Make sense to move my old Zurich pension to my current Aviva pension?

reck_uk

I've got an old Zurich pension plan, originally Allied Dunbar, with around £90,000 in which i'm thinking would be best moved to my current employer pension at Aviva.

I've got the following information back from Zurich and Aviva so can anyone see why I wouldn't move it to Aviva?

Zurich

Scheme Annual Management charge 1% which is reinvested back into the plan and used to allocate additional units.

Fund Annual Management charge 0.18%

Monthly policy charge: £10.32

This plan does not contain any additional benefits or guarantees.

There are no exit penalties are charges applicable for transferring out of this plan

Aviva

Your scheme Annual Management Charge 0.28%

Your Fund Annual Management Charge 0.10%

Transfers are accepted into this plan, and there are no charges.

Thanks

Albermarle

How the investments in each are performing is one factor, as is the choice of investments available to you.
This is much more important than minor differences in charges. As far as I can see the Zurich one has lower charges anyway.
Also a more modern pension will probably have more options when you come to withdraw from it.
So there is a few things to think about .

dunstonh

I've got the following information back from Zurich and Aviva so can anyone see why I wouldn't move it to Aviva?

There is insufficient information to decide either way.  

Many of the old AD plans waive the AMC if they are paid up.   They tended to be heavy on contribution charges.  So, often, making them paid up, if they are not already, gave the lowest charges.

also, the way you have laid out the charges is not typical of old AD plans unless the Fund Annual Management charge 0.18% is the transaction charges figure.     If you are including that on the AD side then you should included it on the Aviva side but it appears you haven't.    

I have also never seen Zurich use "Scheme management charge" in their documentation.   Back in the day, there was no such thing on those old plans.

So, more detail is needed.

reck_uk

dunstonh said:

I've got the following information back from Zurich and Aviva so can anyone see why I wouldn't move it to Aviva?

There is insufficient information to decide either way.  

Many of the old AD plans waive the AMC if they are paid up.   They tended to be heavy on contribution charges.  So, often, making them paid up, if they are not already, gave the lowest charges.

also, the way you have laid out the charges is not typical of old AD plans unless the Fund Annual Management charge 0.18% is the transaction charges figure.     If you are including that on the AD side then you should included it on the Aviva side but it appears you haven't.    

I have also never seen Zurich use "Scheme management charge" in their documentation.   Back in the day, there was no such thing on those old plans.

So, more detail is needed.

I'm not sure what you mean by 'paid up'. This is an old pension i've not paid into for a long time.

I've copied the exact text from the email without any changes in I misunderstood some of the terminology. Scheme management charge is actually Annual Management charge.

This plan does not contain any additional benefits or guarantees.

The charge for the fund you are invested in, the Managed AP is 0.18%.

There is 1% Annual Management charge, which is reinvested back into the plan and used to allocate additional units.

There is a monthly policy charge of £10.32.

There are no exit penalties are charges applicable for transferring out of this plan.

dunstonh

I'm not sure what you mean by 'paid up'. This is an old pension i've not paid into for a long time.

Your plan is paid up.  Old style pensions become "paid up" when you were no longer paying into them.  Most modern pensions don't use that phrase as they are open for contributions on ad-hoc or regular basis as and when you like.

I've copied the exact text from the email without any changes in I misunderstood some of the terminology. Scheme management charge is actually Annual Management charge.

This plan does not contain any additional benefits or guarantees.
The charge for the fund you are invested in, the Managed AP is 0.18%.
There is 1% Annual Management charge, which is reinvested back into the plan and used to allocate additional units.
There is a monthly policy charge of £10.32.
There are no exit penalties are charges applicable for transferring out of this plan.

Old plans didn't have platform charges or scheme charges as such.  They come from an era when bundling charges in a single figure was the norm (although some had multiple charges).   Nowadays, the provider/platform charge is stripped out and displayed separately from the fund charges.

Also, due to a rule change in 2018, funds had to create a synthetic figure to display your share of the underlying charges incurred by the fund that were not included in the AMC/TER/OCF.   It's not an explicit charge but is created through a range of calculations.    Most investors ignore it due to the flaws (different calculation methods are allowed that result in different outcomes, which makes comparisons pointless).   And with pensions, you are not actually required to disclose that figure.  So, you have some that do and some that don't.   

That 0.18% is the transaction charges figure.  The disclosure for that didn't exist back in AD days. Just the 1.0% AMC.  As your plan is paid up, they are not charging the 1.0% AMC but are fully refunding it.   As the 0.18% is a synthetic disclosure and not an explicit charge, they don't refund that (you haven't paid 0.18%, so they don't refund 0.18%).

So, your plan charge is effectively the £10.32 per month. 

I often find that I recommend not to transfer ex AD plans for this reason.  They were damned expensive when paying in (bid/offer spreads and no contributions being invested in the early years but going on initial charges using complex methods).   However, once paid up, they became very cheap.

Now we need to look at your Aviva charges.  Is the 0.28% the provider/platform charge or the AMC or the transaction charges.  Or is that the 0.10%.   Is the transaction charge figure included or not?      If its an older style plan, it could be bundled but if its modern style if would be unbundled.   So,you need to give us the actual descriptions of the Aviva charges like you did with Zurich.

reck_uk

Very informatice post thanks.

dunstonh said:

So, your plan charge is effectively the £10.32 per month. 

