Written by richard on 12 August 2010
Interestingly enough, over the last couple of weeks I have had several (more than 4 queries) relating to Abbey Life Pensions and problems close to or at retirement.
If you own an Abbey Life Pension you will need to be aware of the following points;
Abbey Life will automatically send you Retirement Options a couple of months before you are due to retire. If you do not respond the following will happen.
Abbey Life will automatically purchase you an annuity with the value of the fund and put this in payment to the last known bank details held.
You should therefore take immediate action to ensure that Abbey Life Pension have your correct address details on file in order that you are in receipt of the information relating to your Pension in advance of your retirement date.
Remember once an Annuity has been purchased there is nothing you can do about it to either increase the value of your Pension or by having some increased flexibility over your planning.
Richard Smith
Richard Smith – Personal Financial Planning Expert
http://www.thefinancezone.co.uk 0845 226 9106
“if you really think any of the banks are acting in your best interests you are mistaken” Richard Smith UK Investment Forum comment.
Tags: Abbey Life, Abbey Life Pension, Abbey Life Pension Transfer, Annuity Purchase
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Written by Richard Smith Financial Expert on 12 July 2010
Pension Income Drawdown
These plans have been available for the past 10 or so years and are not without their problems, indeed many Income Drawdown plans are not reviewed regularly and indeed little understood by many. If you have one of these Pension Drawdown (or Pension Fund Withdrawal plans) there are some concerns which I have outlined below.
The main concerns in relation to pension drawdown contracts relate to the following areas.
Investment performance, this is where the overall return from the invested funds are not as expected, or indeed sufficient to be able to provide a level of income that is selected to be withdrawn from the plan. Many Pension Income Drawdown arrangements are not invested in a correct range of funds or indeed with any range of funds.
Mortality drag, this is the effect on the income you would have had from the pension fund had you purchased an Annuity (an income for life) with the plan proceeds at your plan maturity date. There is a further detailed explanation here http://en.wikipedia.org/wiki/Mortality_drag
As you know it is possible to take a fund value within your pension scheme and convert this into an annuity, this annuity then provide you with the level of income for life. This income can also be guaranteed.
Charges.
Pension drawdown contracts tend to have the highest charging structure of all pension plans.
It is possible that you will be paying up to 3% in annual management charges. Plus an Expert fee of anything up to 2%. Plus a one off fixed cash fee of anything up to £500 per annum adjust for having a fund invested.
There is also the effective charge that is levied on the underlying fund. This could be as high as 3% per annum.
The overall effective charge is could end up decimating a fund quite substantially
Financial Experts and insurance companies are duty bound to review pension drawdown policies at least on a 3 year but 3 yearly bases but also annually and then would normally be or they could also be a charge for this ongoing review work.
As you can see from the above there is no substantial reason or reasons for not continuing with the pension drawdown contact, importantly these alone should be compelling reasons for you to review your plans immediately.
Very often these issues are not explained in full and from my experience many customers did not understand them.
Given that there are now some extremely low cost providers in the market place, you should review your pension drawdown contract as a matter of urgency.
Richard Smith
Personal Financial Planning Expert.
If you have any questions in relation your Income Drawdown Plan please document them below and I will be pleased to answer them for you.
Tags: Pension Drawdown, Pension Income Drawdown
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