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[Mister Fixit]

Hi

I have 2 small pension endowment policies which mature in 14 months or so when I am 65.

They will yield such a poor pension (which the UK Gov't will knock off £ for £ anyway), I would prefer to try to sell them before they mature and take any losses and pay any fees incurred - it would still give me a sum which would be quite useful in Thailand.

I know there are companies who will buy these policies, but I have been told that this is only for INSURANCE endowments, not pension endowments. I have been told that UK law forbids the sale of pension endowments, but have no idea if this is true or not.

Does anyone know if it is feasible for me to sell these things, which were mis-sold in the first place? If so, do you know of any companies who specialse in this? Or could I sell them back to the company who has them already?

Help much appreciated.

Thanks

Edited December 11, 2012 by Mister Fixit

[fletchsmile]

I think you may be mixing up 2 different things:

- An endowment policy being an insurance based product which is also used as an investment/savings plan

- A pension

Although both are often provided by insurers there are differences:

You can't usually cash in a pension before retirement and take the cash. An endowment you can cash in any time, as it has a surrender value (on which they will often impose a market value adjustment (MVA) to penalise you for cashing in early)

If an endowment, it may well be better to wait 14 months and avoid the surrended penalty or MVA

If it's a pension you have these are usually defined benfit (no. of years salary given) or defined contribution (pot of money) - sounds like the latter if it is a pension and not an endowment. If it is indeed a pension you have, you will have 3 main options at retirement age: 1) income drawdown (usually not worthwhile on small amounts), 2) buying an annuity from your pension provider (this is usually a mug's option and worst value default option) or 3) buying an annuity on the open market/from a different annuity provider who will find the best rtae for your pot of money. For options 2) and 3) there is also a likelihood you can take 25% of the fund value in cash

Also if it's a pension you have, and it's a private pension. You will be able to start take it earlier than 65, and in all likelihood now.

All in all I would suggest you contact someone like Hargreaves Lansdown in the UK, as you need some help understanding exactly what it is before your options:

http://www.hl.co.uk/

They specialise in pensions, and also have a service that would find you the best annuity rate for you. I've used them for a couple of decades, and found them great to deal with.

[Hugh Jarse]

I think you may be mixing up 2 different things:

- An endowment policy being an insurance based product which is also used as an investment/savings plan

- A pension

Although both are often provided by insurers there are differences:

You can't usually cash in a pension before retirement and take the cash. An endowment you can cash in any time, as it has a surrender value (on which they will often impose a market value adjustment (MVA) to penalise you for cashing in early)

If an endowment, it may well be better to wait 14 months and avoid the surrended penalty or MVA

If it's a pension you have these are usually defined benfit (no. of years salary given) or defined contribution (pot of money) - sounds like the latter if it is a pension and not an endowment. If it is indeed a pension you have, you will have 3 main options at retirement age: 1) income drawdown (usually not worthwhile on small amounts), 2) buying an annuity from your pension provider (this is usually a mug's option and worst value default option) or 3) buying an annuity on the open market/from a different annuity provider who will find the best rtae for your pot of money. For options 2) and 3) there is also a likelihood you can take 25% of the fund value in cash

Also if it's a pension you have, and it's a private pension. You will be able to start take it earlier than 65, and in all likelihood now.

All in all I would suggest you contact someone like Hargreaves Lansdown in the UK, as you need some help understanding exactly what it is before your options:

http://www.hl.co.uk/

They specialise in pensions, and also have a service that would find you the best annuity rate for you. I've used them for a couple of decades, and found them great to deal with.

Why not consider a QROP?

[HullyGully]

I would suggest you wait 14 months until the policies mature.

I am almost certain if the value of the persion is very small you can take the whole lot as cash = 100%

Normal, you can only get you hands on 255 cash

Anyway suggesting transerring into QROPS, forget about it...you pension is very small and the set up and annual costs are expensive

Nearer the time write to the insurance Company requesting 100% cash as the amount is low, say under 20K GBP

[meatboy]

you need to get a surrender value from the provider,if its what they class as a trivial amount you wont get a company to touch it,i had one with only £6,000 value and had to wait till i reached 60 then you can take it as a lump sum,but if you have other pr.pension pots over[used to be £18,000] you cannot take it.were they tax excempt if so you will be taxed on them.all these endowments made ins.sales reps a lot of money,but lost a lot to the savers quoting large profits eg.like enough to pay your mortgage and have plenty left over.which we all know did not happen.

