ReAssure Pension Review

Is ReAssure Pension Plan Safe For Investment?

Founded in 1963, it is a life and pension company that buys and administers closed books of business from other companies. It has around 3 million policies and investments of nearly £70 billion for our customers. 

 

ReAssure has blocks of business from several providers which include Guardian Financial Services, HSBC, Barclays Life, Alico, National Mutual and Old Mutual Wealth Life Assurance.

 

As the value of investments can rise and fall, it is crucial to review the performance of the all life and pension funds offered. 

 

Hence, this guide helps you to understand pension options offered by ReAssure and its pros and cons. Towards the end, this guide presents the FAQs section, giving you more clarity.

Types of Pension Offered by ReAssure

Here are the different types of pensions offered by ReAssure: 

 

1- Individual Pensions

 

Usually, in a pension plan, you pay your contribution to build a pot of money to support yourself in retirement. You cannot take out your pension until you reach 55 years of age. 

 

Similarly, in case of individual pensions, also known as defined contribution, the amount of money you have in your retirement is based on:

  • how much you pay in

  • the investment growth of the funds that you have invested in 

  • annuity rates at the time you take your benefits. It is applicable when you choose to take a guaranteed income for life

Contribution can be made by both you and your employer. You can also transfer the money from another registered pension scheme.

 

Here are the pros and cons of Individual Pensions:

Pros:

  • Offer a long-term saving option and guaranteed income once you retire.

  • It helps you negate the effect of inflation.

  • It allows you to tweak the plan to get the lump sum payment on retirement or death.

 

Cons:

  • You can not withdraw it without incurring costs and fees before the age of 55. 

  • Your pension funds are invested in bonds, stocks, shares, or other investments, which increases your risk. 

  • It is complicated as it comes with different kinds of rules and regulations, making it difficult for you to understand what you can and can't do.

2- Group & Workplace Pensions

Group and workplace pensions are those that you took out through an employer’s scheme. These are administered by your current or previous employer. 

There are two different types of schemes under this pension:

Defined contribution or money purchase scheme: Money that you and your employer pay into this scheme is invested in funds. Thus, the value can go up as well as down. It implies that the final value of your pension pot is determined based on the amount you have paid and the performance of the funds that you invested in.  

Defined benefit or final salary scheme: In this scheme, the money you pay is used to pay you income upon your retirement. The income amount is determined based on your length of service and salary at time of retirement. 

Here are the advantages and disadvantages of group and workplace pensions:

Pros:

  • You also get your employer’s contribution into your pension pot.

  • The amount is deducted from your paycheck before taxes are taken out, which saves your money in the long run. 

  • If your pension provider goes bust, the FSCS tries a pension transfer to move your funds to another pension. If that is not possible, then you are entitled to receive 90% of the saved pension. 

Cons:

  • The final value of your pension amount is dependent on how much you have contributed and the performance of the funds.

  • If your pension provider goes out of business, then you are at a risk of losing 10% of your saved pension pot. 

3- Retirement Account

 

Retirement account is a defined contribution product. Thus, its value is dependent on the amount that you pay or transfer in, the performance of your chosen investment funds, and how much you withdraw. 

There are two pots: 

Flexible pension pot: It is a personal pension plan in which you can save money for your retirement while benefiting from tax concessions. It allows you to save regularly by adding one-off contributions to your pot or paying no contributions at all. You can also withdraw 25% of your fund as a tax-free lump sum upon you hit 55 of age while leaving the rest invested. 

Flexible drawdown pot: It is a flexi-access drawdown plan. It allows you to make taxable withdrawals from your funds. You cannot pay contributions into a FDP. But you can transfer the amount to FPP. However, you have to pay tax at your marginal rate of income tax on 100% withdrawals from your FDP plan.

 

Here are the pros and cons of group and workplace pensions:

 

Pros:

  • It allows you to consolidate all your pension savings into one place.

  • You can access your retirement savings flexibly.

  • You can take a tax-free lump sum while leaving the rest of the money invested.

