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Punter in the Park
Posted: 27 July 2011 15:14:35(UTC)

Joined: 26/10/2008(UTC)
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My IFA is pitching this to me as a way of securing my capital with guaranteed minimum return but very high charges (c3%). I am 68 years old and have no need to draw on my pension fund in the foreseeable future. Presently I have an advisory portfolio SIPP>

Has anyone had experience of MetLife, positive or negative?
Simon Taylor
Posted: 27 July 2011 16:44:57(UTC)

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Do you suppose that the high charges levied on this fund and the fact that your IFA is pushing it might not just be coincidence?
Simon Taylor
Posted: 27 July 2011 16:46:16(UTC)

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Do you suppose that the high charges levied on this fund, and the fact that your IFA is pushing you towards it, might not just be a coincidence?
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Guest on 22/10/2013(UTC)
Karl Smith
Posted: 27 July 2011 16:52:33(UTC)

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How could 3% possibly be a good deal! Although no experience of Metlife (but pleanty from IFAs & assurance companies) I would be asking the IFA what's in it for him?
Guaranteed bonds have their (limited) place but with inflation at say 4.5% & fees at 3%, just to standstill you need to be grossing 7.5%. Change your IFA! If capital retention is your worry there are other reasonably low-risk options available.
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Guest on 16/11/2012(UTC)
Joe Soap
Posted: 27 July 2011 16:58:15(UTC)

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And those other reasonably low risk options are...................??????
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bill blayney on 21/10/2013(UTC)
Punter in the Park
Posted: 27 July 2011 17:11:14(UTC)

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Thanks for all your responses which confirm my concerns and doubts BUT what I am really after is someone who has a policy with MetLife - any takers?
Karl Smith
Posted: 27 July 2011 17:28:19(UTC)

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@ Joe, simple things like cash deposits, NS&I bonds (including index linked), gilts. If capital preservation (as opposed to growth or income) is the requirement all these don't start with a 3% handicap.
My personal choice would be a combination of NS&I products, PIBs some corporate bond fund(s). some divi paying defensive stocks (e.g. Tesco, utilities etc) and maybe an income paying investment trust. Depending on the amount of risk I was willing to take would determine the ratios. Mind you, I'd still throw some into gold (just in case).............. :-)
Joe Soap
Posted: 27 July 2011 17:45:24(UTC)

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Thanks Karl.
Punter in the Park
Posted: 27 July 2011 18:07:30(UTC)

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Hey guys , I'm delighted you are all pitching in and don't want to break up the party but actually there is only one question:


D G Stonebanks
Posted: 27 July 2011 19:27:24(UTC)

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"My IFA is pitching this to me as a way of securing my capital with guaranteed minimum return but very high charges (c3%)."

What do you mean by "guaranteed minimum return"?

You could get over 5% in dividends with HICL - the HSBC Infrastructure Fund Ltd - they buy PFI projects (hospitals, schools, police stations) after they have been completed and collect index-linked rents from the Govt for the life of the contract - typically 35 years. Of course, if interest rates rise, will the share price fall keeping the yield (dividends/share price) in step with alternatives? I don't know - but my wife will be keeping her shares.
Posted: 27 July 2011 21:03:24(UTC)

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Terence, I know nothing of MetLife, but read and http://www.bankinvestmen...lations-2674283-1.html.

This is an American company and it looks like it wants to stay under the radar and have less accountability/regulation (and just look what happened to those companies in the US and the UK that took full advantage of less scrutiny following the relaxation of regs and what they did, both sides of the pond). The question I would ask is why? In the above articles are also some slightly worrying snippets.

You say you have no need to draw on your pension fund in the foreseeable future, so why the the need for this product? What is it, a type of annuity or a bond?

The fact that you visit this website perhaps suggests that you have a separate portfolio. Wouldn't you be better in shares like Glaxo, utilities, Reckitt Benckiser and other solid blue chips paying 4-5% in divis (with a realistic chance of capital increase, no commission for either your IFA and/or Metlife)?

