Something weird has happened to my Phoenix life pension funds.
I’ve just received an annual plan update. I noticed there is a change to your plan over the past year section. Apparently the fund changed from Phoenix SM with profits pension series 1, to Phoenix SM Cash Pension.
So, I phoned them up and asked what was going on. They said, last March they sent me a retirement pack (as I reached 65 in May last year) and in it explained if I didn’t instruct other wise they would convert my with profits pension plans into some other type of plan. I’ve checked the retirement pack and it states, if I don’t get in contact with them they will contact me in another 5 years.
I’m now in a fund as link below.
The question is.
Does the panel think this is a high, low or medium risk fund?
I’m a baffled as to why/how they could do this, and that they didn’t write to me specifically advising they had done this.
It’s common practice to move pensions to lower risk investments as you approach retirement age. Suppose you were about to buy an annuity and the markets crashed, as they inevitably do from time to time. You and many others could find yourself out of pocket.
If you don’t intend to draw down from that pension (potentially for a decade or two) you might want to delay any de-risking for quite some time, but of course your provider probably doesn’t know how and when you will draw from the pot, so you need to be a bit proactive and choose how you want it invested.
I’m looking into what to do with my pension funds at the moment, so I’ve produced spreadsheets showing performance of my funds over the last few years.
I have a couple of Phoenix with profits pension funds that have been paying the following final bonus.
2012 to 2018 it was 2.5% of fund value.
2019 it was 54% of fund value.
2020 it was 53% of fund value.
2021 it was 57% of fund value.
2022 it was 43% of fund value.
2023 it was 38% of fund value.
So, when my “with profits” fund was closed last year, I got 38% final bonus. As far as I can tell the final bonus for Jan 2024 was 18%.
Well done Phoenix Life.
I’m pretty close to buying an annuity with one of the pots, something I said I would never do. But the with annuity rates being quite high, it’s worth putting some eggs in that basket.
The with profits funds don’t seem very transparent or fair.
From my last post.
It appears that anybody cashing in a pot before 2019 has been screwed, and anybody cashing in a fund after 2019 is benefiting from the fact they where screwed.
I have another Phoenix WP fund which was set up from money that came from compensation for the closure of a works DB fund.
Bear in mind you’re at least now in a fund with explicit charges, though whether you want to be paying them 1% p.a. to ‘manage’ your money in cash is, um, a choice worth considering further perhaps.
It would be wise to consider one of three things imo:
Research all your options for your future wealth and welfare and choose a direction that will satisfy your requirements for the rest of your life and any beneficiaries to your estate accordingly, in the most tax efficient and cost effective manner available, ideally one that is also flexible to allow you to adapt to changes should and when they occur, making note of not only current legislation and tax laws but any changes announced every financial year too and remember to thoroughly review your choices and plans at least every 6 months to ensure continued suitability or otherwise.
Or:
Speak to Pensionwise if it helps. Which it probably won’t because you’ll want to ask them more questions which they won’t be able to answer.
With profits pension funds profits don’t get the full amount of profit added to the fund value each year, some of the money is put into a large pool. My fund guaranteed a growth of 5% PA. If this wasn’t achieved, the money in the pool was used to ensure 5% was added to my fund.
With my fund there was excess money in the pool, so when somebody cashes in a WP fund, they get a cut of the money in the pool.
So, in 2112 to 2018 people got an additional 2.5% of their fund value as a final bonus.
In 2019 people got an additional 54% of their fund value as a final bonus.
I’ve produced spreadsheets comparing, annuities, draw downs and bonds.
My daughters checking my maths, she’s got a PPE Degree, so doesn’t come cheap. I’m paying her in premium bonds.
My thought is don’t put all your eggs in one basket. Do a combination of all three.
The plan was that we were going to use my lump sum to change the main car, and keep the TT as a fun runabout. I retired end Feb 2020……remember what happened in March?!!
So that put the mockers on anything for the next two years.
I bought some LEGO, and my DB is in the process of having her teeth ”sorted”.
Hi Jim.
I watched the video on Index funds and that prompted me to do some more reseach as well. I must say, funds like Vanguard and such seem quite atractive. I love the points the presenter makes regarding the rebuttles to expect from one’s investment advisor. He has some very good arguments and data supporting his claims.
I’ll be thinking about this.
Thanks again for the post.
