Equitable Life with profits pension / takeover.

New_World_Man wrote: »

Looking through the Utmost website it appears ... that most of their funds/pensions etc. have an initial 5% charge and then fees are 1%+.

We won't know exactly what the choices and the charges will be until later this month, but I'm going to speculate that what we'll be offered by Utmost will NOT be their existing unit-linked funds.

Digging deeper into the small print in "Summary of the Policyholder Independent Expert's Report" in Part B of the Explanatory Booklet on pages 130-164 (AppendixVI), here's the relevant text (pages 145-146):

2.4.4 Investment options and charges
From now until the Implementation Date, the Society I]Equitable[/I will continue to adopt a cautious investment policy. At the Implementation Date I]1-Jan-2020[/I UK unit-linked policyholders I]with-profits policies will already have been converted to unit-linked[/I will be given a range of fund choices, based on the Society's current range of unit-linked funds plus at least four new funds I]presumably from Utmost[/I.

All policyholders will have their funds invested in the Secure Cash Investment Fund before or at the Implementation Date. [.... Policyholders will be able to hold their funds in the cash fund for six months...] The Secure Cash Investment Fund will consist of a cash fund with a maximum annual management charge of 50bps [0.5%], under which the unit price is guaranteed not to reduce below the price on the Implementation Date until the funds are transferred out of that fund.
.........

The annual management charges on the unit-liked funds will not exceed 100bps [1%] in any circumstances. These charges will be no more than 75bps [0.75%] unless one of the following applies:
- the charge on the existing unit-linked fund at the Implemenation Date is more than 75bps.
- Utmost's costs increase materially due to regulatory action that also results in other life companies increasing their annual management charges.

Why has Equitable in their booklets not linked to these specific points which seem to address some of the serious concerns expressed in this thread?

From my interpretation of this, we will have until end-June 2020 (without risking a drop in the value) to decide what to do with our uplifted funds, either to:
- re-invest in one or more unit-linked funds on offer.
- transfer the funds out to another provider or to buy an annuity.

The new Utmost unit-linked funds will be managed by JP Morgan Asset Management; the Equitable unit-linked funds are managed by Aberdeen Standard Investment (in the Transfer Independent Expert's report on page 196 of the Part B booklet) and there's a table of the pre- and post-transfer assets and solvency position of Equitable and Utmost Life & Pensions (page 190). Currently, Equitable is four times the size of Utmost!

Thanks for the information about investment options and charges.
Nothing above 0.5% annual management fee for a cash management fund, eh.

It brings to mind the chairman of the House of Commons Work and Pensions Select Committee: stop ‘making a fat living off the hard-earned savings of pensioners’.
Vanguard UK charges .15%/year for their cash fund. Utmost’s own JPMorgan Asset Management cash fund charges .02%/year. Fidelity UK charges .15%/year. Equitable’s own Aberdeen Liquidity Fund charges .4%, which in the hands of Equitable becomes .5%/year. And Aberdeen charges a 3% entry fee; pretty much doubling your effective management fee for the first decade, for heaven’s sake.
Some of the ticket clippers have a lot of explaining to do while they enjoy their country houses and yachts.

Sutton8 wrote: »

If the proposal is accepted and the stock crashes by about 30 to 40 % around that time, I would like to hear the risks of voting for the proposal .
is there any benefit to wait for the proposal if there is a risk the stock market collapses around 1st November 2019. I am looking at different scenarios before I make the final decision.

First, it's still too early for anyone to take a final decision! Wait until the "Investment Choices" booklet is distributed later this month, then you'll know what will be on offer from Utmost and how you might go about implementing your choice(s).

Risks of voting for the proposal:

The Explanatory Booklet in Part A on page 17 describes the potential risks of the proposal being accepted or rejected. Basically, if it goes ahead, you lose "guaranteed growth" (at a slow but steady rate) but instead have a chance that growth will be higher albeit at the risk that growth could be lower or even negative. If the proposal is rejected, then in several years time, as the number of policyholders declines, the Equitable may find it more difficult to function. Read the Booket and make-up your mind based on your attitude to risk and your long-term requirements.

What happens if there's a stock market collapse before the Implementation Date:

For the Equitable's with-profits fund, my understanding is that it would make little difference! As JohnWinder says above, the fund is invested in more stable investments (gilts, bonds, etc). Further, Equitable have taken insurance to guard against any significant drop in the value of the investments in the fund, with the aim of giving policyholders a reliable value for their individual shares in the fund at the Implemenation Date on 1st January. Again, as JohnWinder observed, a crash in the prices of stocks & bonds on the open market could be good news because our "fixed" policy value would purchase more.

Of more concern would be the situation after a stock market crash if the proposal were rejected, despite Equitable's fund being invested for long-term stability. At some point, Equitable's insurance on the value of their current investments will terminate (I don't know when). There might then be a problem in achieving the guaranteed investment return without cutting the expected capital distribution. There are big unknowns out there.

Of course, if there's a crash in early 2020, then the situation is reversed. If the proposal goes ahead and you've invested your policy funds in one of Utmost's unit-linked funds with investments in equities, then you'll lose. If you invest in a money-fund, you'll neither gain nor lose. If the proposal is rejected, then the Equitable's fund may be well protected from short-term changes (provided that the fund isn't adversely affected by the termination of the insurance - the fund's current value may be being kept artificially high by the protection from the insurance).

Short answer: no-one knows for certain and, whatever the future holds, there'll be (relative) winners and losers depending on the choices made by individuals. By considering all the options, you'll make better choices and probably have a better chance of being a winner.

PS: You have until 10:00 on 1st November to vote on the Proposal and, if the Proposal is accepted, until 13th December to register your investment choices to be implemented on 1st January. (But my understanding from reading other parts of the paperwork is we'll have another six months to make our choices on what to do with our individual funds.)

No detail on charges etc - other than the transition caps etc in the Doc B and it's appendices - as referred to above -



but at


https://www.utmost.co.uk/equitable-life/equitable-pension/


www utmost co uk / equitable-life / equitable-pension ( as URL rejected - add dots / remove spaces )





There are now some more details on the likely list of funds for those wondering.


So looks like if the scheme happens - we will have have the choice of


3 risk level multi-asset,

6 equity / unit linked (UK FTSE tracker, Equity by region - UK, European, US, Asia

and global ),

2 Bond funds ( Govt / Corporate )

and

1 'money market'.




They cover most of the things in the Doc B - including auto age dependent 'lifestyle', transition in 1,3 or 6 months etc.




Looks like we will have to wait for investment pack - for charges / full details etc.




However at least Utmost are now differentiating us - from their current customer base (who appear to only have 3 multi-assets funds to choose from).




At least there is now a section specific to our part of the scheme for information on Utmost site - so progress of sorts.


Regards