Switching out of Standard Life WP, no MVR but a negative bonus?

pensionpickle

I'm considering switching my old SL "Serps" plan with c£40k in which I have had since 1992 (only £10k of this is in a WP fund with a 4% increase guarantee, the rest is multi asset funds), either to my current CS AVC (with lower charges), or to another more modern SL pension that supports drawdown/UPFLS (neither of these are possible under my old scheme). 

I'm looking to hopefully start the retirement process in the next 6 months and this will be a useful small-ish pot to bridge until I claim my CS DB pension hopefully.

SL tell me there is no MVR for this (which surprises me as they have previously advised last year a MVR of over £1k applied).  However they have said there is a "negative bonus" on my plan - no details given on this value though. This has not been mentioned to me previously, and the recent with profits bonus review issued by SL on 31/7/25 did not refer to any negative bonuses, indeed it seemed as if bonuses were increased  across the board if anything.

Has anyone else had a negative bonus? I'm trying to speak to SL to clarify as I'm struggling to see how this works and what impact it has on my value.  It seems as if WP funds are very opaque in their charging structure - negative bonus and MVR seem inter changeable in terms of reducing the value and I cannot see how they link to the guaranteed 4% value increase!

xylophone

This?



https://www.standardlife.ie/dam/Global-blueprint/Geo-IE/BZ_IE/BZ_PDF/with-profits-fund-guarantees-podcast-transcript.pdf

So today I’d like to focus on the Pension With Profits Fund.

Stephanie: How do you know if you’re in this fund?

John: The Pension With Profits Fund has code W3 or W7. This fund has two separate valuations:

• First; transfer value – which is like a low risk smoothed managed fund. This is based on the performance of underlying assets

• Second; the guaranteed unit value. This valuation
  has units times price. The price is guaranteed to increase at 4% per annum. This is potentially a valuable guarantee. The difference between these two independently calculated values is Final Bonus. 

If final bonus is positive this means that the Transfer Value is higher than the guaranteed unit value. If final bonus is negative (also called Unit Price Adjustment),then this means that the guaranteed unit value is higher than the transfer value.

pensionpickle

xylophone said:

This?



https://www.standardlife.ie/dam/Global-blueprint/Geo-IE/BZ_IE/BZ_PDF/with-profits-fund-guarantees-podcast-transcript.pdf

So today I’d like to focus on the Pension With Profits Fund.

Stephanie: How do you know if you’re in this fund?

John: The Pension With Profits Fund has code W3 or W7. This fund has two separate valuations:

• First; transfer value – which is like a low risk smoothed managed fund. This is based on the performance of underlying assets

• Second; the guaranteed unit value. This valuation
  has units times price. The price is guaranteed to increase at 4% per annum. This is potentially a valuable guarantee. The difference between these two independently calculated values is Final Bonus. 

If final bonus is positive this means that the Transfer Value is higher than the guaranteed unit value. If final bonus is negative (also called Unit Price Adjustment),then this means that the guaranteed unit value is higher than the transfer value.

very interesting!  Thanks for finding this...certainly seems counter intuitive, but a lot of info about the WP scheme seems to be either opaque, or gives SL so much discretion in calculating the sums that it is very unclear what the actual figures are.  This time last year SL wrote to me stating that there was a MVR of over 10%, now they are saying no MVR but referring to this negative bonus for the first time.  It seems as if they both amount to roughly the same thing? 

Problem for me is it is a partial WP fund with high-ish fees, and I could probably get a better return.  It is hard to transfer to my other pension (CSAVC) due to the WP/perceived value of guarantees, but the fees over the next few years until originally selected retirement date will probably equal the MVR/negative bonus!

DRS1

Will they let you do a partial transfer?  Leave the with profits bit behind and just transfer the rest?

pensionpickle

DRS1 said:

Will they let you do a partial transfer?  Leave the with profits bit behind and just transfer the rest?

No unfortunately, it is an old policy that doesn't allow partial transfers, drawdown or UPFLS. To do anything other than annuity/pension/cashing in I would have to transfer to a new SL product anyway.  As it is also fairly high in fees I was thinking of  transferring into into my civil service AVC with much lower fees and more flexibility  -  but they don't accept WP funds!

DRS1

I have an old policy (not with SL) with a with profits part and a unitised part.  A few years ago when I was asking about the GAR and how I could take an annuity and tax free cash while keeping as much benefit from the GAR as possible the insurer volunteered that I could take a partial transfer of just the unitised part if I wanted.  That went against what I understood.  I did not pursue it but it does suggest that some of these old policies may not be as restrictive as we may think.

Of course if SL say you can't do a partial transfer then I am sure they know what they are talking about.

On the not accepting wp funds point I think you may find you'd have to move all the funds in the pension into cash for the transfer to be made.

I also wonder if the guaranteed investment return is a safeguarded benefit which would mean you needed IFA advice for any transfer.

xylophone

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

1. In practice, safeguarded benefits are any benefits which include some form of guarantee or promise during the accumulation phase about the rate of secure pension income that the member (or their survivors) will receive, or will have an option to receive. 

according to SL 

Stephanie: So there’s a potentially valuable guarantee. Can you give me a simple example?

John: Let’s say Transfer value is €90,000 and Unit Value is €100,000. In this case the customer and broker will see -€10,000 difference on the statement. This is a good thing for retiring pension customers.

Stephanie: Why is that John?

John: Well if the customer continues until retirement the higher guaranteed unit value is the amount they will receive. And remember, this guaranteed unit value will continue to rise based on the 4% guaranteed price increase.

The policy does not offer a rate of secure pension income or option to receive a rate of secure pension income?

The OP could check with SL.