TRANSFER to a SIPP

Gatser

I am contributing to a Std Life GPPP, into equity funds.
60% of my GPPP is With Profits with a 25% MVR so I am locked in until I get to 60.
I therefore planned to transfer the 40% (Equities) to a SIPP so I could use drawdown in 2-3 years. (My IFA knew this)

However, Std Life now tell me that the GPPP is ONE POLICY and cannot be part transferred to a SIPP. So it appears the whole GPPP is locked until I get to age 60, I cannot afford to lose 25% on the WP fund.

I am not happy with Std Life and less so with the IFA for not bringing such "rules" to my attention when I discussed drawdown/SIPPs with them.
(Perhaps I can complain through the FSA?)

Anyone else had these problems?
Thanks for any feedback

dunstonh

(Perhaps I can complain through the FSA?)

No. The FSA do not handle complaints.

Before we know if you have a valid complaint you will have to clear some things up as there are some inconsistencies in your post.

I am not happy with Std Life and less so with the IFA for not bringing such "rules" to my attention when I discussed drawdown/SIPPs with them.

Investment returns are not something you can complaint about. If an MVR is still being applied then there is a good chance that had you gone into a similar risk unit linked fund then you would have lost money in real terms.

What interests me is that you say its a GPPP. This suggests an employer scheme and that usually means employer contributions. In which case, the best advice is to join the scheme due to free money. Did you see the IFA linked to the employers scheme and have a full review or did you just do a quick application to join the scheme? Or did you use your own IFA who isnt linked to the group scheme?

You also say that you want to do drawdown in 2-3 years time. Is that when you are 60?

Gatser

dunstonh wrote: »

What interests me is that you say its a GPPP. Did you see the IFA linked to the employers scheme and have a full review or did you just do a quick application to join the scheme?

You also say that you want to do drawdown in 2-3 years time. Is that when you are 60?

Yes, I had a review and explained that I was interested in using Drawdown before the 2010 deadline (when I am 52), otherwise I would have to wait until 2013 to hit the 55 (new) minimum.
I accept that the WITH PROFITS is a "locked" pension, its the lack of info
to make me aware that I was locking away all that equity money (from mainly my contributions) that I object to.

Thanks for your feedback so far...

dunstonh

Does (did) the GPPP have employer contributions?

Who picked the funds? Did you get a written report on the recommendation or were you told to join the scheme but no more?

I'm surprised that a Standard Life plan still has an MVR that high on it. When was the last time you checked it?

I am going to assume that there were single premiums or transfers made into the plan as well as it is unusual for a regular contribution plan that has been set up post 2001 to have MVRs. Is this the case? If so, when did the pension start?

MVRs are a pain and didnt really start to get greater disclosure until the early 2000s. Mainly as they hadnt been activated in the past and they got ignored. Failure to disclose it in itself is not a mis-sale as long as you have the right attitude to risk. Drawdown is considered a high risk transaction so its clear you had the right attitude to risk. You wouldnt be able to complain that your risk profile was unsuitable as the reason for the complaint is that it is hindering your wish to do drawdown. If you had been low risk then that is when MVR complaints tend to be more likely to be upheld.

You say it was a full review so you should have a reason why/suitability letter. On there, does it mention that you intended to do income drawdown?

LOST

As far as I know - you can't split the fund like you are wanting to - yes Standard Life are applying an MVR at the moment, but you may be able to transfer when market conditions have improved depending on how the policy is set up.

It is true that drawdown is very high risk and a very expensive option as compared to purchasing a conventional annuity - it is only suitable for larger funds (typically £50k+).

EdInvestor

LOST wrote: »

It is true that drawdown is very high risk and a very expensive option as compared to purchasing a conventional annuity. -

Drawdown is not necessarily expensive, it depends on which provider you choose.For a person planning to retire at 52, it is easy to argue that long term an annuity is riskier due to inflation. If the OP lived till 90, quite possible for a man his age at current mortality forecasts, a level annuity would be virtually worthless even at today's low levels of inflation. He would have effectively run out of money by that time.

That's significantly less likely to be the case with a drawdown plan.

I am also a bit surprised about the high level of MVR quoted, though there may be some products started at a particular time (from late 2000 - mid 2002 ) particularly if a lump sum transfer in was involved, where 25% might be appropriate.

Perhaps the OP could give more details about the history of the pension.

