Help with re-pensioning or similar

MagicBurd29

Please can anyone tell me how to go about working out if it would be possible, and if so, worthwhile, to move my pension and my wife's out of Friends Provident? Will I be best talking to an IFA or, being relatively numerate, should I be able, with some pointers to resources from yourselves, to work it out myself?

We're not happy with FP's administration, is one reason. Another is that my wife was self-employed but is no longer, due to incapacity, so her pension was paid up in '03 - I'd like her to restart modest contributions, and I might be able to afford a little increase in my own contributions.

(I hope the following info is neither too much nor too little! - mainly gleaned from FP's online system)

Me : dob 3/61; plan to retire @ 55 ie 3/16; self-employed BR;
Paying £55pm into Retirement Annuity Contract S226 10/86;
Current value £36k = sum payable on death = current transfer value
if retire 3/16 projected fund £62k @ 7%;
Also paying £0 into Retirement Annuity Contract S266 1987 (single pmt);
Current Value £2.5k = transfer value;
if retire 55 projected fund £4k @ 7%.

Spouse: dob 10/59; plan to "retire" @ 55 ie 10/14;
Paying £0 into Retirement Annuity Contract S266 1987;
paid up 2003 because no longer works (incapacity);
Current value £34k = sum payable on death = current transfer value;
if retire 55 projected fund £51k @ 7%.

All sums are invested in the Stewardship Fund (we were young idealists).

Am I right to assume that at this modest rate of contributions - even increasing to £1000pa each say - we're likely best to look at stakeholder pensions? We have each been fully-funding a mini cash ISA for several years.

Finally though - we've just had a letter saying J C Flowers is considering bidding to take over FP so does that mean it would be sensible to hold fire until that crystallises?

Thanks in advance for any suggestions or directions

dunstonh

Please can anyone tell me how to go about working out if it would be possible, and if so, worthwhile, to move my pension and my wife's out of Friends Provident?

Its possible. May or may not be worthwhile depending on the contract.

We're not happy with FP's administration, is one reason.

To be honest, never had any real problems with Friends Provident.

Another is that my wife was self-employed but is no longer, due to incapacity, so her pension was paid up in '03 - I'd like her to restart modest contributions, and I might be able to afford a little increase in my own contributions.

That isnt a good enough reason to transfer as the FP pension can take contributions (unless it is a legacy plan such as a section 226 retirement annuity contract or an early personal pension or one they inherited from a company they took over).

Paying £55pm into Retirement Annuity Contract S226 10/86;

Read that after I typed the above. Its a 226 so it cannot be topped it. It may well have guaranteed annuity rates. Many 226s do.

Am I right to assume that at this modest rate of contributions - even increasing to £1000pa each say - we're likely best to look at stakeholder pensions?

If you are not experienced investors then paying more for the more experienced investment options which you may not utilise to best effect means a stakeholder would probably be better.

Finally though - we've just had a letter saying J C Flowers is considering bidding to take over FP so does that mean it would be sensible to hold fire until that crystallises?

It would make no difference.

You need to find out the guaranteed annuity rates on the section 226 and then work out the critical yield required to beat those guaranteed rates.

MagicBurd29

Many thanks for your reply.

dunstonh wrote: »

Its a 226 so it cannot be topped it.

Do you mean I can't make additional single payments, or I can't increase my regular contributions, or something else? Might I need to get written confirmation from FP on this? - I have been badly misinformed by phone by FP before.

FP sent me a leaflet saying Retirement Annuity rules were changing in April 2006, so does this mean the original Policy Conditions have been superseded and I should ask for replacements?

It may well have guaranteed annuity rates. Many 226s do.

I can't see this phrase or anything like it in the original Policy Conditions. Again do I just have to ask FP?

It would make no difference.

Are pension policyholders unlikely to benefit from a takeover - did that only apply to flotations and the like?

You need to find out the guaranteed annuity rates on the section 226

Understood.

Do all of your comments about my 226 pension apply equally to my wife's paid-up 266 pension?

dunstonh

I have been badly misinformed by phone by FP before.

FP stopped giving out advice some years back.

Do you mean I can't make additional single payments, or I can't increase my regular contributions, or something else?

Its a section 226. They were replaced with personal pensions in 1988. Only those already paying into them could keep contributions up. There are a handful of exceptions but they are a minority.

I can't see this phrase or anything like it in the original Policy Conditions. Again do I just have to ask FP?

yes

Are pension policyholders unlikely to benefit from a takeover - did that only apply to flotations and the like?

It wont make any difference unless you own shares in friends prov.

Do all of your comments about my 226 pension apply equally to my wife's paid-up 266 pension?

yes. A very large proportion of 226s have guaranteed annuity rates. Some even have guaranteed minimum maturities. Theses plans tend to have poor annual performance and if you dont know what to look out for you can end up transferring out of a very good plan thinking it is bad.

MagicBurd29

Again, many thanks DunstonH.

Seems to me I have three choices:

a) attempt to work out myself just how good or bad our FP plans are

b) pay an IFA £x00 to work this out for us, and advise on what to do

c) leave the FP plans alone and invest my time and our money in stakeholders, entirely separately

All in all, and especially given the relatively small sums involved (not small to me, but small to an IFA) I'm now feeling (c) might be the best option.

<sigh>

Thanks for helping me avoid some cul-de-sacs (culs-de-sac?)