Are Norwich Union Crooks? - What gives them the right to mess with With Profits?

peterbaker

I received a "Yearly Statement" today for a Section 32 Buy Out policy I was defaulted into when a Final Salary scheme was wound up. The statement was prepared on 8th January 2008 but it only shows values up to 17th November 2007 (nearly two months ago now).

It contains that wonderfully useless phrase "Values can go down as well as up and aren't guaranteed". A great chunk of the value in November was "Final Bonus" which isn't guaranteed either. There is no information about what he plan was worth on 8th January 2008 when they sent this useless and misleading statement. All I know is that none of what is written is guaranteed.

Just before Christmas Norwich Union wrote to me about their plan to bribe policyholders like me to relinquish rights to part of the With Profits fund under their supposed stewardship - part which they have had their eye on for some time and which Richard Harvey and his successor wanted for themselves I guess.

NU first introduced the idea of this particular bribe last Summer. They didn't call it a bribe of course, but that's what it'll be when they finally write with a note of how big the cheque is that they wish to write to each policyholder.

With Profits was a traditional term which is used to define a fund which exudes stability and traditionally comprises an initial sum plus bonuses which cannot be removed. However, over the last fifteen years or so, the term has been more and more misused so that we now have a situation where even the big names like Norwich Union are making With Profits rules a complete law unto themselves.

Why is this allowed? Why can third parties like Employers and Trustees mess with our pension funds and why can supposedly trustworthy insurers can also mess with them? How can fund managers in the city justify taking huge annual bonuses when our pension funds have been performing miserably? I think we have reached a stage in the UK where there are so many sticky fingers in our churned pension pots that we should be allowed to take our own money and run.

Can anyone give me any good reason why I should ever take my eye off my investments and trust any of the players further than I could throw them ? ... Once upon a time, a name like "Norwich Union" was good enough ... not any more, I fear.

EdInvestor

peterbaker wrote: »

I received a "Yearly Statement" today for a Section 32 Buy Out policy I was defaulted into when a Final Salary scheme was wound up. All I know is that none of what is written is guaranteed.

A Section 32 policy will normally have a Guaranteed Minimum Pension (GMP) that the insurer must pay you when the plan matures.This is guaranteed, regardless of what the fund is worth. It may also have a Guaranteed Annuity Rate attached.

If you'd like to post the GMP amount and the fund value, we can work out who's winning so far, you or NU. My guess is it will be you.

peterbaker

Well the 'revalued' GMP is stated as £268 a year on this statement.

Two years ago £23,700 was paid into this product to kick it off. They even have the bloomin' cheek to suggest that they would 'charge for payments invested for less than 10 years' if I transferred the funds, despite the fact that NU held the funds for the original Final Salary scheme before it was wound up.

I am bloody annoyed that so much incomprehensible jargon is used to define this part of my pension fund. What use is a GMP of £268 a year when they control 100 times that amount?? Why do they waste paper on sending me such data when it is only decipherable by industry types? Why instead don't they write and explain in plain English why they think they are entitled to raid the With Profits fund in their own sweet time, and why I should not therefore call them crooks?

peterbaker

Edinvestor have you given up? I thought you were going to reveal the winner

Maybe with most funds in freefall today, the chances of it being me have become terminally miniscule?

Retired_I.F.A.

There's nothing stopping you sticking into a personal pension where you control all the investment. Though how much "it" is now worth depends on norwich unions actuaries.

ManAtHome

Interesting timing - I'm about to break a company scheme into personal pensions due to increased reporting requirements. IFA is promoting a section 32, but I also think most providers are more interested in their own bonuses. They'll still get around 1% of the funds, so why break sweat to make 10% (for me) profit? Not in their interests to lose it all in the first couple of years, but they still only cop for 1/100th of (my) losses.

My views are also coloured by past performance - I have a couple of low-value WP funds which seem to have been going uparound the same as a middling savings account for the last few years (when just about every asset class has been booming).

