer into another more accessible pension leaving it invested still but with access as needed when we retire. 
And just pray we never lost a 240% bonus in 7 years time...!
Much appreciated for your comments and clarifying what I initially said. I do feel a little more informed now. 
Thank you
Regards
Rob.

dunstonh

The thing on the bonus is I wanted a real life bonus example paid ,say last week, so we can make an informed choice.

That information would not be useful for making an informed choice.
For example, that person they paid last week may have paid in between 1980 and 1991 and then stopped for 3 years then did a top up or increased the regular every 5 years.   Their dates and contribution amounts won't match yours.   So, using their information to make a decision on your situation would not be helpful.

This then makes our decision based on actual events. 

No.  It would mean you make a decision on their situation.  Not yours.

I think on the situation we are in we will go ahead and transfer into another more accessible pension leaving it invested still but with access as needed when we retire. 

And that will fluctuate like the RL pension will.

njkmr

dunstonh said:

The thing on the bonus is I wanted a real life bonus example paid ,say last week, so we can make an informed choice.

That information would not be useful for making an informed choice.
For example, that person they paid last week may have paid in between 1980 and 1991 and then stopped for 3 years then did a top up or increased the regular every 5 years.   Their dates and contribution amounts won't match yours.   So, using their information to make a decision on your situation would not be helpful.

This then makes our decision based on actual events. 

No.  It would mean you make a decision on their situation.  Not yours.

I think on the situation we are in we will go ahead and transfer into another more accessible pension leaving it invested still but with access as needed when we retire. 

And that will fluctuate like the RL pension will.

Hi dunstonh
We wanted to know the level of possible bonus. So far we are working on the range 0-240% which is meaningless to us unless someone could say yes I got 30% or indeed someone says he's got 65% terminal bonus. We just wanted an idea of what actually possible. I don't for one minute think the 240% has been added to bonuses  ever probably .?

I just want an example of what an actual pot produced. Not really going as deep as how it was created etc but what a certain sum of money created in a terminal bonus. Again not assuming my wifes would be the same .

And yes I understand another pension it's put in will fluctuate but the new one will be accessible from 55 for my wife when needed. It will also be a bit easier to keep an eye on as the FA we will be using is more visible and contactable  and I have colleague's who have been using his services for a number of years with good reviews of him. We will just feel more in control of it I think.
Thanks again for your help.
Regards
Rob.

dunstonh

We wanted to know the level of possible bonus. So far we are working on the range 0-240% which is meaningless to us unless someone could say yes I got 30% or indeed someone says he's got 65% terminal bonus. 

The answer is meaningless but the answer is correct.   The problem is not the answer but the question.

Final bonuses dont increase at maturity.    They accrue as you go along based on the dates of your contributions.

Example
one person pays in £100,000 on 1st January
Another person pays in £10,000 per month starting on the 1st January for 10 months.  
Both people have paid in £100,000 and both started on the same day.  However, they will have different terminal bonus figures.

 We just wanted an idea of what actually possible. I don't for one minute think the 240% has been added to bonuses  ever probably .?

There is no reason to doubt 240%.  It sounds reasonable enough and in the ballpark of expectation.   But as I already mentioned, those that get to around 240% will have contribution dates that were worked well for them.

I just want an example of what an actual pot produced. Not really going as deep as how it was created etc but what a certain sum of money created in a terminal bonus. Again not assuming my wifes would be the same .

How it was created and the dates it was created are what dictates the final bonus.

You already have an example.  Your wife's plan is an example.  The terminal bonus is not a figure added at the end.    It accrues as you go along.   You know your wife's terminal bonus and you know her dates and contributions.   

What it accrues over the next 5,10 or however many years will be down to investment returns in those particular years.    It won't have a thing to do with how much bonus she has now.   How much she has now is down to her history to this point.  That is done and dusted.   How much it maybe in the future is down to what happens in the future.

