SERPS should I transfer, what is Protected Rights is it a thing anymore?

thatsnotmynaim

Hi, I have an old pension due to contracting out of SERPS as someone told me it was a good idea back in the early 90's. When I spoke to an IFA 18 months back they said leave it where it was as it was Protected Rights, they didn't tell me what that actually meant, but I let it be as told.

They told me a few things about some other pensions, like keep the LBG one as LBG are a good company, but move the rest. Now I'm looking into that the LBG one has performed the worst over the past 5 years, it's the only one to have dropped and not recovered 100% from 21-24 and was the worst at the time of the advice now I look deeper into it as it was in a mixed strategy, so now I'm also questioning the SERPS protected rights thing.

The SERPS Protcted Rights pension was with Allied Dunbar, which is now Zurich, it's only a small 10-15% of my total pensions which I'm currently consolidating. I'm now wondering if I can or should just move the SERPS Protected Rights pension into my SIPP as I read it's no longer a thing. It's also currently in an old "Zurich Managed AP" fund with charges of 0.93%, if I move it to a SIPP it would probably be into a VHVG ETF with only 0.12% charges.

Main questions I guess are, is protected rights a thing anymore and does it give me anything extra or is / was it just some restriction on what you can (could) do with it?

Thanks

Marcon

thatsnotmynaim said:

Hi, I have an old pension due to contracting out of SERPS as someone told me it was a good idea back in the early 90's. When I spoke to an IFA 18 months back they said leave it where it was as it was Protected Rights, they didn't tell me what that actually meant, but I let it be as told.

They told me a few things about some other pensions, like keep the LBG one as LBG are a good company, but move the rest. Now I'm looking into that the LBG one has performed the worst over the past 5 years, it's the only one to have dropped and not recovered 100% from 21-24 and was the worst at the time of the advice now I look deeper into it as it was in a mixed strategy, so now I'm also questioning the SERPS protected rights thing.

The SERPS Protcted Rights pension was with Allied Dunbar, which is now Zurich, it's only a small 10-15% of my total pensions which I'm currently consolidating. I'm now wondering if I can or should just move the SERPS Protected Rights pension into my SIPP as I read it's no longer a thing. It's also currently in an old "Zurich Managed AP" fund with charges of 0.93%, if I move it to a SIPP it would probably be into a VHVG ETF with only 0.12% charges.

Main questions I guess are, is protected rights a thing anymore and does it give me anything extra or is / was it just some restriction on what you can (could) do with it?

Thanks

No - not 'a thing' any more. Your protected rights pension is now the same as any other defined contribution pension.

dunstonh

 When I spoke to an IFA 18 months back they said leave it where it was as it was Protected Rights, they didn't tell me what that actually meant, but I let it be as told.

Protected rights hasn't existed for over a decade.  They were reclassified at non-protected rights.   Normally, the thing to look out for today is safeguarded benefits.     Could they have meant that?    Some APPPs (appropriate personal pension plans) had guaranteed annuity rates as did Section 32 buy out bonds.  Both of which could handle protected rights.

Basically, if no safeguarded benefits, then it being an [ex] protected rights plan is irrelevant as a reason to keep it.  Hence why I wonder if there was something else.

They told me a few things about some other pensions, like keep the LBG one as LBG are a good company, but move the rest. 

The Lloyds Bank defined benefit scheme would be worth keeping.  The money purchase scheme is not as good but low cost.  It has a small fund selection available.

 Now I'm looking into that the LBG one has performed the worst over the past 5 years, it's the only one to have dropped and not recovered 100% from 21-24 and was the worst at the time of the advice now I look deeper into it as it was in a mixed strategy, so now I'm also questioning the SERPS protected rights thing.

Bonds are down over the last 7 years.  Equities have doubled.  So, if you blend them, as most people do, the returns will tilt towards the type you are heaviest in.

The SERPS Protcted Rights pension was with Allied Dunbar, which is now Zurich, it's only a small 10-15% of my total pensions which I'm currently consolidating. I'm now wondering if I can or should just move the SERPS Protected Rights pension into my SIPP as I read it's no longer a thing. It's also currently in an old "Zurich Managed AP" fund with charges of 0.93%, if I move it to a SIPP it would probably be into a VHVG ETF with only 0.12% charges.

