Aviva group personal pension to SIPP

Aylesbury_Duck

DRS1 said:

Oh well just a thought.  Be interesting to know what it is.

If you have a problem with the post from Aviva I think they have a way to send you correspondence by encrypted email.

Interestingly they sent me a secure message on the website to tell me they were sending me a letter by post!  Quite why they couldn't simply use the messaging facility, I don't know.

Oh well, time will tell.

dunstonh

Thank you.  I'm curious, because before initiating the transfer I specifically asked if there were any protected rights I would be losing if I transfer, and the answer was: "There are no safeguarded or protected benefits associated with the plan."  I also don't understand the "buddy" bit.  I'm the sole policyholder.  It is an old Friends Life policy that was taken over by Aviva.  Could that be what's behind it?

Protected tax free cash entitlement is not a safeguarded benefit.     

Can you confirm the pension type you have?  e.g. does it mention anything like Section 32 buy out bond or words to that effect?  Is there any reference on the original paperwork to an employer or scheme transfer?   Or a reference to executive pension plan?

Interestingly they sent me a secure message on the website to tell me they were sending me a letter by post!  Quite why they couldn't simply use the messaging facility, I don't know.

Aviva (CGNU) and Aviva platform are on more advanced systems than Aviva (FP) or Aviva (AXA).    The ex FP plans are still largely running on ex FP software out of the Salisbury office.  i.e. its showing its age.

Aylesbury_Duck

dunstonh said:

Can you confirm the pension type you have?  e.g. does it mention anything like Section 32 buy out bond or words to that effect?  Is there any reference on the original paperwork to an employer or scheme transfer?   Or a reference to executive pension plan?

I've had a read through all the paperwork I have.  I can't see any reference to S32 or any of the other terms you've mentioned.  It was originally a FL Personal Pension Plan (which I paid into through my employer, who made their own contributions) which began in 2006 and has been deferred since 2014.  I have a letter from May 2017 notifying me of the transfer to Aviva and confirming that no benefits would change as a result of the transfer.

There is a line about the with-profits fund that says: "Your plan may have a guarantee date when a MVR will not be applied.  Normally this is your selected retirement date."  That same line appears on every annual statement.

Albermarle

Aylesbury_Duck said:

dunstonh said:

Can you confirm the pension type you have?  e.g. does it mention anything like Section 32 buy out bond or words to that effect?  Is there any reference on the original paperwork to an employer or scheme transfer?   Or a reference to executive pension plan?

I've had a read through all the paperwork I have.  I can't see any reference to S32 or any of the other terms you've mentioned.  It was originally a FL Personal Pension Plan (which I paid into through my employer, who made their own contributions) which began in 2006 and has been deferred since 2014.  I have a letter from May 2017 notifying me of the transfer to Aviva and confirming that no benefits would change as a result of the transfer.

There is a line about the with-profits fund that says: "Your plan may have a guarantee date when a MVR will not be applied.  Normally this is your selected retirement date."  That same line appears on every annual statement.

MVRs are only usually applied to with profits funds after/during a big market drop. They are to protect the fund from people withdrawing too much when the funds are depressed.
Normally though any MVR applicable at the time will not be applied if you are withdrawing at your selected retirement date, which is probably 65. 'Selected' would imply you can change it, but I am not sure that applies with the with profit funds. 

Aylesbury_Duck

Albermarle said:

Aylesbury_Duck said:

dunstonh said:

Can you confirm the pension type you have?  e.g. does it mention anything like Section 32 buy out bond or words to that effect?  Is there any reference on the original paperwork to an employer or scheme transfer?   Or a reference to executive pension plan?

I've had a read through all the paperwork I have.  I can't see any reference to S32 or any of the other terms you've mentioned.  It was originally a FL Personal Pension Plan (which I paid into through my employer, who made their own contributions) which began in 2006 and has been deferred since 2014.  I have a letter from May 2017 notifying me of the transfer to Aviva and confirming that no benefits would change as a result of the transfer.

There is a line about the with-profits fund that says: "Your plan may have a guarantee date when a MVR will not be applied.  Normally this is your selected retirement date."  That same line appears on every annual statement.

MVRs are only usually applied to with profits funds after/during a big market drop. They are to protect the fund from people withdrawing too much when the funds are depressed.
Normally though any MVR applicable at the time will not be applied if you are withdrawing at your selected retirement date, which is probably 65. 'Selected' would imply you can change it, but I am not sure that applies with the with profit funds. 

thanks, and yes, Aviva have already confirmed that no MVR will apply if I transfer out of their with-profits fund and into their SIPP.

