Retail Distribution Review and Personal Pension Plan

solentview1 · 4 November 2012 at 6:53PM

I wonder whether how many other MSEers with NFU Mutual personal pension plans have received the letter dated October 2012 from NFUM stating that the current NFU With Profits Personal Pension Plan will close to new subscribers as from 31 Dec 12, and that existing subscribers will be limited to making regular payments at the level as at 31 Dec and that there will in future be no facilities for increasing or restarting regular payments or making lump sum contributions. The first paragraph of the letter (from Tim McKeon Head of Life Services) states: 'The changes are necessary because the FSA has introduced new rules, as part of the Retail Distribution Review, that affect the way in which the Plan will operate in the future'.

I wonder if there are others who share my disappointment at what seem to be fairly drastic and draconian changes to a Plan, which otherwise appears to conform to a fairly standard pension plan model, at rather short notice, bearing in mind that most personal pension plan subscribers will probably want to stay in a scheme and use the facilities for 20 - 40 years. If anyone can shed any light on why NFU Mutual have chosen to do this, I would be grateful for enlightenment. I should add that my family and I have similar personal pension plans with four other providers, none of which have so far made changes to these other plans, as a result of RDR.
Solentview

dunstonh · 4 November 2012 at 7:54PM

I wonder whether how many other MSEers with NFU Mutual personal pension plans have received the letter dated October 2012 from NFUM stating that the current NFU With Profits Personal Pension Plan will close to new subscribers as from 31 Dec 12, and that existing subscribers will be limited to making regular payments at the level as at 31 Dec and that there will in future be no facilities for increasing or restarting regular payments or making lump sum contributions.

Expect all legacy personal pensions priced up using the commission method to close their product to new business. Indeed, most already have over the last decade.

I wonder if there are others who share my disappointment at what seem to be fairly drastic and draconian changes to a Plan, which otherwise appears to conform to a fairly standard pension plan model, at rather short notice, bearing in mind that most personal pension plan subscribers will probably want to stay in a scheme and use the facilities for 20 - 40 years.

And you can still continue to use that scheme for those contributions. No-one is stopping that. However, they cannot use commission based products after RDR.

If anyone can shed any light on why NFU Mutual have chosen to do this

NFU never moved to fee based products when most others did. They kept on a commission model. With commission being banned from Jan 2013 on advised products they can no longer offer that product for new business or top ups.

Strangely the NFU website is showing stakeholder pensions (but not personal pensions). Stakeholder pensions are not compliant with RDR.

I should add that my family and I have similar personal pension plans with four other providers, none of which have so far made changes to these other plans, as a result of RDR.

That will either be because they are already on RDR compliant products or the fact the product has closed already and no notification was sent out.

This thread would be better off in the main pension section. If a mod/board guide spots this, can they move it please.

jamesd · 5 November 2012 at 2:54PM

Another way to read that announcement is: "You are paying commission from your pension pot. That's being banned for new business but it'll carry on for the money already in this pot and any new money you add to it in the future. If you want to stop paying that commission, transfer the money to another pension with lower costs."

Just pick the deal that offers you the best terms and transfer to it, unless you lose some benefits like guaranteed annuity rates by doing so.

If the others aren't sold with advice - places like Hargreaves Lansdown - they can continue to take commission for another year at least even on new business.

Daniel_Elkington · 13 November 2012 at 4:16PM

This will involve commission.

Speak to an IFA, some do a free review service.

Retail Distribution Review and Personal Pension Plan

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