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Section 32 buyout questions
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nrsql
Posts: 1,919 Forumite
I posted a while ago that this wasn't getting any bonuses and someone kindly pointed out that the guaranteed benefits were likely to be good and outweigh everything else.
Well I finally took the 5 mins to write to NU and ask for details - they responded in a couple of weeks which I think pretty good. I have a couple of question about it though.
guaranteed fund £15,565, bonuses £13,289.35
Retirement age for the plan is 60.
The estimates give 0 pension and 0 tax free sum unless growth is 7% and annuity rates 6.1% in which case £3160 pension or £1860 tax free and £3023 pension.
I'm guessing that's not going to happen.
The good bit
Guaranteed min pension £3023.80
Odd bit - GMP is included in the extimated benefits so why do the 5% and 6% growth columns show a 0 pension. - is that wrong?
It also says
"One or more of the projections does not cover the cost of providing the revalued GMP. At your retirement date a smaller pension may be payable which steps up to the revalued GMP at state pension age."
Does it just mean that if the 7% projection isn't met and the state retirement date is greater than the plan date then I don't get the full guaranteed amount untill the state retirment age?
Also pre88 GMP at date of leaving £188.7
GMP revaluation rate 8.5%
If I compound that for 30 years (when this was taken out to retirement) I get 2181.736 it needs another 4 years to get to 3023.57 which is pretty close to the stated GMP.
Well I finally took the 5 mins to write to NU and ask for details - they responded in a couple of weeks which I think pretty good. I have a couple of question about it though.
guaranteed fund £15,565, bonuses £13,289.35
Retirement age for the plan is 60.
The estimates give 0 pension and 0 tax free sum unless growth is 7% and annuity rates 6.1% in which case £3160 pension or £1860 tax free and £3023 pension.
I'm guessing that's not going to happen.
The good bit
Guaranteed min pension £3023.80
Odd bit - GMP is included in the extimated benefits so why do the 5% and 6% growth columns show a 0 pension. - is that wrong?
It also says
"One or more of the projections does not cover the cost of providing the revalued GMP. At your retirement date a smaller pension may be payable which steps up to the revalued GMP at state pension age."
Does it just mean that if the 7% projection isn't met and the state retirement date is greater than the plan date then I don't get the full guaranteed amount untill the state retirment age?
Also pre88 GMP at date of leaving £188.7
GMP revaluation rate 8.5%
If I compound that for 30 years (when this was taken out to retirement) I get 2181.736 it needs another 4 years to get to 3023.57 which is pretty close to the stated GMP.
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Comments
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Anyone any views on this?0
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guaranteed fund £15,565, bonuses £13,289.35
Retirement age for the plan is 60.
The good bit
Guaranteed min pension £3023.80
You may like to look up what size of fund you would need to buy this pension on the annuity market .
https://www.fsa.gov.uk/tables
Play around with pension annuities section.
If the guaranteed pension is index linked in payment and/or has a spouse pension, be sure to include that.Odd bit - GMP is included in the extimated benefits so why do the 5% and 6% growth columns show a 0 pension. - is that wrong?
Because the fund won't be big enough to provide the pension at that growth rate, so you can't take it early.[They have to provide it at NRD whether the fund is big enough or not.]It also says
"One or more of the projections does not cover the cost of providing the revalued GMP. At your retirement date a smaller pension may be payable which steps up to the revalued GMP at state pension age."
Does it just mean that if the 7% projection isn't met and the state retirement date is greater than the plan date then I don't get the full guaranteed amount untill the state retirment age?
I'd have thought so.Also pre88 GMP at date of leaving £188.7
GMP revaluation rate 8.5%
If I compound that for 30 years (when this was taken out to retirement) I get 2181.736 it needs another 4 years to get to 3023.57 which is pretty close to the stated GMP.
That does explain it.
Looks like a pretty valuable guarantee you have there.
Trying to keep it simple...
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Thanks,
the bit it the end was about how they've calculated the guarantee.
It sounds like they are saying it increases by 8.5% each year but when I do this calculation from the date of the section 32 buyout to retirement date I get 2186.736 rather than 3023.80.
Maybe it's because the buyout wasn't done on my birthday so there was some extra to accumulate at the begining and when compounded that makes the difference? (Actually it can't be that much).
I'm quite happy to get £3023 a year from 8 years work - wish I could remember if there was company contributions in that - but guess that would just reduce my salary so doesn't really count as free money.0
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