[fletchsmile]

I think you may be mixing up 2 different things:

- An endowment policy being an insurance based product which is also used as an investment/savings plan

- A pension

Although both are often provided by insurers there are differences:

You can't usually cash in a pension before retirement and take the cash. An endowment you can cash in any time, as it has a surrender value (on which they will often impose a market value adjustment (MVA) to penalise you for cashing in early)

If an endowment, it may well be better to wait 14 months and avoid the surrended penalty or MVA

If it's a pension you have these are usually defined benfit (no. of years salary given) or defined contribution (pot of money) - sounds like the latter if it is a pension and not an endowment. If it is indeed a pension you have, you will have 3 main options at retirement age: 1) income drawdown (usually not worthwhile on small amounts), 2) buying an annuity from your pension provider (this is usually a mug's option and worst value default option) or 3) buying an annuity on the open market/from a different annuity provider who will find the best rtae for your pot of money. For options 2) and 3) there is also a likelihood you can take 25% of the fund value in cash

Also if it's a pension you have, and it's a private pension. You will be able to start take it earlier than 65, and in all likelihood now.

All in all I would suggest you contact someone like Hargreaves Lansdown in the UK, as you need some help understanding exactly what it is before your options:

http://www.hl.co.uk/

They specialise in pensions, and also have a service that would find you the best annuity rate for you. I've used them for a couple of decades, and found them great to deal with.

Why not consider a QROP?

2 "small" policies. QROPs are not worth it for small amounts - the fees quickly each into capital.

[yoshiwara]

If the income from the pensions are not exactly large, then your tax allowance at 65 will probably be in excess of the income so your concerns re losing income to taxation are probably misplaced. So selling off not such a good idea. If you do want cash you may be able to convert 25% of the cash value of the policy to cash so worth asking.

[Mister Fixit]

I think you may be mixing up 2 different things:

- An endowment policy being an insurance based product which is also used as an investment/savings plan

- A pension

Although both are often provided by insurers there are differences:

From my providers statement - Prosperity Pension Plan - With Profit.

Not much confusion there.

There's about 14 pages of bumf for each plan which I shall wade through in due course and get back on here when I have an inkling.

However, it does look like I can cash in at any time.

More later, thanks all.

[fletchsmile]

Thanks for clarifying. That is a pension plan you have not an endowment policy. They are 2 separate things, as outlined above. That was the confusion and mix up referred to.

"Withprofits" is a particular style of investment where monies from different sources are pooled together. It is used by some endowment policies and some pension plans.. They have become much less popular in recent years due to failing to meet targets and scandals such as Equitable Life.

Would suggest you contact Hargreaves Lansdown as they are familiar with these.

I used to have some small withprofit personal pension plans (one of which was with the infamous Equitable Life - which BTW made a mockery of claims to UK pension plans being supported by an adequate regulatory and government framework). I transferred it into a Self Invested Personal Penison under the HL umbrella. They did all the paperwork. I was much further from retirement that you tho' so more time to make up the MVA and surrender penalty on the with profits plan. Note although the with profits plan was surrendered proceeds needed to go into another pension arrangement - in my case I put in unit trusts.

[fletchsmile]

BTW I believe there's a rule that if all your pension funds are below GBP 18k and you are over 60 (which you are) you can take the whole amount as a lump sum. Don't have a link but if you Google it you might find under government/DWP/hmrc websites eg www.gov.uk

For stakeholder pensions there's a lower limit than that regardless of what your other pensions are think I recall 2k

[Mister Fixit]

OK, I have emailed Pearl (as was) - now Phoenix Life, and had an auto-reply that the girl I have dealt with in the past is out of the office until tomorrow.

I've asked her if I can just take the lot now or whatever. Lets see what she says first

Will report back her reply.

However, it looks like the entire lot is worth just over £20,000 so may not be able to do as previous poster suggested, will be just over the limit. As there are 2 plans, I suppose I could cash in the one with most in it and leave the smaller one

Edited December 12, 2012 by Mister Fixit

[meatboy]

OK, I have emailed Pearl (as was) - now Phoenix Life, and had an auto-reply that the girl I have dealt with in the past is out of the office until tomorrow.

