Advice on moving a Pru With Profits please. What to do?

mehimandus

OH is almost 70 and in receipt of State Pension but also has a Pru With Profits that has about £130k in it.  He has ‘sat on’ this for a long time and it’s a long time, since any contributions were made into it.  

When he retired, we had savings, and as interest rates were low, decided to keep ‘sitting on’ the pot and supplement SP from savings. 

We’ve tried to research and have some basic knowledge but not enough.  We know about FAs/IFAs and the websites that you can find them on but really, we have been at a loss as to who to go to.  Or now, as time has ticked on, do we really need an FA/IFA.   

We did speak to a couple of IFAs, briefly, a few years ago but didn’t feel particularly enamoured or need access to the pot, and of course, the charges seemed considerable, so we continued to sit on the Pru WP and are not disappointed with its growth.  Although, maybe someone with more knowledge than us would be.  

Basically, we’ve decided that, ultimately, drawdown would be the best option for us. We don’t need access immediately but likely would want to access it, sometime soon. OH is also concerned re the upcoming budget etc and wondering, if it’s prudent, to take action to move it now?  

We’ve previously spoken with a PRU adviser who stated that, to access the money via drawdown, we’d have to pay fees including  an ‘initial advice fee’ (£3k ish) and that this was unavoidable. It’s taken us awhile to conclude that, this cost is probably only unavoidable with the Pru. We’ve recently concluded,  if we move it to another provider, then costs could be much lower, the problem now is, where should we move it to? 

As we know that Drawdown is the route we want to go down, do we really need an IFA? Like most people, we would obviously like to avoid unnecessary costs.  In stating this tho, we’re not savvy regarding managing shares etc.  

When researching  DIY drawdown, SIPPs are regularly mentioned.  Our understanding of a SIPP is that you need reasonable knowledge on dealing shares, that we don’t have experience of 

What we’d probably be looking for is, a well regarded Drawdown Pension with medium risk that had reasonable management costs, that we don’t have to think too much about and that we could move the Pru pot to, without having to pay FA fees.  Could anyone point us in this direction please?  

One relevant point of note is, the current WP Pension mentions an MVR could be applied.  Literature does state that  this can change at any time.  We were once told on a Pru call, that as OH’s initial retirement date has passed, it’s unlikely they’d apply an MVR.  Each time we’ve questioned an MVR over recent years, we’ve been told that ‘today it’s currently £0’.   OH has raised the question that, if we decided to take drawdown elsewhere, might the PRU then decide to apply an MRV? Is there anyone out there who would have knowledge or experience on this point please?  

Any advice would be greatly appreciated. 

xylophone

OH might benefit from a Pension Wise interview.

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

Had you explored a transfer out to a SIPP?

Example

https://www.hl.co.uk/pensions/transfer-to-the-sipp

The SIPP permits access to the pension as best suits your circumstances.

https://www.hl.co.uk/pensions/sipp/frequently-asked-questions

With regard to any MVR, what exactly does your own product literature have to say on the point?

If it is a case of the application of  MVR  will depend   on  market conditions at the time of access/transfer, then you have no choice

but to accept it if it happens?

dunstonh

We’ve tried to research and have some basic knowledge but not enough.  We know about FAs/IFAs and the websites that you can find them on but really, we have been at a loss as to who to go to.  Or now, as time has ticked on, do we really need an FA/IFA.   

You should never need an FA.   The choice should be DIY or IFA.    

We did speak to a couple of IFAs, briefly, a few years ago but didn’t feel particularly enamoured or need access to the pot, and of course, the charges seemed considerable, so we continued to sit on the Pru WP and are not disappointed with its growth.  Although, maybe someone with more knowledge than us would be.

Most Pru pensions in the WP fund have higher charges than modern plans.   The difference in modern times is that the charges are explicitly disclosed whereas old Pru plans are very opaque.   So, on transactional advice, you have probably paid more to Pru in charges since then compared to what an IFA could have moved it to.  

Basically, we’ve decided that, ultimately, drawdown would be the best option for us. We don’t need access immediately but likely would want to access it, sometime soon. OH is also concerned re the upcoming budget etc and wondering, if it’s prudent, to take action to move it now?  

What speculation is your OH falling for?

We’ve previously spoken with a PRU adviser who stated that, to access the money via drawdown, we’d have to pay fees including  an ‘initial advice fee’ (£3k ish) and that this was unavoidable. It’s taken us awhile to conclude that, this cost is probably only unavoidable with the Pru. We’ve recently concluded,  if we move it to another provider, then costs could be much lower, the problem now is, where should we move it to? 

Pru's service is non-advised.  Yet they charge more than the average adviser charge.  And you are limited to the modern Pru contract which isn't very desirable.  I call it modern as its what they offer today but operating it feels like something from 20 years ago.    

As we know that Drawdown is the route we want to go down, do we really need an IFA? Like most people, we would obviously like to avoid unnecessary costs.  In stating this tho, we’re not savvy regarding managing shares etc.  

