Transfer with-profits pension to HL?

itm2

I've had a personal pension with Scottish Life (a Talisman policy) since 1987. I stopped paying into it in 2000, and my most recent statement (from September last year) showed a "plan value" of £46k, and a "with profits" fund of £68,500.

I noticed that the "plan value" had only increased by less than 6% during the previous 5 years, which doesn't sound very healthy, so am considering moving the pension to Hargreaves Lansdown and perhaps altering the underlying investments.

My problem is that I don't understand how the "with profits" element relates to my "plan value", and am concerned that if I move the pension to HL I may lose any terminal bonuses etc from Scottish Life.

Could anyone explain what I should be asking before deciding on moving the pension to HL?

dunstonh

The questions that immediatly come to mind are:

Why do you want to move it from a lower charged investment to a higher charged one?

Most SL Talisman pensions of that era have guaranteed annuity rates (hence why WP returns are generally low). Do you think your investments on the SIPP will make up the difference?

Again, many SL Talisman pensions of that era also have access to the SL internal unit linked fund range and allow you to keep the GARs. Is yours one of them?

The Talisman range includes Retirement annuity contracts and Section 32 buy out bonds. Which is yours? (IIRC they kept the name for their personal pensions for a while as well).

itm2

Thanks for your reply. I'm looking through the policy conditions booklet, trying to work out what sort it is. In the Benefits section it includes details of "guaranteed minimum annuity rates" - for example £93.46 of benefit for a male annuitant at age 60 per £1,000 of benefit. My death benefit is £90k. This rises to £164.69 at age £75. Does that sound like a good deal?

My main reason for looking to move it was the fact that the "plan value" only increased in value by 5.9% in the 5 years to September 2007, whereas all of my other investments have been increasing by more than 5% per annum since then. Does this make sense, or have I missed the point of the "with profits" element?

Sorry but as you may have guessed I know very little about pensions!

EdInvestor

itm2 wrote: »

In the Benefits section it includes details of "guaranteed minimum annuity rates" - for example £93.46 of benefit for a male annuitant at age 60 per £1,000 of benefit. My death benefit is £90k. This rises to £164.69 at age £75. Does that sound like a good deal?

Er yes.You have a GAR of 9.3% at 60.

You can check current annuity rates here:

https://www.fsa.gov.uk/tables.

They are much lower.

You should leave this pension alone. The "plan value" does not reflect the actual value of the pension as expressed in the guarantees.
.

itm2

Presumably it would also make sense to start making payments into it again as well then? I'm a bit concerned that this may not be possible, as I've just read a letter from SL from December 2005 saying:
"We will continue to accept any regular premiums paid by you at their current level. However, from January 2006 your policy will be treated as being endorsed and its conditions changed to withdraw any options which you may have had to increase the level of your regular premiums and/or pay additional single premiums or transfer values into the policy"
Am I misinterpreting this, or does it mean that I effectively can't make any more contributions to it because I'd already stopped making them in 2000?

Also, is the low growth rate in the plan value that I was concerned about not very relevant in the context of the GAR?

dunstonh

Also, is the low growth rate in the plan value that I was concerned about not very relevant in the context of the GAR?

That GAR is roughly 40% more than the open market. So in simple terms, anything you transfer to would have to grow by 40% just to match the benefits on the SL pension. The SL pension is growing slowly so you have to factor that in as well meaning that the alternatives may have to grow by 50-60% just to meet what you are guaranteed to get. Let alone any improvement.

Also, as i mentioned before the SL Talisman plans often had a range of funds so you may be able to switch to something with better potential.

Am I misinterpreting this, or does it mean that I effectively can't make any more contributions to it because I'd already stopped making them in 2000?

If premiums ceased and were outsite of any period of grace (sometimes called a payment holiday period) then you probably cannot restart. Its one to ask them.