'I signed something years ago – is it even any good?' This question comes up more often than you'd think, and the wrong answer is costly: a thoughtless replacement is the most common way to end up paying the same initial costs twice. The right order is: review first, decide second.
- An old policy has two treasures: the retirement age locked in at signing, and the initial costs you've already 'gotten through' – you'd lose both if you replaced it.
- The review covers four points: costs, bonus entitlements, allocation, and the relationship between your premium level and the allowance.
- Replacement is the exception – it typically only pays off for a strikingly unfavorable structure, and only after a detailed calculation.
What is the old policy worth? – the two treasures
The first treasure is the retirement age locked in at signing: a policy signed further back is tied to the retirement age in force at the time of signing – you'd lose that right if you replaced it, since a new policy would be tied to the new rules instead (why it matters). The second is the cost curve: you're already past the higher deductions on the initial units – a new policy would start that stage over from scratch (our article on costs).
These two items are so strong that the basic rule is this: keeping the old policy is the default case – it's replacement that needs to be justified, not staying put.
The four points of the review
- Cost level: what's the product's actual annual charge – and how does it compare with today's market? (For products predating the TKM (total cost indicator) system, this calls for separate analysis.)
- Bonus entitlements: what loyalty credits are still waiting in the policy – and what could cause you to lose them?
- Allocation: does the asset-fund mix still suit the time you have left? In most old policies this is the neglected point – and it can be adjusted free of charge (our allocation article).
- Premium level and allowance: are you making full use of your tax credit cap? The old premium is often sized to an income level from many years ago.
A checklist version of these questions: our policy-review checklist.
The typical outcomes
The most common outcome: the policy stays, but three things change – an allocation adjustment, a premium increase to match the allowance, and a review of the riders. The second most common: the old policy stays as the base, and a second element is built alongside it (possibly in a different form – combining products). A genuine reason for replacement is rare: a strikingly unfavorable cost structure, one that the calculation justifies even after factoring in the loss of the rights locked in at signing.
Something to always be wary of: if someone suggests canceling your old policy without having reviewed it in detail. 'Old is bad, new is shiny' isn't analysis – it's a sales reflex.
How does the review work with me?
You'll need the policy document, your latest annual statement, and 20 minutes. We go through the four points, and at the end I recommend one of three options, with reasoning: keep it unchanged, keep it with adjustments, or – rarely – a detailed replacement calculation. The decision is yours; the review is free of charge.
If you have an old policy, let's start there – it's one of the best-value 20 minutes in pension planning: book a time.
A question about your own situation? Book a free 20-minute consultation →