What is the commission to the IFA for this deal? If a bond, exit penalties?
Anonymous Post
Posted: 27 July 2011 21:15:50(UTC)
Anonymous 1 needed this 'Off the Record'

Terence, I am familiar with MetLife, if that's what you're asking. They used to operate in the UK thorough their wholly owned subsidiary Albany Life until 1998; their products were the usual life company crap, and I mean, like, dung. In the USA they are big, but doesn't mean quality, either. MetLife re-entered the UK market under their own name sometime in around 2003-5.

Unfortunately, in the UK life products are consumer unfriendly, with high up-front and ongoing charges, designed to pay high initial, and sometimes, ongoing commissions to intermediaries. The MetLife product you are interested in would probably pay 7% initial commission and 0.5% per annum. Anybody daft enough to buy products like these should negotiate with their advisor to pay an hourly fee for the work involved and have the 7% (and possibly the 0.5% ongoing) commission rebated into their product.

I believe I looked at this product when it was launched, perhaps 4-5 years ago, and I was unimpressed, as per usual. Hope this helped :)
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David Chapman on 16/11/2012(UTC)
Posted: 28 July 2011 00:01:23(UTC)

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Thank you Anon 1.

Albany Life was operating on instructions from their parent and if the parent is anything like their subsid, then the product is not worth the risk.

I am not and never was an IFA, but in the course of my professional career I gleaned various snippets and Albany Life was not a company to go to for insurance, and those snippets I got from third parties, invariably brokers advising my clients. Nothing specific, just my recollection.

Suggest you avoid.
Posted: 28 July 2011 09:03:01(UTC)

Joined: 11/01/2009(UTC)
Posts: 4

It all depends on your priorities, your attitude to investment risk, the size of your pension fund and your other assets.

Is it likely that you may never need to draw benefits from this pension fund? Are you therefore looking to maximise the death benefits to pass on to your family? Are you looking for the potential for investment growth, but don't want to risk the value of your pension fund falling?

Only you and your IFA know what you are trying to achieve so it is unfair for anyone else to comment on it's suitability without knowing your personal situation

Metlife is a niche product and has its place in certain circumstances; particularly for more cautious individuals who would prefer the comfort of some sort of guarantee. I agree that the charges look high, but nothing in life is free - guarantees cost money. The shorter the term the investment, the higher the cost of the guarantee.

All of Metlife's literature, charges and videos can be found on the following link.

I suggest that you do some homework and familiarise yourself with the Metlife product. Decide whether it's what you are looking for and then discuss at great length with your IFA. Also clarify what your IFA is charging you. Is he fee based or is he taking maximum commission? Are you fully aware of all the charges you are paying for the investments in your current SIPP arrangement? Some managed investment funds have TERs approaching 3%
Anonymous Post
Posted: 28 July 2011 14:17:18(UTC)
Anonymous 2 needed this 'Off the Record'

And with careful choice of investment platforms you can get full rebate of the trail commission paid to an IFA or kept by the fund manager. If using managed funds there should not be so much reliance on using an IFA anyway, they do not have a crystal ball.

A 0.50% to 0.75% trail commission on top of the 3% upwards initial fees the OP pays to an IFA really do mount up to a serious part of his SIPP over the years. Check it out with a calculator and it may change your mind about making some choices yourself OP
Anonymous Post
Posted: 28 July 2011 16:21:08(UTC)
Anonymous 3 needed this 'Off the Record'

There is some information on the Metlife product here: The endless sales aids for IFAs amused me. Every time the product refers to 'guaranteed' this and 'secure' that, you are paying dearly for it trhough the 3% per year and IFA commission. Over ten years, that 3% per year compunds to over 24% lost from the capital you would otherwise have. It seems steep - even normal funds have lower fees than this and if bought through a fund supermarket (eg a Hargreaves Lansdown SIPP) there are no initial fees.
Posted: 29 July 2011 09:30:56(UTC)

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I also know a few things about Metlife. they pitched me a few months ago. The company is regulated in Ireland and is subject for limited regulation in UK. There may be a reason for that. To get the promissed guarantees they buy lots of swaps over the counter from American investment banks, the likes of Merril Lynch etc. So there is a lot of counterparty exposure/risk.