I've asked her if I can just take the lot now or whatever. Lets see what she says first

Will report back her reply.

However, it looks like the entire lot is worth just over £20,000 so may not be able to do as previous poster suggested, will be just over the limit. As there are 2 plans, I suppose I could cash in the one with most in it and leave the smaller one

they might give you a surrender value but it would be a lot less than what you would get on maturity.have the policies got a time period that you must hold,one i had was an open ended after 10years,then i could surrender any time after that,but if i remember right i just about got what i had paid in 11yrs.

[meatboy]

as you have only 14months to go before they mature,if you need the money why not get a loan with them as security because to try and cash them in or sell to a co.you wouldnt pay half as much interest on a loan than the amount you would loose surrendering them.get the surr.value first then go down the road i sugest.

[Mister Fixit]

This is the reply I had from Phoenix Life (Formerly Pearl) - (her English is terrible - see the second sentence! Should be 'from where you got the information..') Ending a sentence with a preposition indeed! Tut, tut. But still ...

Unfortunately, Personal Pension policies cannot be sold. Therefore, I am unsure where you got the information that you believed they could be from.

Your only options would be to leave invested until age 75 at latest, transfer to another provided.

Take your pension benefits where you can receive up to 25% of total fund values and the remaining 75% from each fund will have to purchase an annuity providing income for the rest of your lifetime.

If you have combined fund values less than £18,0000.00 then you could be eligible for the triviality option.

I hope this helps.

I replied asking what the 'triviality option was - no reply so far. Anyone here know or have any other comments, please?

Edited December 13, 2012 by Mister Fixit

[meatboy]

the trivial option is as i said earlier if the total pots are under £18,000 you can have it in a lump sum less tax.work till your 75 i know what i would have told her go and ----- yourself

[Mister Fixit]

OK some figures, perhaps someone can help me make sense of them - I've tried to keep them relevant, you don't need to know plan numbers etc.

Plan update 1

Single contribution/Transfer in amount = £2,109.82 (told you they were small)

Summary -Guaranteed pension fund at 27/1/2014 = £4008.59

Amount payable on death before 27/1/2014 £7,569.11

Transfer value on 05/4/12 = £7,569.11

What your plan might be worth at 27/1/2014 in real terms -

Your pension fund might be worth £7,750

Your annual pension might be worth £289.00 (not worth going to the bank for)

Plan update 2

Single contribution/Transfer in amount = £7,355.89

Summary -Guaranteed pension fund at 27/1/2014 = £13,528.37

Amount payable on death before 27/1/2014 £25.395.92

Transfer value on 05/4/12 = £25.395.92

What your plan might be worth at 27/1/2014 in real terms -

Your pension fund might be worth £25,600

Your annual pension might be worth £957.00 (again barely not worth going to the bank for)

So, dear gents, which figures do I use to calculate the triviality option? The guaranteed pension fund figures or the transfer value figures?

The 2 plans guaranteed funds total £17, 536.96, so I fall withing the triviality option if we use these figures.BUT, if we use the transfer value figures, the 2 plans total £32,965.03.

What figure do I use? And if I can use the lower figure, can I get rid of them ASAP?

I am not resident in the UK, and haven't been for over 8 years, so if I were to cash them in or whatever, should I have to pay UK tax?

Further, if I let them run, I will get a projected measly £1,246 per year or £103.83 per month - hardly worth having them if the Gov't are going to knock a weeks worth off each month pound for pound.

Any further advice most welcome! Thanks for the help so far, chaps

Edited December 16, 2012 by Mister Fixit

[lounger]

Oh, the thread has run out just as it was getting interesting...

firstly you need to maximise your values. A with profits plan will have bonus' added every year until the SRA ( Selected retirement age assumed to be 27/1/14). If you cash in for an annuity or transfer before SRA you may lose out on significant bonus' and also be hit with an early surrender charge. Years ago the biggest bonus was the last one but more enlightened companies have spread an estimate of this final biggy over the life of the plan. Your Phoenix contact has estimated only a slight increase in value between now and SRA but then she is prohibited from assuming growth of anything other than regulatory figures.

