Promises from RNPFN and obligations from LV

Cathymac7

Hi
I have two personal pension plans with RNPFN, both due to finish in 2016. (no prizes for guessing my age!). The guaranteed annuities for the two policies is inly about £1300 per year. I pay £30 or so each month. The fund stands at about £28000 at the moment. There have been no annual bonuses for some years now. When LV tookover RNPFN we were promised that the inherited balance would be distributed as terminal bonuses. Is there a wayof knowing what current terminal rates are?
Incidentally I have a marvellous piece of paper, an illustration from 1986, which estimated that my fund on retiremnet would be £185000! qualifying me for a lump sum of £50000 and a pension of £16000!! What a good job that I didn't really think paying only £360 a year for thirty yeras would qualify me for that. My other question is , do LV have an obligation to pay what the customers of RNPFN were promised? Slightly ironically my Father worked for LV for 40 years....

EdInvestor

Those rates look rather low.What is the GAR rate on the initial policy documentaton?

Cathymac7

The two policies are amalgamated into one for my purpose only. One is £10 per month, paid since 1982, has a GAR of £445. The other policy is for £21.43 per month, since 1986, and has a GAR of £948. The illustration mentioned was done in 1986, and as I have already said, implied a much larger pension than I will be guaranteed. I am wondering whether to have these small policies made -up, and if I did , would I still qualify for a terminal bonus? They are section 226 policies. I have also got other ones with other companies, also with GAR, also small! Up until now, I have taken a view that I would just let them keep building up, but as I mentioned before, am concerned that RNPFN are not adding bonuses. I fully understand that they must have made such huge promises that as a company they would probably have been unable to fund, but it feels a bit like stalemate. Not sure what to do? Any observations? Has anyone else got concerns about their RNPFN policies?

EdInvestor

Looking at the annnuity rates here: https://www.fsa.gov.uk/tables and assuming you take 25% tax free cash from the policies at retirement then it would appear the GAR will provide an annuity virtually the same as what you would get on the open market.

I suggest you ask for some maturity forecasts for these policies to see what terminal bonus might be in there and also get a statement of the guaranteed values and the impact on the policy if you stopped making contributions.

There seems little point in continuing to pay in if the fund is not increasing in value and will only pay out a market annuity rate- but it could be that there are penalties for stopping payments.