With profits pension

Ozro

Hi, my pension is quite low so probably not worth getting pension advice on my pension due to costs. I would be grateful if someone could advise on the following:

I have my fund value sum, my transfer value is another £20K on top which includes the final bonus (not guaranteed) My pension is due to finish when I am 60 which is late next year. I am conscious that there could be a correction in the market soon which was reported in the news. Would it be best to transfer my pension to a SIPP pension now or wait for the end of this pension as it is so close. As the pension isn't high value but it is however my main pension, I would hate to lose the bonus. They say I can transfer now at no cost and the transfer value does include the final bonus. My predicted pension at age 60 is only another £2K from the figure for the transfer value.

I think I did mention to someone ages ago about transferring but at that time they said it was better to stay in the with profits and not transfer but now might be the time so at least I know I won't really lose anything. If the bonus part goes right down my pension will be very small indeed.

Thank you for your time.

plumb1_2

I had small £33k contracted out pension in a with profits fund with SL. And was virtually forced to take a annuity.

You need to ask them if there’s any safeguarding benefits attached to it, like a GMP ( guaranteed minimum pension).

dunstonh

 My pension is due to finish when I am 60 which is late next year. 

Most legacy pensions need to finish by 75. If yours is 60, then its more likely that is the currently selected scheme age but you can change that.

I am conscious that there could be a correction in the market soon which was reported in the news. 

Corrections happen frequently. Around 1 every 2 years. There have been two in the last 14 months. Corrections are rarely anything to be concerned about.

Would it be best to transfer my pension to a SIPP pension now or wait for the end of this pension as it is so close. A

How would transferring it to a SIPP help?

My predicted pension at age 60 is only another £2K from the figure for the transfer value.

Its not a prediction. It's a projection. As WP funds are generally low risk and have relatively low equities, the projection rates used in the assumptions tend to be low. Plus, its not only £2k. It is £2k after adjustment for inflation. So, it will be more than 2k.

Ozro

I had small £33k contracted out pension in a with profits fund with SL. And was virtually forced to take a annuity.

You need to ask them if there’s any safeguarding benefits attached to it, like a GMP ( guaranteed minimum pension).

Hi, when I phoned them and asked if there was a minimum pension amount, they advised that they were unable to give advice but the transfer value was as at today's date - they can't guarantee the amount of the bonus in the future so could go down.

I will maybe try again to ask them about the GMP but she was very difficult to understand and seemed that they didn't really want to give me much info, especially as I don't really understand it.

I really don't want an annuity so I wonder how I make sure that won't happen if I stay with them - its with Aviva.

Ozro

My pension is due to finish when I am 60 which is late next year. 

Most legacy pensions need to finish by 75. If yours is 60, then its more likely that is the currently selected scheme age but you can change that.

At this time I don't want to change that - I am not sure due to health reasons that I can continue working until I am 67 so am happy that it is finishing at 60. I was also advised that not always a good idea to continue these beyond the date it was set up to finish.

I am conscious that there could be a correction in the market soon which was reported in the news. 

Corrections happen frequently. Around 1 every 2 years. There have been two in the last 14 months. Corrections are rarely anything to be concerned about.

Ok but it has been reported in the papers that a correction will probably happen soon based on the mad world we are currently living in!

Would it be best to transfer my pension to a SIPP pension now or wait for the end of this pension as it is so close. A

How would transferring it to a SIPP help?

Because I would then be guaranteed my bonus which is included in the transfer value and I can transfer at no cost. My bonus which has currently been added could go down in the future. If I say then went to Vanguard then I would grow my pension still until I was ready to take it.

My predicted pension at age 60 is only another £2K from the figure for the transfer value.

Its not a prediction. It's a projection. As WP funds are generally low risk and have relatively low equities, the projection rates used in the assumptions tend to be low. Plus, its not only £2k. It is £2k after adjustment for inflation. So, it will be more than 2k.

Ok thanks - all very confusing to me and difficult when the fund isn't very large to try and do the best without any advice

Albermarle

Ok but it has been reported in the papers that a correction will probably happen soon based on the mad world we are currently living in!

The same comments are made every week by somebody, probably for the last 150 years.

What do you think will happen to investments in a SIPP if there is a market crash?

With Profits funds are one of the better protected investments in a market crash. They always say the final bonus is not guaranteed but it would be unusual for it to be reduced.

Ozro

I have an aviva with profits pension which is due to mature next August. Can I at that stage withdraw my 25% tax free and then transfer the rest to another pension provider? I presume they won't make me take an annuity

Ozro

https://forums.moneysavingexpert.com/discussion/comment/81979016#Comment_81979016

Ok thank you. I was considering just placing it in cash or bonds with a new provider anyway. My main concern was whether the bonus which has currently been added on my transfer value but which is not guaranteed at maturity, could potentially be wiped out. I am not explaining myself very well.

DRS1

When you get near your selected retirement date Aviva will send you a pack which shows the choices you have. Broadly they are Do Nothing, Take an Annuity (with or without a tax free lump sum) Go into drawdown or Take everything in one big lump sum.

The pack is generic so you would need to get more details especially about drawdown as that may require you to transfer to a more modern pension (which could be with Aviva but could equally be a SIPP with someone else).

Just to add to the complexity if you are thinking about taking a transfer you should ask about market value reductions. That is how they would adjust your pension figures if the bottom fell out of the market. Typically if you take your benefits at your selected retirement age then no market value reduction would be applied. If you take them (or a transfer) some other time they are possible but it depends on the markets. 2 years ago when I took my benefits from 4 Aviva pensions I was told to check there was no MVR and there wasn't. You can ask them any time and they will tell you if there is one currently (almost certainly not).

gm0

You presume a lot. Scheme admin has to operate to scheme rules. Product admin on old products can be a bit frozen (and on old IT).

Careful checking on maturity and the writing up of the with profits element. And the rules on taking the pension.

All pensions have to allow full transfer out (for a long time). If you move the funds in their entirety post maturity there definitiely will not be any issue chosing a destination where you can take 25%, use drawdown, buy open market annuity or a mixture of things. Choose what you want. Issue the pull request from somewhere that supports that.

Taking the 25% in situ - could entangle you in a restricted set of scheme rules. So care is needed with that idea. Before pushing the button. I cannot help you with the specifics of particular ages of AVIVA product. Someone else may know. But i do know the problem can exist.

The in situ options to take the pension could be a sub-set. And if they don't suit you - then a carefully timed transfer is your go to - without losing out on with profits returns via premature exit.

Scheme rules are not static but scheme admin do not speculate about possible future changes - such as introducing a drawdown option. Nor will they talk about things which exist beyond the current rules of the product. Conversations of the "if you transfer then x,y,z - tend not to happen. (Because of the FCA stance on what counts as personalised advice and incumbency)

Ozro

https://forums.moneysavingexpert.com/discussion/comment/81979078#Comment_81979078

Ok are you saying that basically I am better to wait until maturity, then transfer my pension to another provider and then take out my 25% if so required rather than take out the 25% with Aviva and then transfer the remaining? Sorry got a bit confused.