The pension funds (Pru, Skandia, and Axa) have done much better, even the WP ones, so is it just a select band of decent mangers or are some companies doing a bit of cross-subsidising to help some of their funds drag the cash in?

hedgehunter_2

You don't say when you took out this Section 32 policy, but a revalued GMP of £268 looks a little low, either it is incorrect, our your previous occupational scheme that you transferred from was not contracted out for very long. Even a GMP of £268 would currently cost around £5000 to provide from State Retirement age.

Turning to the other issue about the proposed reattribution from NU (CGNU). Reattribution is effectively the early payment of the distribution of CGNU's inherited estate, and so it is a case of some jam today, or more jam tomorrow, but if you want more jam tomorrow you have to risk that it may be a long time comming, or possibly not at all, or that you may not be eligible in the future for any jam.

This is why NU have to have a policyholder advocate to look after the policyholders interests and only recommend reattribution if it is considered a fair deal for the policyholders.

Both the policyholders of CGNU and the Shareholders of Aviva have much to lose by either side being too greedy, because both sides will have the opportunity to reject any proposed deal.

Whatever either side gets in the reattribution is probably more than they deserve because neither the current generation of policyholders or shareholders significantly contributed to the inherited estate (because its origins are many years in the past) Unfortunately, any division of what appears to be "free money" inevitably brings out the worst in human nature.

peterbaker

HH I do say when this Section 32 was commenced (two years ago) but I can't quite get my head around why it was two years and not 4, because it was my understanding that after the original FS scheme was frozen to all contributions following a takeover at the beginning of 2000, it was finally wound up at the end of 2004. I don't think I dreamed the 2 years ... I think I was reading from something in the recent statement, but I am too busy right now to check again. I didn't take it out. The trustees and their advisors did, explicitly against my wishes. I signed nothing except my complaints against them.

What's all this new vocabulary?? Jargon actually. Reattribution?? No such word was sensibly ushered when I last researched the subject. Where has it come from? And 'Policyholder advocate'? (my ar*e) :mad: ... has this person made an appointment to pop round my gaff to explain how he or she sees it? (My Policy). Like hell they have.

Paid preferred yes-person you mean ? I'll tell you how much I respect anyone that agrees to such a role, shall I? If they fell off a cliff I wouldn't even be bothered to watch where their credentials bounced :rolleyes:

BTW If I want jam today, why the hell cannot I cash all my pension funds instead of having them locked in and manipulated by effectively unregulated crooks with their sticky fingers in my jam that they want today?

PS You really annoy me when you talk of "free money". You are obviously of the modern ilk of "finders, keepers" who believes it is fair for a trusted fund manager to spend time looking for ways of separating fundholding members from the money in the fund. Your type HH, seems to be well within the group I am targetting for my ire, and with good reason.

How dare you suggest that because part of the fund was built up many years ago that current fundholders are now somehow not entitled to profit from it as previous with profits policyholders have done in all years gone by? This especially when the company has profited from the promotional worth of their long term with profits funds in order to attract our business in the first place.

It is patently obvious that the fence you have constructed for yourself and are sitting on is just a device to fool fundholders less savvy than myself. The line was actually crossed long before the point you have placed your totally moveable fence.

I'll make it plain to Norwich Union. Get your greedy crooked eyes off our funds and concentrate on boosting them to a good level of profit over and above money market rates. If you are unable to tell us that you have good confidence that you can do that, and through your measly words in my latest statement you do seem unable, then tell the DTI, resign your DTI license to conduct pensions business, give us our funds, and go forth and multiply.

missile

peterbaker wrote: »

And 'Policyholder advocate'? (my ar*e) :mad: ... has this person made an appointment to pop round my gaff to explain how he or she sees it? (My Policy). Like hell they have.

For your info, she is being paid £250,000 :rotfl:

peterbaker

Where do they get these bloody people from?? One (wo)man bloomin' quangos I mean ...

I cannot believe how totally moneygrabbing and unscrupulous they are. You'd have thought for two hundred and fifty thousand quid (paid out of the with profits fund?) she could afford the cost of a stamp and write me a personal letter rather than just rubberstamping the first bit of paper NU stuck under her nose for enclosure with their own (other) miserable drivel.

missile

Her fee seem almost reasonable @ only 50% of Tony Blair's ?