Again, it comes down to DIY or IFA.    DIY will save you money if you know what you are doing but will cost you more if you get it wrong.    
You say you know that drawdown is the route you want to go down.    Which method of drawdown are you considering? (as there are multiple ways).
What drawdown investment strategy will you be using?   

When researching  DIY drawdown, SIPPs are regularly mentioned.  Our understanding of a SIPP is that you need reasonable knowledge on dealing shares, that we don’t have experience of 

Most consumers do not use shares.   They use funds and its the funds that will invest in shares.   So, you don't need to micromanage the shares.  You just need to manage the fund selection.

What we’d probably be looking for is, a well regarded Drawdown Pension with medium risk that had reasonable management costs, that we don’t have to think too much about and that we could move the Pru pot to, without having to pay FA fees.  Could anyone point us in this direction please?  

Insufficient information to answer that.   There is no single best option.   The type of investments you want, the method of drawdown you intend to use (not all pensions support all methods), the quality and functionality of their software and their service are all key considerations.

One relevant point of note is, the current WP Pension mentions an MVR could be applied.  Literature does state that  this can change at any time.  We were once told on a Pru call, that as OH’s initial retirement date has passed, it’s unlikely they’d apply an MVR. 
Each time we’ve questioned an MVR over recent years, we’ve been told that ‘today it’s currently £0’.   OH has raised the question that, if we decided to take drawdown elsewhere, might the PRU then decide to apply an MRV? Is there anyone out there who would have knowledge or experience on this point please?  

An MVR could be imposed at any time.  There is usually a window after you reach scheme retirement age that the MVR would not be applied.   However, if the scheme retirement age has been deferred, then the MVR could be applied again up to that scheme age.       That said, different versions of the pensions have had different rules applied to them over the years.  So, you cannot rely on generic information but would need to know the scheme rules.  Pru typically give that info automatically in the packs they supply IFAs.  So, it should be easily obtainable for a consumer directly.

Historically, MVRs do not appear overnight and only occur on heavy loss periods and on those that have not invested for a long time.   e.g. recent losses on bonds have taken them back to where they were 7 years ago.    So, if you had invested in that 7 year period, you may have had an MVR.  However, if you invested long before that, then there wouldn't be an MVR.

xylophone

If you decide that you need professional advice, you could try

https://adviserbook.co.uk/

Tick "confirmed independent" and other options required when the menu comes up.

alwayslearning77

Just for info, I transferred a Pru with Profits Pension to Interactive Investor Sipp last year, so that I would be able to drawdown when I wanted.  It took a few months to get it transferred, mainly due to the Pru. It didn't cost anything to transfer it, but obviously there are monthly charges and ongoing charges involved in running a SIPP, and you need to decide what you want to invest in. I'm not specifically recommending Interactive Investor as there are lots of platforms and I'm sure others will have a much better view than I, but their communication was very good during the transfer and they prompted me for the documents they required.

dunstonh

Just for info, I transferred a Pru with Profits Pension to Interactive Investor Sipp last year, so that I would be able to drawdown when I wanted.  It took a few months to get it transferred, mainly due to the Pru.

They are much improved of late.   Taking about 8-10 days now.  Scot Am versions seem to take a day or two longer.

If the anti-fraud checks are triggered and you are going to a small player, then you are talking months.  If you transfer to an provider that uses Origo, then you talking days.

bucksman

It's good to read it is now more speedy.  Do the Pru and Interactive Investor use Origo?  I am in the same position as the OP and was also considering Vanguard, as I'm no Warren Buffett.

Roger175

I have recently completed a transfer of an old 'with profits' pension from Prudential into my A J Bell SIPP and can explain exactly what you need to do.

Firstly, prepare yourself for a relatively long and frustrating process (probably several months in total). Prudential appear to be in turmoil and their staff and systems are simply not fit for purpose. However, stick with it as it will be a huge relief once you are away from them and able to control things yourselves.

In my case, I actually had 5 separate plans all with individual policy numbers and with no obvious overall plan number, albeit, Prudential always treated them as being one plan.  In my case the total value was around £167k and a MVR of about £2k was applied to only one policy (no idea why, but I just accepted it in order to get out). When speaking to Prudential I always gave the policy number of the largest individual policy and they seemed to be able to then see the rest on their screen.

You need to make the request to transfer by asking the new pension provider to instigate the transfer - In my case I already had a SIPP with A J Bell, so they were my choice of companies to transfer to. 

In theory, Prudential should be able to use the Origo automated transfer system, but in my case they said they couldn't and never provided a satisfactory answer as to why not, so I was forced to do a paper transfer. (They gave several incorrect and totally spurious reasons, but never a proper answer).

Prior to asking your new provider to instigate the transfer, you need to phone Prudential (prepare for a long wait) and ask for a transfer value/illustration to be provided - they will insist on posting this and will give you a long-stop date by which it should be received. They will almost certainly miss every deadline in which case you can then phone them and they will agree to it being sent by secure email, but even this will take 3 days to arrive (if they don't agree, insist! trust me they don't make it easy). Once you have the transfer value you need to ask them for the Transfer Discharge paperwork. This will be required by the receiving scheme and will take another age to be posted (or not in my case!) in which case they will be obliged to email it. Once you have this, return it to Prudential whilst also sending a copy to your new provider and then sit back and hopefully it should all happen.