You say you are prepared to take a loss and mature the policies early. I suggest you find out more about the bonus payment structure particularly the terminal bonus before you decide. The maturity value (probably the same as the transfer value) is the one used for the 18,000 trivial pension, so you no longer qualify

When the plans are matured, which can be on different dates, there will be a fund of which 25% can be paid to you in cash. The remainder is used to buy you an annuity which is calculated on the yield from government gilts. Today government gilts are paying an absurdly low yield and so your pension will also pay an absurdly low yield. There is a move afoot in government circles to improve the annuity (yield) from a pension fund. You need an expert to tell you how this is coming on as maybe 2014 will have totally new and better rules ( by 2014 the government may be worried about inflation and have put up interest rates thereby improving the yield, who knows?) You need to get quotes for the final annuity from Phoenix and from an independent. The reason for this is because the independant should provide a better rate BUT Phoenix may have a policy clause guaranteeing certain internal calculations which do not apply if you transfer to an independent.

So in summary:

Will you get a bigger fund if you hang on?

Will you get a better rate if you hang on?

Will you get a higher annuity from a transfer to another annuity provider or from staying with Phoenix ( in house).

These decisions are dependent on:

Phoenix policy conditions

Movement in interest rates

Government policy on annuity calculations

good luck

[Mister Fixit]

Oh, the thread has run out just as it was getting interesting...

firstly you need to maximise your values. A with profits plan will have bonus' added every year

No they haven't - there have been no bonuses added for some years - yes, I know, which makes even mo worthless to me.

until the SRA ( Selected retirement age assumed to be 27/1/14). If you cash in for an annuity or transfer before SRA you may lose out on significant bonus'

I won't - see above

and also be hit with an early surrender charge.

That's probably true, but a significant argument may ensue!

Years ago the biggest bonus was the last one but more enlightened companies have spread an estimate of this final biggy over the life of the plan. Your Phoenix contact has estimated only a slight increase in value between now and SRA but then she is prohibited from assuming growth of anything other than regulatory figures.

You say you are prepared to take a loss and mature the policies early. I suggest you find out more about the bonus payment structure particularly the terminal bonus before you decide. The maturity value (probably the same as the transfer value) is the one used for the 18,000 trivial pension, so you no longer qualify

Well, we'll soon find out - I expect a reply to me email very soon.

When the plans are matured, which can be on different dates, there will be a fund of which 25% can be paid to you in cash. The remainder is used to buy you an annuity which is calculated on the yield from government gilts. Today government gilts are paying an absurdly low yield and so your pension will also pay an absurdly low yield. There is a move afoot in government circles to improve the annuity (yield) from a pension fund. You need an expert to tell you how this is coming on as maybe 2014 will have totally new and better rules ( by 2014 the government may be worried about inflation and have put up interest rates thereby improving the yield, who knows?) You need to get quotes for the final annuity from Phoenix and from an independent. The reason for this is because the independant should provide a better rate BUT Phoenix may have a policy clause guaranteeing certain internal calculations which do not apply if you transfer to an independent.

Well, I'm waiting to hear ...

So in summary:

Will you get a bigger fund if you hang on?

Will you get a better rate if you hang on?

Will you get a higher annuity from a transfer to another annuity provider or from staying with Phoenix ( in house).

These decisions are dependent on:

Phoenix policy conditions

Movement in interest rates

Government policy on annuity calculations

good luck

Many thanks - but could you please use your carriage return key so I don't have read a huge amount of text in one huge lump? Please separate into paragraphs - thanks. Golden rule of writing ...

Edited December 18, 2012 by Mister Fixit

[Mister Fixit]

Copy of email sent to Pearl, now Phoenix Life. Let's see what they say ...

I have looked at the figures on my two plans and I think I am eligible under the trivial commutation rules to 'cash in', or whatever the term is, these plans. However, please let me know what figures I should use to compute the correct amount

In the 2 summaries for both my plans, the total of the 'Guaranteed pension funds' at 27/1/14 will be £17, 536.96, so the total falls within the triviality option of £18,000.

BUT if we have to use the Transfer value figures quoted as of 5/4/12, , they come to £32,965.03

Which figure do I use? Further as a non-resident of the UK as I have lived in Thailand for over 8 years, I think I would not have to pay UK income tax on the proceeds if I can use the triviality option. Can you confirm this, please?

Please let me know ASAP so that I know how to proceed, as it would help me a lot to know which figure to use!

Regards

Now we sit back and wait ...

Edited December 18, 2012 by Mister Fixit