Moving pension pots for the best annuity

DRS1

Roy1234 said:

So I looked at both her statements dated December'25, from SW and People's Pension, formerly B&CE, a construction industry related scheme from her having worked mostly in that world.

Amazingly, neither SW nor PP statements show the type of fund anywhere!  The letters acknowledge her intended June retirement date, show contributions and current values, include a MoneyHelper booklet re decisions coming, but no named fund.  Getting her to log into SW on her phone (not sure if this was effectively the app or the website), despite similar fund info and options to vary investments etc, the fund is not named.

Does this seem odd for a giant like SW?  She'll try accessing both via PC shortly in case more info is there, but I just can't understand the fund name not being beside the value.  My work Money Purchase scheme has moved between about three providers (inc BlackRock & Aegon) but the name e.g. Lifestyle has always been there.

She says she's never meddled with any pension options so I'm hoping she has ended up in something like a lifestyle.  Like so many non-financial people, she doesn't really understand or want to be troubled with this stuff.

Her SW statement did however state that there are no special guarantees.  Her PP statement said nothing on the matter.  The SW statement had a paragraph saying under 75, remaining fund values can be passed on tax-free, whilst over 75 they are taxable.  But I'm not sure if this is some perk or just a restatement of government policy?

Re the widow's pension, I'm 5 years younger which might reduce the joint life offering; but I did survive a cancer episode 15 years ago, which I suppose 'might' push the calculation a little better?

Most employer DC schemes let the employee choose hw their pension is invested.  Whether derisking into eg. gilts and bonds makes sense or not will depend on your own investment choices, and those choices will depend on how you plan to use your pension.If you're planning to take an annuity, derisking into a gilt fund might make sense. If you're planning to draw down over the next 30 years, it might not.

My employer DC scheme has never offered options steered towards annuity of else draw-down.  The two options are discussed at periodic pension briefs, but not re type of fund chosen.

The lack of fund information is curious.  In my old paper statements from SW (for the unit linked bit of the pension) I had 4 columns and the first was headed FUND then there was UNITS ALLOCATED, BID PRICE and VALUE.

Admittedly they were a bit cryptic about identifying the fund so I had MX (for the Mixed Fund) and EQ (for an equity fund).

I only had online access for a few months in 2025 and I can't remember what that showed.

It is good to know there are no guarantees.  That means she can move to a third party annuity provider if they give the best quote.  I had a look at an old email I had from Retirement Line because I remembered they had a list a questions to ask the pension company.  I quote it below (also including their bit about timing)

"If you wish to contact your pension providers and obtain the following information, this will help assess whether your pension plans has any inclusive valuable benefits, by contacting your pension provider directly could save you approximately 2-4 weeks when processing your annuity arrangements. The average timescale to set up your annuity is 8 - 10 weeks.

Does this pension plan have any safeguarded benefits? For example Guaranteed Annuity Rates (GAR), Guaranteed Minimum Pension (GMP) or Protected Tax Free Cash?

Does this pension plan have any penalties for transferring? For example, Exit Penalties or Market Value Adjustment?

Are there any other benefits attached to my pension plan which would be lost on transfer?

Do I require transfer forms or can transfer of funds be made by ‘Origo’ transfer. (Origo transfer allows the pension providers to communicate directly without the need to complete any further paper documentation).

 

Alternatively, we will endeavour to check the above questions for you on your behalf on receipt of your application form."

It may be obvious but if you go for a joint lives annuity then they will look at health and lifestyle for BOTH of you.  So your health will be a factor - I can't remember how far back they go but you should make sure they know about the cancer scare even if it does not fit neatly into the medical questions.

Roy1234

Thanks, I'll get her to try that.  Assuming it says she's on Balanced/Medium or whatever the SW default is, can she assume she's been quietly moved into low risk now for many years?  I mean she shouldn't have to choose Cautious herself, should she?

DRS1

Roy1234 said:

Her SW statement did however state that there are no special guarantees.  Her PP statement said nothing on the matter.  The SW statement had a paragraph saying under 75, remaining fund values can be passed on tax-free, whilst over 75 they are taxable.  But I'm not sure if this is some perk or just a restatement of government policy?

I missed the bit about age 75.  That is just the law - nothing special for SW.