IIRC the FOS will find in favour of an MVR-based misselling complaint if it wasn't mentioned at a sale after the company had invoked the penalty.SL was very late to invoke its (first ever) MVR - in September 2002 - so if the pension was started before that the OP probably won't succeed.

Given the OP's relative youth IMHO he should not be too concerned about the 25% MVR, but rather investigate in detail how a drawdown might be invested so as to make up the loss without compromising the income.This ought to be possible ovetr a few years at his age as the max income he can take is not very high.

dunstonh

Nowadays drawdown isnt expensive. Indeed, its not a lot different to holding the investments normally pre drawdown. Post A day contracts have seen to that.

Gatser

dunstonh wrote: »

(a)Does (did) the GPPP have employer contributions?
(b)Who picked the funds?
(c)Did you get a written report on the recommendation or were you told to join the scheme but no more?
(d)I'm surprised that a Standard Life plan still has an MVR that high on it. When was the last time you checked it?
(e)....If so, when did the pension start?
(f)You say it was a full review so you should have a reason why/suitability letter. On there, does it mention that you intended to do income drawdown?

Thanks for all the comments... and I will try to answer the questions to get an overall balanced answer...
(a) Yes, Company pays in mostly via a Salary Sacrifice arrangement
(b) I chose the funds with guidance from the IFA
(c) The IFA suggested that I invest further contributions into Property funds
(d) Yes... it really is 25% ! (I check it regularly)
(e) The SL pension was transferred into the SL GPPP in 2001
(f) The IFA letter acknowledges that I discussed with them my wish to have flexible pension arrangements, taking an early pension if I so choose. This was as a direct result of my numerous discussions about income drawdown.

Sadly, I am not even confident that when I get to 60, SL will have removed the MVR (as they themselves have written to me). Do I gamble that I will be able to transfer to a SIPP at 60 (without penalty) or take a hit now but get the money into a low cost SIPP under my control.
A difficult one I think !

EdInvestor

Gatser wrote: »

(e) The SL pension was transferred into the SL GPPP in 2001
(f) The IFA letter acknowledges that I discussed with them my wish to have flexible pension arrangements, taking an early pension if I so choose. This was as a direct result of my numerous discussions about income drawdown.

Do you mean that initially there were two pensions at SL, your own and the company Group Personal pension? And that in 2001, you transferred your own SL pension into the GPP? If so you could have a case against the IFA in the context of reduced flexinility/desire for early drawdown.. How did the money end up in With profits in the first place?

Sadly, I am not even confident that when I get to 60, SL will have removed the MVR (as they themselves have written to me).

What is the normal retirement date on your policy?Typically it is 60 or 65. At the NRD you should be able to "take benefits" from a WP pension without MVR penalty.

BUT

SL has a history of interpreting "taking benefits" as meaning taking tax free cash and converting the rest of fund into an annuity, not into an income drawdown plan in a SIPP.

They have attempted to suggest that anyone wanting to do drawdown in a SIPP is transferring his pension, not taking benefits, and thus has to pay the MVR.IIRC it is possible to get around this by asking SL to pay the tax free cash and then despatch the rest of the money to the SIPP provider.That way there can be no doubt you are taking benefits.But you would be wise to check this.

Gatser

EdInvestor wrote: »

(a)Do you mean that initially there were two pensions at SL?
(b)How did the money end up in With profits in the first place?

(c) What is the normal retirement date on your policy?
SL has a history of interpreting "taking benefits" as meaning taking tax free cash and converting the rest of fund into an annuity, not into an income drawdown plan in a SIPP.
.....But you would be wise to check this.

(a) There has always been one SL pension (for both EE & ER contributions)but it was changed to a low cost GPPP in 2001 and the funds transferred over (within SL) Hope this makes some sense...
(b) With Profits was the default pension fund since the early 1990's. Actually I do not have a problem with the fact that WP was the recommended fund at that time or the current MVR...my issue is with ...
(c) NRD=60. SL will not commit to assuring me that MVR will not be removed at NRD, because they say they cannot foresee market conditions in 12 years time!.

So I am left with the question:
Do I trust SL to (i) remove MVR at age 60?
(ii) allow me to transfer to a SIPP at 60 without penalty?

If they cannot commit to me, why should I feel comfortable to commit my trust in them ?

dunstonh

If they cannot commit to me, why should I feel comfortable to commit my trust in them ?

They are not authorised to make any such comment. To do so would be classed as opinion or advice. You are also asking them to second guess the markets and no-one can do that. You would expect it to reduce over time but there is no guarantee that it will.