Product news
Pensions bulletin Pensions selection
Barnett Waddingham has confirmed it will offer the full range of new pension income options. From April 6 2015, Barnett Waddingham’s Flexible SIPP will include the new pension benefit options, flexi-access drawdown and uncrystallised fund pension lump sum (UFPLS), and will roll out added improvements including the immediate payment of ad hoc income and UFPLS, a reduced fee for ad hoc income payments, and a second payment date per month for regular payroll income.
Hargreaves Lansdown has introduced a new drawdown proposition with no set-up or income withdrawal charges. In terms of its ‘ad hoc’ pension withdrawal option, no charges will be levied on Vantage SIPP investors who want to make an ad hoc withdrawal from their fund.
Legal & General will offer a fixed-term annuity, the Fixed Term Retirement Plan, as part of its post-April 2015 range of retirement products. It will also launch a Cash-Out Retirement Plan.
Aegon, Aviva, Canada Life, Friends Life, Legal & General, LV=, Partnership, Prudential, SAGA and Standard Life have all amended their pension annuity rates since the last issue.
TOP UNIT-LINKED PENSIONS Accumulated cash fund as at 1 January 2015 for a male retiring at the age of 65 years having contributed a gross annual premium of £1K for 10 years
Prudential
Wesleyan Assurance Standard Life
Legal & General Scottish Widows
£14,919.00 £14,699.49 £14,510.69 £14,043.12 £13,867.44
Aviva MGM Advantage Friends Life (ex AXA)
£13,725.77 £13,520.64 £13,515.00
TOP WITH PROFITS PENSIONS Accumulated cash fund as at 1 January 2015 for a male retiring at the age of 65 years having contributed a gross annual premium of £1K for 10 years
Friends Life (ex AXA) Wesleyan Assurance LV=
(UWP) (UWP) (UWP)
The Co-operative Insurance (UWP) Standard Life
(UWP)
£16,338.00 £15,459.25 £15,395.02 £14,751.25 £14,244.61
TWP - Traditional with profits. UWP - Unitised with profits.
TOP PENSION TRANSFER VALUES Pension transfer values as at 1 January 2015 - based on £100 gross per month. Total invested over 10-year term £12K
Top five unit-linked transfer values
(balanced managed fund) Prudential
Wesleyan Assurance Standard Life
Legal & General Scottish Widows
Top five with profits transfer values
£17,594.00 Wesleyan Assurance £17,290.11 £17,000.75 £16,498.62 £16,325.81
LV=
The Co-operative Insurance Standard Life AEGON
DWP announces automatic transfer proposals
The Department for Work & Pensions (DWP) has outlined proposals for the automatic transfer regime. The policy will allow an individual’s pension savings to move with them when they change jobs, with consolidation increasing efficiency and reducing the volume of dormant or lost pots.
The ‘pot follows member’ system, which was first announced in the Pensions Act 2014, will take a two- phase approach: it will first be operated through opt-ins by scheme members before being replaced by an opt-out regime in the second phase. However, automatic transfers will only be applicable to members saving into default charge-capped arrangements, with exemptions in place for funds outside the new 0.75% cap as well as for small/executive pension schemes. This is to give members who actively manage their savings the freedom to make their own investment decisions, with automatic transfer being more appropriate for those who don’t engage with their savings to such an extent.
There is other criteria that a pension pot must meet in order to be eligible for automatic transfer (including the requirement for the first contributions to have been received on or after July 2012 with the pot worth £10,000 or less at the point of valuation), and if the criteria is met, the pot will be ‘matched’ with its recipient when the member changes jobs. The initial phase of automatic pot- matching is scheduled to be in place by autumn 2016. The DWP has projected that without this system, by 2050 there would be 50 million ‘dormant’ pots due to job changes.
Pension freedoms drive down enhanced annuity sales
Sales of enhanced annuities in the fourth quarter of 2014 fell by nearly two-thirds (65%) compared with the same period in 2013, as the pension freedom fall-out continues to impact the industry.
According to Towers Watson, total quarterly premiums fell by a further 13% in the fourth quarter to £334.8 million, following on from the quarter-on-quarter reduction of 36% seen in the third quarter of 2014, 29% in the second, and 12% in the first. Sales of variable annuities also fell, but less severely. Fourth quarter 2014 sales of £192.8 million were 23% less than in the same quarter of 2013, with the total 2014 annual sales of £866.8 million representing 78% of the 2013 sales total.
“Declining gilt yields over the second half of 2014 continued to put downward pressure on annuity rates, which has only added fuel to the fire of doubt surrounding annuities at the moment,” said Jeremy Nurse, a Director at Towers Watson. “Riding out this storm is clearly proving painful for enhanced annuity providers, but we expect to see some stability returning to the annuities market, albeit at a lower overall sales level, once people grow comfortable with the nature of the guidance promised as part of the Government package.”
50
£17,810.30 £17,567.10 £17,220.41 £16,732.73 £16,147.13
Useful IFA Pension website addresses
www.pensionsadvisoryservice.org.uk TPAS (The Pensions Advisory Service) gives information and guidance on occupational, private and state pensions. Pensions Helpline telephone: 0300 123 1047. Email:
enquiries@pensionsadvisoryservice.org.uk
www.thepensionsregulator.gov.uk The Pensions Regulator is the UK regulator of work-based pension schemes. Customer support telephone number: 0870 606 3636. Email:
customersupport@tpr.gov.uk
www.gov.uk/find-lost-pension The Pension Tracing Service can help trace pensions where people have changed jobs or a former employer has been taken over and contact has been lost. Telephone number: 0845 6002 537.
www.dwp.gov.uk DWP (The Department for Work and Pensions) is responsible for the Government’s welfare reform agenda. It delivers support and advice through a network of services to people of working age: employers, pensioners, families and children, and disabled people. There is a special section for advisers, professionals and employers offering various technical guides in PDF form.
AEGON Prudential
Legal & General Aviva
Scottish Widows
(UWP) £13,741.78 (UWP) £13,282.00 (UWP) £12,867.00 (UWP) £12,819.00 (UWP) £12,615.27
March 2015
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