I often find that I recommend not to transfer ex AD plans for this reason.  They were damned expensive when paying in (bid/offer spreads and no contributions being invested in the early years but going on initial charges using complex methods).   However, once paid up, they became very cheap.

The Zurich costs appear to be a lot more than £123 a year though. Along with the email they sent me a statement where it says 'Total charges in statement period £784.07'. By period do they mean over the last 12 months?

That £784.07 is made up of two parts.

Regular fund charges and transaction costs - £450.30
These are ongoing charges that are currently applied to your pension plan.

Regular product charges - £333.77
These are ongoing charges that are currently applied to your pension plan. Depending
on your circumstances, some of these may not always apply.

reck_uk

dunstonh said:

Now we need to look at your Aviva charges.  Is the 0.28% the provider/platform charge or the AMC or the transaction charges.  Or is that the 0.10%.   Is the transaction charge figure included or not?      If its an older style plan, it could be bundled but if its modern style if would be unbundled.   So,you need to give us the actual descriptions of the Aviva charges like you did with Zurich.

This is what they wrote in the email.

Good morning,

There are three charges for your plan

Your scheme Annual Management Charge 0.28%
Your Fund Annual Management Charge 0.10%
Additional Charges 0.00%

I've attached the fund fact sheet for your reference.
Transfers are accepted into this plan, and there are no charges.
If you would like to transfer in, we will need to speak to you over the phone

dunstonh

reck_uk said:

Very informatice post thanks.

dunstonh said:

So, your plan charge is effectively the £10.32 per month. 

I often find that I recommend not to transfer ex AD plans for this reason.  They were damned expensive when paying in (bid/offer spreads and no contributions being invested in the early years but going on initial charges using complex methods).   However, once paid up, they became very cheap.

The Zurich costs appear to be a lot more than £123 a year though. Along with the email they sent me a statement where it says 'Total charges in statement period £784.07'. By period do they mean over the last 12 months?

That £784.07 is made up of two parts.

Regular fund charges and transaction costs - £450.30
These are ongoing charges that are currently applied to your pension plan.

Regular product charges - £333.77
These are ongoing charges that are currently applied to your pension plan. Depending
on your circumstances, some of these may not always apply.

The charges disclosure will not include the rebate.   Its the charges without the rebate.  That happens so often and is frustrating.    The transaction costs are synthetic as mentioned.

The product charges seems interesting at £333.77 as £10.32x 12 doesn't equal that.  It is possible that their software is still showing the charges you would have paid if you were still paying into it. (again, that happens on legacy plans and it does say the some of these may not always apply).

These old plans were not software coded for modern requirements and quirks and anomalies are not uncommon when trying to shoehorn them into modern disclosure requirements.

As advisers, we don't compare charges this way because of the anomalies that exist and how complicated it can be with multi-charge plans from a different era.        We look at the projections using the same assumptions across the providers.

There are three charges for your plan
Your scheme Annual Management Charge 0.28%
Your Fund Annual Management Charge 0.10%
Additional Charges 0.00%

This charging is more akin the Aviva platform and in a modern form.    i.e. provider/platform charge (which they are calling scheme AMC here - that is unusual wording for Aviva to use),  fund OCF  (AMC = OCF when dealing with pension funds) and transaction charges (which is additional charges in this case).

It is also in the ballpark of expectation.  The default Aviva platform charge is higher but Aviva discount it across distribution channels and you don't oven see the default.    The 0.28% is in the ballpark of where you normally see the discounts.      The internal Aviva fund range is 0.10% on the Aviva platform.


The Aviva plan is in the ballpark you would expect a good value modern plan to be.  Its more expensive than the Aviva plans we can arrange but that is more expensive than the lowest cost options as well.  But its in the right area.

The Zurich plan is cheaper due to its rebates but its quirkiness and issues may lead you to take the view that you want a more modern option that is cleaner.  Moving it to Aviva consolidates the two together.   Although if you don't mind having two plans, then you can get cheaper than the Aviva pension (and when you leave that employer, you can move the Aviva plan to your "new" plan)

reck_uk

Thank you for another detailed reply dunstonh. I just find the Zurich pension hard to understand and the information I get back from them isn't very clear and the website is is poor as well in terms of planning and projections.

Ideally i'd like to get rid of it and to make life easier move it into the Avia one and have it consolidated under one place. However i'd not really considered a third option to seek out a completely new pension that would be cheaper than both and eventually bring them both together under this new one in time.

Perhaps it's worth my time (and some money) to speak to an independent pension expert to see what's out there and what options I have.

dunstonh

Thank you for another detailed reply dunstonh. I just find the Zurich pension hard to understand and the information I get back from them isn't very clear and the website is is poor as well in terms of planning and projections.

It is.    Their plan was not designed to exist in today's world.   Aviva have plans like as do most legacy providers.  Hard coded on old computer systems where they have to fudge things.  Plus, they are a closed provider. So,no resources are being put into it other than to comply to the bare minimum.    

Sooner or later it will be sold to Phoenix (who buy virtually all the closed books).

Perhaps it's worth my time (and some money) to speak to an independent pension expert to see what's out there and what options I have.

Probably not.  Yes, they can get cheaper but you may as well put it in Aviva if that is the case as you would need to recover the adviser fee.