It may be obvious but if she buys an annuity that will be outside the personal pension and the stuff about inheriting the pension pot and the pre/post 75 tax treatment won't apply because there won't be any pension pot any more.  It is something to bear in mind if you are deciding between drawdown (where she would keep the pension pot and just take money out of it from time to time) and buying an annuity (where the pension pot gets spent on the annuity).

dunstonh

So I looked at both her statements dated December'25, from SW and People's Pension, formerly B&CE, a construction industry related scheme from her having worked mostly in that world.

You mention "formerly B&CE".      Peoples Partnership (their current name) used the Peoples pension brand right from the start of auto-enrolment.    The B&CE brand was used for the LSRB and stakeholder pensions.     So, from your reference to B&CE, it would suggest an older product.

Does she have the LSRB or a stakeholder pension?
If a stakeholder, then that is just a normal pension.  If its the LSRB then it is a hybrid plan from the old days and pays 100% tax free cash.

Does this seem odd for a giant like SW?  

Not necessarily.   Their statements do show the funds if it is invested in unit linked funds.  However, if its in a non-unitised With Profits fund then there would be no units, unit price or fund name to show.

My work Money Purchase scheme has moved between about three providers (inc BlackRock & Aegon) but the name e.g. Lifestyle has always been there.

Aegon bought Blackrock's pension book.  So, it wasn't a plan change but a brand change.   i.e. a continuation of what was already in place.

My employer DC scheme has never offered options steered towards annuity of else draw-down.  The two options are discussed at periodic pension briefs, but not re type of fund chosen.

Aegon does have lifestyle funds for different methods (e.g. target annuity, target drawdown etc) but IIRC, Blackrock did not.  I don't know if Aegon have made the funds available on the Blackrock product yet.

Roy1234

DRS1 said:

Roy1234 said:

Her SW statement did however state that there are no special guarantees.  Her PP statement said nothing on the matter.  The SW statement had a paragraph saying under 75, remaining fund values can be passed on tax-free, whilst over 75 they are taxable.  But I'm not sure if this is some perk or just a restatement of government policy?

I missed the bit about age 75.  That is just the law - nothing special for SW.

It may be obvious but if she buys an annuity that will be outside the personal pension and the stuff about inheriting the pension pot and the pre/post 75 tax treatment won't apply because there won't be any pension pot any more.  It is something to bear in mind if you are deciding between drawdown (where she would keep the pension pot and just take money out of it from time to time) and buying an annuity (where the pension pot gets spent on the annuity).

Thanks, you confirm what I thought they meant.  I realise that draw-down will for many mean more of the fund is taken overall, perhaps why I'm told they've become the norm now, but she doesn't like the idea of a pot that can run out.  She's an optimist by nature, and like many of us likes to imagine a long retirement.  She also has the advantage that a recent inheritance means that she isn't short of cash for holidays etc, so isn't depending on a fixed annuity to effectively give her more buying power now.  Likewise doesn't need the Lump Sum.

Roy1234

Just to update the promised info.  On a PC the PP/B&CE website showed almost all her fund in the B&CE Pre-retirement fund.  So that sounds good.

Logging into the SW website, wow how slow and buggy, and 'can't give you that information right now'.  Is the SW  webpage normally so dire?

Anyway, she is in the SW Balanced Profile and it lists her as being invested in 2 funds, the SW Four CS7 (about 78%) and the SW Five CS7 (about 12%).  Google suggests these are lower risk funds, but the names tell you nothing.  I much prefer B&CE's approach. 

DRS1

I am not sure if these are the SW funds (so many have very similar names)
SW Pension Portfolio Four CS7 Pn Fund factsheet | Trustnet
SW Pension Portfolio Five CS7 Pn Fund factsheet | Trustnet

If so then lots of bonds in there.  So lowish risk as you say.

PS 78 + 12 = 90 so is there a third fund?

Roy1234

DRS1 said:

I am not sure if these are the SW funds (so many have very similar names)
SW Pension Portfolio Four CS7 Pn Fund factsheet | Trustnet
SW Pension Portfolio Five CS7 Pn Fund factsheet | Trustnet

If so then lots of bonds in there.  So lowish risk as you say.

PS 78 + 12 = 90 so is there a third fund?

Sorry, second fund was 22%.  Moral: don't do maths with a bad head cold!

RogerPensionGuy

Just for information. 

Last year I was getting non enhanced annuity quotes. 