When filling out the Transfer Discharge paperwork there is a section about advice - you have to answer whether you're 'transferring to access your pension savings'. If you tick yes, the next question asks you to confirm whether you've taken advice from Pensionwise, a Financial Advisor or are choosing to proceed without advice. I ticked the 'no' box which was true in my case, but in any event, it makes no difference, once the money is in the new account you can pretty much do what you like. So, to reiterate I didn't have to take any advice.

Just be prepared for the fact that Prudential are totally archaic in their procedures and the fact that their staff, whilst sounding reasonably competent are clearly not - they contradict each other and whilst there clearly are a few good people there, some of them couldn't give a monkey's.
 
Good luck with it.

bucksman

Roger175 said:

I have recently completed a transfer of an old 'with profits' pension from Prudential into my A J Bell SIPP and can explain exactly what you need to do.

Firstly, prepare yourself for a relatively long and frustrating process (probably several months in total). Prudential appear to be in turmoil and their staff and systems are simply not fit for purpose. However, stick with it as it will be a huge relief once you are away from them and able to control things yourselves.

In my case, I actually had 5 separate plans all with individual policy numbers and with no obvious overall plan number, albeit, Prudential always treated them as being one plan.  In my case the total value was around £167k and a MVR of about £2k was applied to only one policy (no idea why, but I just accepted it in order to get out). When speaking to Prudential I always gave the policy number of the largest individual policy and they seemed to be able to then see the rest on their screen.

You need to make the request to transfer by asking the new pension provider to instigate the transfer - In my case I already had a SIPP with A J Bell, so they were my choice of companies to transfer to. 

In theory, Prudential should be able to use the Origo automated transfer system, but in my case they said they couldn't and never provided a satisfactory answer as to why not, so I was forced to do a paper transfer. (They gave several incorrect and totally spurious reasons, but never a proper answer).

Prior to asking your new provider to instigate the transfer, you need to phone Prudential (prepare for a long wait) and ask for a transfer value/illustration to be provided - they will insist on posting this and will give you a long-stop date by which it should be received. They will almost certainly miss every deadline in which case you can then phone them and they will agree to it being sent by secure email, but even this will take 3 days to arrive (if they don't agree, insist! trust me they don't make it easy). Once you have the transfer value you need to ask them for the Transfer Discharge paperwork. This will be required by the receiving scheme and will take another age to be posted (or not in my case!) in which case they will be obliged to email it. Once you have this, return it to Prudential whilst also sending a copy to your new provider and then sit back and hopefully it should all happen.

When filling out the Transfer Discharge paperwork there is a section about advice - you have to answer whether you're 'transferring to access your pension savings'. If you tick yes, the next question asks you to confirm whether you've taken advice from Pensionwise, a Financial Advisor or are choosing to proceed without advice. I ticked the 'no' box which was true in my case, but in any event, it makes no difference, once the money is in the new account you can pretty much do what you like. So, to reiterate I didn't have to take any advice.

Just be prepared for the fact that Prudential are totally archaic in their procedures and the fact that their staff, whilst sounding reasonably competent are clearly not - they contradict each other and whilst there clearly are a few good people there, some of them couldn't give a monkey's.
 
Good luck with it.

Thank you, Roger, for this helpful account of your journey! I managed to get a valuation from the Pru, it took 3 months! Initially, I was told there would be no MVR, then, like you, £2k was applied - it all seems very random. And more reason to find a transparent and efficient financial provider! 

Roger175

bucksman said:

It's good to read it is now more speedy.  Do the Pru and Interactive Investor use Origo?  I am in the same position as the OP and was also considering Vanguard, as I'm no Warren Buffett.

Both the Pru Team and A J Bell told me it should be possible with Origo, but when AJB sent through the request, it was rejected by Pru who said to use the Paper route. When I phoned Pru, the operative said that this was wrong, it could definitely be done by Origo (she told me she used to work in the transfer team and was categorical about this!) and asked me to request AJB to try again as it was obviously a blip in the system. It was then rejected a second time without any sensible reason given. One obnoxious Pru operative told me Origo was only suitable for transfers up to £30k (wrong!) another said I obviously had some protected benefits, but couldn't tell me what these might be - when I eventually analysed it all, the only thing remotely described as a protected benefit was that I could take the pension at age 55 (so could anyone else of my era and I'm already 60, so not much help there).

The whole process in my case took about 4 months, it sounds like you're already going to be longer than that! do stick with it though. (to put that in context, a transfer from HL to AJB took 6 days, start to finish)

mehimandus

Thanks all for your comments.  I’m trying to respond by replying to quotes but struggling with ‘body is 10 characters too long’ error message. I’m working on it and hopefully back shortly