RL with profits pension

P933alilli · 21 July 2019 at 2:31PM

I'm getting a call-back from RL tomorrow regarding questions i have about my with profits. On paper, it looks like another 14% rise in transfer value. However the performance of the fund had -2.2% fall in the last year, will an MVR be applied if i took the lot or would it need to be a more serious downturn? The investment mix last year was 47% company shares, 13% property, 37% government & other bonds and 3% cash & other investments from which there were poor returns on company shares and UK bonds. There are no guarantees, apart from the minimum pension pot which includes annual bonuses. They envisage the fund to increase by 4.7% each year. As i dont understand much about investing/pensions etc what other questions should i be asking? Maybe , what % final bonus has been paid out on this type of pension in previous years?

SonOf · 21 July 2019 at 3:01PM

On paper, it looks like another 14% rise in transfer value. However the performance of the fund had -2.2% fall in the last year,

2018 was a negative year. Markets fell around 15% in Q4.

will an MVR be applied if i took the lot

We cant answer that as each policy is individual.

They envisage the fund to increase by 4.7% each year.

No they don't. No provider would suggest such a thing on any of their funds. If you are referring to the statement projection, then these are just synthetic figures and not based on much reality.

As i dont understand much about investing/pensions etc what other questions should i be asking? Maybe , what % final bonus has been paid out on this type of pension in previous years?

The question on past final bonuses serves no purpose as it would depend on the day in the year you took it out, when you paid in (including what day in the month or any ad-hoc payments) and it just doesnt help you in any way.

Your value is daily. So, the current value and transfer value are the key things. If the transfer value is lower than the current value, then a penalty is being applied. You can ask them what that is.

P933alilli · 22 July 2019 at 10:31AM

I got some answers this morning. They wo'nt apply an MVR on my type of policy. However, as mentioned before, the final bonus isnt guaranteed.
Its the future investments they expect to increase by 4.7% each year not my pot, one of their general assumptions.
When i asked about final bonuses the reply was that there had always been healthy growth on these particular policies and they will send me a copy of final bonuses added for the previous 10 years. They will also send me an estimate of what the pot could be by my assumed pension date if i wanted to increase my contributions to my max of £2880 for the next 5 years.
The current value is exactly the same as the transfer value and is what i would get if i took it today within the 25% tax free rule etc.
Im probably no better off in my thinking of whether to stick or twist really though.

Albermarle · 22 July 2019 at 11:41AM

Im probably no better off in my thinking of whether to stick or twist really though

I suppose the question is , what would you do with the money if you took it all out?
A with profits fund is a relatively low to medium risk investment, that in theory at least smooths out some of the volatility sometimes seen in financial markets .
If you put the money in a savings account , the return would be below inflation , which is not good long term .
If you invested it in something a bit more aggressive , it could grow faster or the opposite .

P933alilli · 22 July 2019 at 5:28PM

Ive no need for the money yet, just an investment to take me up to 62-5'ish when i can hopefully take the lot and avoid tax on 75% by withdrawing under my personal allowance each year. The final bonus is the crux , if it were obliterated it would basically halve the pot.

P933alilli · 27 July 2019 at 12:31PM

Received a letter this morning to tell me that my policy is made up of 2 segments, each segment has a different terminal bonus applied. The current terminal bonus added are ; segment 1 - 91%
segment 2- 76.6%.
We are only able to quote the current terminal bonus rate!
This means nothing to me

Johnnyboy11 · 27 July 2019 at 1:03PM

Could it be the -2.2% performance relates to the 2018 calendar year, whereas the 14% Transfer Value increase relates to the end of the 2018-19 tax year? There was a major dip in the stock market in December 2018, which had recovered by April 2019.

RL with profits pension

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