If you want some guarantees ask your IFA to arange you some cash deposits in your SIPP, Scottish Widows has a 5 year deposit paying 4.25% and 0.30% commission which can be rebated back into your SIPP. A £85,000 cash deposit won't do you any harm. Other banks that offer deposits for SIPPS are Investec or Julian Hodge (4% for 5 years).

Posted: 26 October 2011 22:32:13(UTC)

Joined: 19/02/2011(UTC)
Posts: 1

Dear "Punter in the Park"

My own Metlife Retirement Plan (Secure Income) comes at a total cost of 1.98% per annum, and this includes the 0.5% annual investment management fee I pay to my IFA. I have circa £200k invested with them, and have 3% guaranteed yearly growth on the retirement income, which Metlife guarantees.

Therefore, even though I'm paying 1.98% in charges every year, my income still grows by a minimum of 3% every year. I'm also not stuck with the contract so if something better comes onto the market I can move my fund at any time.

All in all, I believe I have a good retirement plan for the current investment climate.

Posted: 11 April 2012 08:46:09(UTC)

Joined: 11/04/2012(UTC)
Posts: 1

The new version of this product has been significantly weakened. The pitch is '70% equity with a guarantee'. In reality the new Min, Med and Max portfolios that you invest in have the ability to be invested in 50%, 60% and 70% equity. However the fund fact sheet says they can hold significant amounts of cash. In fact the current asset allocation for the 70% equity fund is only about 35% equity.

This means you are paying a whopping 1.8% PA for a guarantee (approx 3.5% PA total charges per annum) on a fund with 35% equity. It also means that should equity markets fall significantly as in 2008 and 2009 (and the cost of providing the guarantee goes through the roof), MetLife can simply reduce the equity content, and you could end up in fund holding a high proportion of cash. If the fund value is lower than the guaranteed level, you are effectively stuck in the product, and paying huge fees for a cash fund that you stuck in.

There is also a written into the terms and conditions a clause that Metlife can increase the charges at any time (for new and existing policy holders). The fund terms and conditions also state that you can be blocked from transfering out of the fund for up to 6 months 'if in metlife's opinion it is in the interests of other members of the plan'.

Looks like this is a guarantee, but Metlife can shift the cost of providing it on to the policyholder if they need to.
Hacked Off
Posted: 15 May 2012 11:08:06(UTC)

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We invested almost all our pension funds in to MetLife Secure Income option following advice from our IFA (now ex IFA). Product is extremely expensive at around 3.2% per annum (which includes .5% trail commission plus 'claw back' to cover the 3% initial commission), and extremely complex. I was 2 years in to the plan by the time I fully understood what was going on; I have been trying to get out of it ever since. At this time MetLife still want to charge over £15,000 penalty before they let me out.

Whatever your IFA implies when pitching the scheme your actual fund is not guaranteed, it will be exposed to market risk, and will be carrying very high charges. The ‘guarantee’ applies to something called the ‘Benefit Base’, which is itself linked to a complex and equally expensive, ‘Draw Down’ pension, neither of which can be extracted from MetLife. And although the ‘Benefit Base’ is increased by 3% per year it is unlikely ever to increase by more than this (because your real funds, invested only partly in equities, would need to increase by more than 6%), and the related ‘Draw Down’ pension, in my view, is not at all competitive with offerings outside of MetLife.

My advice to anyone considering investing would be to ensure your IFA explains all the complexities, issues and risks of the plan, then to read all the documentation very carefully, and then to put your money someplace else.
3 users thanked Hacked Off for this post.
Guest on 15/05/2012(UTC), Jack the hat on 16/11/2012(UTC), David Chapman on 16/11/2012(UTC)
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