Exit charges on regular premium policy

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messyleo

Registered User
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I just wanted to check how exit charges are normally payable on a regular premium investment.

I currently have a policy with Standard Life started in 2023 with declining exit charges over five years. My understanding is that each contribution has to be in for a full five years in order not to have to pay exit charges, rather than just the policy being a minimum of five years old. So for contributions made in year one, in year six, there will be no exit charges payable, but for contributions made in year three you need to wait till year eight for no charges to be payable.

Do I have the right understanding there or is it better than I think and once the policy is five years old there's no exit charges even for current or the most recent contributions which have only been in a month?

Thanks a lot.
 
messyleo said:
My understanding is that each contribution has to be in for a full five years in order not to have to pay exit charges, rather than just the policy being a minimum of five years old. So for contributions made in year one, in year six, there will be no exit charges payable, but for contributions made in year three you need to wait till year eight for no charges to be payable.
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I wouldn't have thought that it was implemented that way but I could be wrong. What does the policy document/terms and conditions say about how the early exit penalty is calculated?
messyleo said:
and once the policy is five years old there's no exit charges even for current or the most recent contributions which have only been in a month?
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That's how I would have assumed that it works - i.e. that early exit charges are calculated with reference to the policy inception date and not the most recent contribution date.
 
ClubMan said:
I wouldn't have thought that it was implemented that way but I could be wrong. What does the policy document/terms and conditions say about how the early exit penalty is calculated?
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This - the second sentence makes me unsure:

"Early encashment charge: Starting at 4% in year 1 & 2, and then reducing by 1% each year on the anniversary date. This charge applies from the date that funds are invested"
 
Ok, maybe your first analysis is correct after all...?


For a Synergy Approved Retirement Fund, if you make an occasional withdrawal or transfer your policy before the 5th anniversary of the date your premium is allocated, this charge may apply. Any top-up premium may also be subject to this charge for the 5 years following allocation. The early encashment charge, if it applies, will be within the range 1-5%. The charge is a % of the value cashed in and is applied on a first in/first out basis.
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Thanks fortune. I guess I will contact them for clarity the text in the doc Clubman linked still confuses me a bit!
"For a Synergy Personal Pension, Synergy Buy Out Bond, Synergy Investment
Bond or Synergy Regular Invest, if an early encashment charge applies, it may be
within 5 or 3 years of the allocation date of the contribution, transfer payment
or premium on a first in/first out basis, depending on what you agree with your
financial adviser"

I have also increased the premium since starting it so this maybe a factor as you say
 
ClubMan said:
Why not just ask Standard Life or your broker for clarification?
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That's literally what I just said II'm going to do tbf :)
I wanted to check I hadn't missed something obvious first and SL are also quite slow customer service wise I find.
 
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