Are you sure the charges are 0.93%?   Many ex AD plans are heavy when contributing to them but once they go paid up, the AMC is rebated and they become very low cost.     Cost and charges disclosures usually ignore rebates.  So, you would have to factor them back in manually if they exist.

You only mention the ETF charge.  Not the SIPP charge or the transaction charges (fund level TC, not SIPP level).  TC is included in the Zurich disclosures.  Even though most ignore TC, if you are going to include it on one option, you should include it on both.  Or strip it out on both.

thatsnotmynaim

Thanks for taking the time to reply, it’s really appreciated. The ex SERP plan has no mentioned I can spot of extra / safeguarded benefits. The plan was setup by a friends IFA back in the 90’s so not by an employer. I've emailed Zurich for the transfer value, transfer charges, list of annual charges and any extra benefits, I suspect there’s no extra benefits but will wait and see what comes back. The website when I login says death benefit but nothing else.

The Zurich fund is this one : https://digital.feprecisionplus.com/documents/zurichassurance/en-gb/HB47/FS

The fact sheet says TCF = 0.93%, AMC = 0.75% is mentioned on other websites. It looks UK heavy, launch = 1984.
If I switch it to AJ Bell as ETF / shares it’ll be a £10/pm SIPP, £5 per deal + 0.12% PA for VHVG ETF.
I have a few pensions I’m putting in there so the £10/pm account charge I’ll pay anyway.

My old LBG schemes are their ‘No1 PIP’ & ‘No1 Your Tomorrow’, I think (but not 100% sure) both are DC. PIP says has an ‘underpin’, something like 2.6% pa of current value if I retire in 13 years @ 65. I presume that’s not a fantastic extra, more a safety net. Both LBG pensions were default invested in their ‘Mixed Investment Fund’ which is underpin by 60% ‘LGIM Diversified’ & 40% ‘AQR Global Risk Premium’ which both have bonds ~39% total, AQR looks to be mostly below 0% for many years. May leave it at LBG for now until I know more but move it to their Global Equity fund instead of their Mixed Investment. Thanks again

xylophone

https://www.lloydsbankinggrouppensions.com/scheme_benefits/understanding_your_pip#


PIP No 1

Getting advice if you want to transfer away from the Scheme

We strongly recommend that you consider taking impartial regulated financial advice before deciding to transfer out your PIP. If the underpin is required to top-up your PIP benefits, as explained above, and your transfer value is more than £30,000, then the law says you must take advice. In other cases, it's your choice, but we would recommend it. Please remember that once you’ve transferred out you can’t transfer back in, so you need to understand your options fully.

This advice needs to come from an authorised financial adviser who is qualified to advise people on pension transfers. Visit Unbiased to find a financial adviser in your area and use the Financial Conduct Authority (FCA) register to check your adviser is suitably registered and authorised to advise on pension transfers.

Looks like DC with DB underpin - see "safeguarded benefit"

https://assets.publishing.service.gov.uk/media/5a80b577ed915d74e33fbf54/pension-benefits-with-a-guarantee-factsheet-jan-2016.pdf

Your Tomorrow

https://www.lloydsbankinggrouppensions.com/#

DC pension.

dunstonh

The plan was setup by a friends IFA back in the 90’s so not by an employer

AD plans were not available to IFAs.    IFAs wouldn't have used them even if they were.

The fact sheet says TCF = 0.93%, AMC = 0.75% is mentioned on other websites. It looks UK heavy, launch = 1984.
If I switch it to AJ Bell as ETF / shares it’ll be a £10/pm SIPP, £5 per deal + 0.12% PA for VHVG ETF.
I have a few pensions I’m putting in there so the £10/pm account charge I’ll pay anyway.

However, if the AD plan is rebating, then it can be cheaper and there are a range of AD funds.  Not a load but sufficient for many.

My old LBG schemes are their ‘No1 PIP’ & ‘No1 Your Tomorrow’, I think (but not 100% sure) both are DC. PIP says has an ‘underpin’, something like 2.6% pa of current value if I retire in 13 years @ 65. 

Underpins are a safeguarded benefit.   So, if the value is over £30k, then mandatory advice will be required.  If its under 35k, you should still consider not transferring it.