Cons:

  • Retirement account is linked to the value of investments held in the funds. Thus, the value of your investments is not guaranteed and can go down or up accordingly. 

  • Inflation reduces the real value of your benefits upon retirement.

  • You cannot access the amount until you turn 55. 

  • When you decide to transfer a policy into the Retirement Account, it is not guaranteed that you will achieve a higher value. 

 

4- Annuities

When you pay into a defined contribution pension scheme over your working life, you get a chance to decide what to do with the pension fund upon retirement. One option is to buy a lifetime annuity. 

Annuities provide you regular guaranteed income once you reach your retirement age. When you use your pension pot, you can take up to 25% of the amount as tax-free cash. You can use the rest of the amount to buy annuity.

 

Here are different types of annuity:

  • Level annuities

  • Escalating annuities

  • Inflation-linked annuities

  • Impaired or enhanced annuities

  • Lifetime annuities

  • Joint life annuities

  • Short-term or fixed-term annuities 

Here are the pros and cons of an annuity:

Pros:

  • Offer guaranteed income. It is not dependent on the market.

  • Your income can continue after you die.

  • Money used to purchase annuities is tax-free.

  • It offers no annual contribution limit.

 

Cons:

  • You cannot cash in your annuity.

  • If the payout is linked to an investment strategy then there is a potential of loss of money.

  • If you withdraw an amount which is over the maximum withdrawal amounts, then you can be penalised and subject to withdrawal fees. 

5- Capped Drawdown

Capped drawdown is a type of pension that allows you to take out money from your pension pot while keeping it invested. 

However, the amount of money that you can withdraw from a capped drawdown plan each year is limited by rates set by the Government Actuary’s Department. The current rate is 150% of the ‘equivalent annuity’.

In this policy, you can benefit from investment growth while earning an income. However, the value of these investments can go down as well as up. Thus, your plan value will also fluctuate as you make withdrawals. 

Here are the advantages and disadvantages of capped drawdown pension:

Pros:

  • You can vary the withdrawal amount over time. 

  • Easily passing on the money after your death. 

  • The value of your pension will increase with the increase in performance of shares and bonds in which your pension fund is invested.

Cons:

  • There is a lack of certainty. Your income from capped drawdown pension can fall if the underlying assets perform badly.

  • Restricts the tax relief that you can claim on fresh pension contributions.

  • It is difficult to move your defined benefit schemes to a drawdown fund.

ReAssure Pension FAQs

 

How to build your pension pot?

 

Here are the ways to make the most of your pension:

 

1- Increase your savings: Add your spare or extra income into a pension.Any extra income that you save into a pension will benefit from tax relief. 

 

2- Claim all your tax relief: If you are a higher rate taxpayer making pension contributions, then you can claim the basic rate tax relief is 20% of your gross contribution.

 

3- Check how your pension pot is invested: If you have a defined contribution personal or workplace pension, then you can choose how your pension pot is invested.

 

4- Check the changes deducted from your savings: If you have a defined contribution scheme, charges can reduce the value of your pension pot. You have to pay service or administrative charges or charges for each of the investment funds within your pension. 

How to combine your pension pots?

Here are the steps to transfer combine or transfer your pension pots:

  • Find out your transfer value.

  • Your scheme administrator will provide you a document that sets out your transfer value, details of any extra benefits, any exit charges, and information that your new scheme will need. 

  • Once you have submitted the application to your new pension provider, they will contact your existing scheme administrator to arrange the transfer.

  • The transfer process takes six months.

 

What are the pension scheme charges?

 

Here are some of the charges that can apply to your pension pot:

 

1- Annual Management charge

2- Policy fees

3- Ongoing charges figures

4- Service/ administration charges

5- Transaction costs

6- Trading or switching fees

7- Entry fees or bid/ offer spreads

8- Initial units, capital units and accumulation units

 

If you have a defined benefit scheme, then the following information must be provided to you:

 

  • When your pensionable service started

  • the rate at which your benefits build up

  • your pensionable salary

  • any deductions or fees

  • the amount that you will get

  • if you worked to your normal retirement date

  • if you left the scheme within a month of the date of the statement.