Equitable Life WP MVA is 10% but they told me 4%

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ClubMan

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I have a small amount of pension savings in the Equitable Life With Profits fund. I recently wrote to them asking for a valuation and a clarification of what the current MVA was. They wrote back stating that it was 4%. Their website and the recent annual report said 8%. Seemingly the 8% is for UK policies only. Their website does not clarify what the Irish WP MVA is. They have recently emailed me in response to a request for further clarification apologising for the incorrect information in the previous letter and informing me that the MVA for Irish policies taken out after 1st January 1998 is actually 10% (not 4%)! Does the fact that they notified me formally in writing that the MVA was 4% give me any leg to stand on in terms of insisting that this and not the 10% is applied if I decide to transfer out of the EL WP fund to another provider? I.e. can I insist that they stick to their word on the 4% or else use this as a bargaining position? I suspect not but just wondering if anybody knows the official line on this and what, if anything, IFSRA or the Ombudsman might have to say on the matter?
 
Hi Club

I also suspect not.

Usually these letters from the life companies will have some disclaimer (E & O E) at the bottom basically saying that they are entitled to make adminstrative mistakes witout being held to them, for example if a Benefit Statement issued gave a fund value of €1,000,000 by mistake and the actual value is €100,000 I do not think that the court will entertain anybody claiming that they are owed €1m.

Just my opinion, I do not know of any official line.
 
Thanks. I must check the letter for an E&OE rider. I imagine that you are correct but just wondered. I've sent an email of complaint to them just to see what they say. I can imagine, given the state of EL, that they are unlikely to give discounts just to keep customers who complain happy - especially a customer who wants to get away from them anyway! I'll see what they say and might run it by IFSRA/Ombudsman/UK FSA if it comes to that just to see what they say.
 
Well maybe you should not take it away from them until the day comes when (I hope the day comes!) the MVA is reduced to 0%.
 
I need to look at this in more detail but some rough calculations suggest that the chances of being better off by taking the hit and sticking the money in a high equity content fund for the next few decades are high. It's only a small proportion of my overall pension savings but I am inclined to cut my links with EL due to the ongoing uncertainty about their long term future and to stick it into equities for the potentially better long term returns. WP in general and EL in particular was the wrong choice for me at the time. My own mistake. You live and learn.
 
Does the investment in their WP fund carry a guaranteed annuity factor (which is very favourable compared to current market annuity rates)...and by taking your transfer you will lose your ability to avail of this favourable annuity rate?
 
In that case you are right, it was a mistake to go into EL's WP fund, and get out fast because you are subsidising everybody else that is availing of the extremely favourable annuity factor.
 
Actually the main bad decision was putting money into a WP fund with several decades to go to retirement. My mistake was being too conservative about the lump sum that I put in and worrying about it's short term value/volatility. As things transpired the choice of EL was also a bad decision in the light of the GAR debacle and the subsequent impact on the society. On the other hand it's also quite possible that I would have been even more out of pocket with some of the alternative pension charging structures on offer at the time - e.g. those that took from the first few months to the first couple of year's contributions in charges and also levied high annual management charges. Either way, some lessons learned.
 
WP Funds are great for a long-term to retirement, as long as you have a GAR, the WP investors with Friend Provident - when I worked there - made fantastic returns because of the GAR.

Next time get the GAR, otherwise do not touch WP.
 
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