Terminal bonuses are not a defined rate that everyone with maturity of a certain year got.  That method is decades, indeed generations out of date.  I think this is where you are getting confused.    Back in those days, you had a guaranteed sum assured to which annual bonuses and the terminal bonus were added.       Again, back in those days, you never knew what the terminal bonus was until maturity.        And the periods were measured by year of contribution rather than specific dates.         Back then, annual bonuses were higher and terminal bonuses were lower than today (on a pro-rata basis).       It hasn't been that way for a very long time.   Your questions about the final bonus suggest you are thinking it is still like that.  it is not.

coyrls

Isn't the final bonus accrued to date reflected in the transfer value minus any penalties?

Marcon

njkmr said:

Marcon said:

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.

Marcon said:

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.

Hi Marcon
We have been told we were not able to transfer without using a specialist company due to the benefits attached to this pension. Our IFA could not do it for us but referred us to a specialist.
Regards
Rob.

You need to take advice from a specialist (i.e. someone with the necessary 'permissions' to advise on such transfers), because the old scheme won't be able to transfer the funds until they know you've received advice from such a person. But you can certainly do the actual transfer yourself if the receiving scheme will accept it without the adviser supporting such a transfer - and as I've said above, a stakeholder must accept it.

dunstonh

coyrls said:

Isn't the final bonus accrued to date reflected in the transfer value minus any penalties?

Correct.

Yep again your correct I think our guy is an FA . Not an IFA hence why he put us in touch with Grove the company who can move it for us possibly. They have already advised it's against what they would advise though. 

Did they go through modelling your life plan and how that is to be funded?  i.e. the holistic method or did they just look at the figures without looking at your life plan?

njkmr

dunstonh said:

We wanted to know the level of possible bonus. So far we are working on the range 0-240% which is meaningless to us unless someone could say yes I got 30% or indeed someone says he's got 65% terminal bonus. 

The answer is meaningless but the answer is correct.   The problem is not the answer but the question.

Final bonuses dont increase at maturity.    They accrue as you go along based on the dates of your contributions.

Example
one person pays in £100,000 on 1st January
Another person pays in £10,000 per month starting on the 1st January for 10 months.  
Both people have paid in £100,000 and both started on the same day.  However, they will have different terminal bonus figures.

 We just wanted an idea of what actually possible. I don't for one minute think the 240% has been added to bonuses  ever probably .?

There is no reason to doubt 240%.  It sounds reasonable enough and in the ballpark of expectation.   But as I already mentioned, those that get to around 240% will have contribution dates that were worked well for them.

I just want an example of what an actual pot produced. Not really going as deep as how it was created etc but what a certain sum of money created in a terminal bonus. Again not assuming my wifes would be the same .

How it was created and the dates it was created are what dictates the final bonus.

You already have an example.  Your wife's plan is an example.  The terminal bonus is not a figure added at the end.    It accrues as you go along.   You know your wife's terminal bonus and you know her dates and contributions.   

What it accrues over the next 5,10 or however many years will be down to investment returns in those particular years.    It won't have a thing to do with how much bonus she has now.   How much she has now is down to her history to this point.  That is done and dusted.   How much it maybe in the future is down to what happens in the future.

Terminal bonuses are not a defined rate that everyone with maturity of a certain year got.  That method is decades, indeed generations out of date.  I think this is where you are getting confused.    Back in those days, you had a guaranteed sum assured to which annual bonuses and the terminal bonus were added.       Again, back in those days, you never knew what the terminal bonus was until maturity.        And the periods were measured by year of contribution rather than specific dates.         Back then, annual bonuses were higher and terminal bonuses were lower than today (on a pro-rata basis).       It hasn't been that way for a very long time.   Your questions about the final bonus suggest you are thinking it is still like that.  it is not.

Thanks again dunstonh,
I was under the impression from literature they have sent that the terminal bonus was payable at the end and was dependant on the surplus funds available within the company at that time . Low annual bonuses allowing the terminal bonus pot to "grow" so to speak and hence yes only on full term arriving , my wifes 60 birthday a portion of this surplus fund is added to her pot. That's how I had interpreted it and hence why I thought a recent example would be available to help make our decision. I guess I'm way out of date on my thinking.
Regards
Rob.