Hopefully the letter will land in the next couple of days and the mystery will be solved!

Aylesbury_Duck

Well, after a month of waiting, two emails and two phone calls, there is no sign of the letter. More concerning is that when I have called, I've had contradictory information from both "sides" - the former FL part of Aviva, and Aviva itself. I was told at one point by the FL team that transferring wasn't possible! I was told they could send the letter by encrypted e-mesage, then today that they can't but they're going to endeavour to email me by 11th March.

Not impressed at all with the process. It's too early for a formal complaint but if I haven't had the email/letter and an estimate of when the transfer will take place, by 11th March, then I will be complaining. It's pretty clear that I am dealing with two entirely separate "companies" within Aviva, and neither has any idea (or will to find out) what the other is doing.

I started this process because I'm comfortable choosing my own funds, it's a means to exit the with-profits fund with what looks to be a currently healthy bonus, and because the SIPP will cost me 0.56% in fees instead of the 1% I'm currently paying. I also thought it would be relatively straightforward to do an internal transfer from one Aviva product to another. If Aviva continue to muck about, I may just cancel the transfer and start a new one from my Vanguard SIPP where the fees are even lower.

Aylesbury_Duck

I made a formal complaint, which has instigated some action and I've finally been sent the letter about the block transfer. It turns out that, despite written confirmation to the contrary back in October, there are some protected benefits associated with the current policy, which I need to "sign away" if I want to proceed with the transfer. On the face of it, the benefit looks to be a negligible one, but I would appreciate people's thoughts to make sure I'm not missing something.

The form says this:

The value on 5 April 2006 was £15125
The amount of tax-free cash available under this policy at 5 April 2006 was £7223
This amount can be increased in line with the change in the Standard Lifetime Allowance.
In addition, you may also be entitled to an amount relating to any post 5 April 2006 increase,
where the increase is calculated as being the difference between your actual retirement fund
(A), and your 5 April 2006 retirement fund increased in line with the increase in the Standard
Lifetime Allowance (B).
Where A is greater than B, the additional tax free cash will be 25% of the difference between the
two funds. Where B is equal to or greater than A, no additional tax-free cash will be payable.
The actual retirement value will be determined in accordance with the policy booklet.
Please note that any tax free cash payable on retirement will be subject to having available
Standard Lifetime Allowance

The policy has been deferred since 2014 and is currently worth around £222k (once the with-profits final bonus is added). I have other DC pension plans, including an LGPS-linked AVC, the aggregated value of all of them is about £600k, and the sum of my TFLSs at the moment is about £218k (because of the generous TFLS entitlement with the AVC).

My reading of this is that if I proceed with the transfer, I'm giving up a small extra amount of TFLS which will probably be irrelevant in any case, since I'm likely to be at or above the £268k standard lifetime allowance, anyway. Have I understood that correctly? Or is there a much bigger benefit here that I'm misunderstanding? Even if the TFLS element of this policy is much larger than 25%, I presume I'd just be moving TFLS around because I'll be up against the ceiling in any case?

DRS1

Am I wrong to think that this scheme specific lump sum protection might assist you if you knock up against the LSA? Maybe not by much but by something? See the end of this note

Scheme specific tax-free cash protection

Aylesbury_Duck

https://forums.moneysavingexpert.com/discussion/comment/81907652#Comment_81907652

Thank you, that looks like it's a good explanation for what's behind the letter. I will do some calculations using the formula from that link, and try to understand the extent of the tax benefit in play here. If negligible then I'll proceed with the transfer but if more, or if I can't get my head around it fully, I'll hold off.

Aylesbury_Duck

Well, I've done the sums as per that link. I think the result is that I would have about £61k of tax free cash I could take from the current pension (at today's value) versus £55k if the pension was moved to the Aviva SIPP. If I've read the formula correctly, that £6k difference holds absolutely as the fund value changes. I assume that because the fund was relatively small on A-day, the TFLS benefit is correspondingly small.

On the face of it, with the fee difference saving me £700 p.a. over the next five years before I even begin to think about drawing on this pension, and the ability to "cash in" on the current with-profits bonus, which might be more or less when the time comes, it seems prudent to proceed with the transfer.

I'll mull it over for a few more days and check my calculations, but can anyone see if I've missed anything or if there's a fundamental flaw in my reasoning?