Phoenix pension MVR

shilts · 9 February 2018 at 8:29PM

I wish to transfer out of my Phoenix with profits pension . My financial advisor has just informed me that in the last week or so Phoenix have started to apply a market value reduction which amounts to about a 4.8% reduction in the value . My advisor had all of the information regarding my pension from Phoenix and this has just come to light . I’m told that very few companies ever apply this reduction and he advises me to sit tight for the time being to see if this changes and he will keep checking . What is the likelihood of this changing as I wish to change providers as soon as possible to a better performing one ? In addition to this I wanted to put additional funds into my pension each month and I am now unsure what to do and not sure I want to add more money into my Phoenix pension . Thanks for any help .

dunstonh · 9 February 2018 at 10:26PM

I!!!8217;m told that very few companies ever apply this reduction and he advises me to sit tight for the time being to see if this changes and he will keep checking

Is he a new adviser? Or is he an FA rather than an IFA? (tied agents often dont see the world outside their own bubble). Activation of MVRs has been commonplace since the early 2000s. You typically see them activated after downturns.

In addition to this I wanted to put additional funds into my pension each month and I am now unsure what to do

That should be unaffected by this.

nd he advises me to sit tight for the time being to see if this changes and he will keep checking .

So, they are applying an MVR of 4.8% after around an 8-10% drop. Are you going to wait for it to go back up 10% so you can get your 4.8%?

not sure I want to add more money into my Phoenix pension

But you said you were opening an alternative. So, why not use that?

shilts · 10 February 2018 at 3:46PM

Thanks for the reply .

He is a new IFA and said that a MVR had been activated on my pension in the last week or so but also said that this may change and that he would regularly check .

My intention was to switch the Phoenix pension to an alternative through my IFA then add additional monthly contributions . The problem I have is that without switching the Phoenix I cannot open the alternative as there would not be sufficient funds just from my monthly contributions to cover the IFA’s yearly charges as they require a minimum fee per year
(hope that makes sense) . The situation with Phoenix and the MVR is going to be monitored in the hope that the activation may be lifted and then I can complete the switch . I want to make additional contributions as soon as possible but am not sure if adding them to my Phoenix plan is the right thing to do if the MVR stays in place .

I don’t know whether I should take the advice and hold fire for the moment to see if the situation changes then make the switch (not sure how likely this is).

Hold fire on the switch but pay the additional contributions into my Phoenix in the mean time and hopefully switch if and when the MVR is lifted .

Or , bite the bullet and accept the MVR which would then make the switch a little less attractive.

Sorry for running on as I have tried as best I can to explain my dilemma. I guess the key is :- how likely is it that the situation will change and Phoenix will stop applying a MVR and when .

Thanks for your help .

dunstonh · 10 February 2018 at 6:05PM

The problem is that there is a 4.8% loss if you move now. That follows around a 10% drop. So, for that 4.8% to go away, the markets need to recover that 10% drop.

Or you move it now, take the 4.8% loss and if it goes up the 10% then you get the full benefit. You are not going to lose the money. If the new plan is better than the old, the new one should do better in the growth period. If it's not better than you shouldn't be transferring it.

tuffet1 · 9 June 2018 at 12:56PM

Having just had my pension statement from Phoenix i can only dream of a 4.8% loss!

My with-profits pension is valued at nearly £39K but the transfer value is less than £26K. It appears to have an MVR of £13K or 33%!

I was planning on cashing this pension early (55 next year), as i have 2 other pensions which are doing ok.

I have had a good read around the internet an I can't see any way around this as the recent changes pension rules only seem to cap exit fees and not MVRs.

Looks like i will need a bit of good old financial advice on what i actually do next year.

Any advice from the site experts more than welcome.

Many Thanks,
Tuffet

shilts · 9 June 2018 at 8:24PM

As luck would have it within a month the MVR was lifted . We got in quick and made the transfer just in case it was reapplied. It came as a bit of a shock but pleased with the outcome . My IFA checked on a regular basis to see if there was any change so was able to act quickly .

lisyloo · 10 June 2018 at 9:41AM

I have an MVR of 28% and can!!!8217;t take the pension until 65 :-(
I was recommended this company (npi at the time) by several IFAs back in 1994.
Fortunately I have most of my money in a SIPP but i certainly understand why some people invested in BTL instead, there are risks there but in general not totally outside of your control.

dunstonh · 10 June 2018 at 2:30PM

I was recommended this company (npi at the time) by several IFAs back in 1994.

NPI was a very good company.... until bought by AMP who went on to asset strip NPI (and Pearl and London Life). They were such as bad company that they ended up losing a fortune and had to retreat back to the southern hemisphere and are a much smaller company than they once were.

AMP didnt have the money to cover the risks so it went heavy into fixed interest AFTER the dot.com crash and missed virtually all of the recovery and then started increasing equities again just before the global recession. It is a fund that is invested not to make money but to not increase liability.

it is one of the reasons why I am wary of using Pru nowadays. Yes, Pru may be viable but they keep threatening to sell the UK book (and just recently have been positioning their book to enable segments to be sold off easily). You could then find yourself stuck in the same way NPI policyholders were.

Phoenix pension MVR

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