The 2nd best quote I got via a broker ooker was with my SIPP provider. 

I got that SIPP (insurance) company to give me a quote for exactly the same, it was a good chunk less than via a broker, I was hoping it would be better and hoping it would be the overall best.

It's a funny old system. 

Albermarle

Roy1234 said:

I have mentioned that I had a pension with SW and bought the related annuity from SW.  So the link has remained for that one.  The reason I stuck with SW was that my pension had a GAR and I would lose that GAR if I transferred the pension elsewhere or bought an annuity from a third party.  That is why it is important to check if she has any such benefit in her existing pensions.

Sorry if I’m being thick here.  I’ve spent my working life in company pension schemes; my wife’s private ones have complexities that are new to me.

Is this correct: If she gives say the SW pension to SW for the annuity, after her research via IFA/brokers, there might be a guarantee of other valuable perk she gets for loyalty to SW.  One that might sway the decision.  Correct?

Well that is another surprise.  Is that a reflection of the growing regulation etc on IFA's shrinking the pool of those still practicing? I don't know about that.  The thread I was thinking of was from someone who could not find an IFA who would just deal with the buying of the annuity.  Many of them wanted to do a full financial survey and give ongoing advice on all things financial.  Others just have trouble finding an IFA at all.  The usual source (unbiased) seems to have become the home for big firms not the smaller independents that you might prefer.  I think there is a box you have to tick to find them. 

Correct me if wrong here, but I thought that these days, IFA’s had no choice but to do full surveys for the products they sell?  If so, perhaps the few thousand they’d get from many modest pension pots just isn’t worth it?

So she wants an RPI linked annuity - not 3%.  @dunstonh or others will have views on whether you need a guaranteed period if you go for joint lives.  If you have gone for 50% spouse annuity then it may make sense to have the 100% continue for x years if she dies early.  What I am not sure about is if the 100% would pay out at the same time as the 50% or if the 50% would only start at the end of the guarantee period.  Something an IFA or broker would know more about.  As to the effect it has on the annuity that is why you use the Moneyhelper or HL calculators.  They will give you a feel for the impact.

The issue of wanting joint lives was pretty much a knee jerk assumption, as my company schemes give that to her.  Perhaps I would cope better without a widower’s pension than she would?  A tricky decision, not least because she likes to leave these decisions to me.

As both pension companies have been given a retirement date of this June, isn't it normal/automatic for them to move investments into high security/lower return as that date approaches?  My work related pensions certainly do this.  As @MallyGirl says that depends on how her pensions are invested.  The older forms of lifestyling were based around buying an annuity at your selected retirement date but more modern ones can be geared towards drawdown and so glide into bonds/cash at a more gentle rate and leave a lot more in equities for longer.  And there was a time before anyone had heard of lifestyling.  Her annual statements should say what the pensions are invested in.

Well putting my company pension hat on, I find it astonishing any major private scheme would not do that nearing state retirement age.  Company advisors have told me that the vast majority of members their leave investments on default settings, really don’t want to meddle, so are shepherded through medium risk options and automatic transfer into the safe/low return ones in the last 5 or 10 years.  I’ll do some digging in her docs.  But this close to retirement age (she'll get the state pension later this year) I would hope that whether aimed at drawdown or annuity, the element of risk would have been mostly over.  No doubt I am wrong about that too!

To add some context.

Around 3 years ago, supposed low risk investments like gilts and bonds dropped very significantly - a one in a hundred year event, caused by interest rates rising post Covid, from a long period of being very very low. 

We had many posters on here, very upset that their pots had dropped, and even more upset that the pension provider had derisked their investments pre retirement, as they were unknowingly in something called a lifestyle fund. Some of these posters had planned to get an income from their pension via drawdown, so significantly derisking pre retirement is not a good idea for drawdown at any time . So they were doubly upset.

They also railed against the providers for not managing their pensions better, even though the situation was the opposite of what you have been commenting.

The basic point that comes out of these discussions, is that the pension providers will not manage your pension, and will not offer any personal advice. At best they will have some middle of the road default option. If you want your pension managed to your liking, you have to do it yourself, or pay an advisor to do it.

Unfortunately the average member of the public, has no interest or understanding in these issues, so will often get a sub optimal result, or come to realise how it works ( or not) too late as they approach retirement.