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    • PeterBalham
    • By PeterBalham 13th Mar 17, 5:20 PM
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    PeterBalham
    Transferring an annuity with a GAR
    • #1
    • 13th Mar 17, 5:20 PM
    Transferring an annuity with a GAR 13th Mar 17 at 5:20 PM
    I have a pension pot with a GAR I obtained from re-assure

    The value in the pot is 12k, however with the guaranteed annuity rate I can receive £1k per annum

    In order for me to get this sum Reassure will pay Liverpool Victoria £12k the value of the pot plus another £13k .

    This is because LV will need £25k to buy the annuity for me.

    I asked reassure can you jusy pay me the £25k to put in my SIPP and they said no

    Can I get at the £25k or do I just accept the £1k annuity.
    Transferring the £12k pot would be just daft
Page 1
    • PeacefulWaters
    • By PeacefulWaters 13th Mar 17, 5:24 PM
    • 7,167 Posts
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    PeacefulWaters
    • #2
    • 13th Mar 17, 5:24 PM
    • #2
    • 13th Mar 17, 5:24 PM
    If it's £12k lump sum or £1k pa for a normal life expectancy take the £1k pa.
    • sandsy
    • By sandsy 13th Mar 17, 5:32 PM
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    sandsy
    • #3
    • 13th Mar 17, 5:32 PM
    • #3
    • 13th Mar 17, 5:32 PM
    £1K pa is worth more than £12k - Reassure confirm this by telling you it would need £25k to buy £1k.

    So do you want something worth £25k or something worth £12k?
    • dunstonh
    • By dunstonh 13th Mar 17, 5:46 PM
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    dunstonh
    • #4
    • 13th Mar 17, 5:46 PM
    • #4
    • 13th Mar 17, 5:46 PM
    Can I get at the £25k or do I just accept the £1k annuity.
    Transferring the £12k pot would be just daft
    LV supply annuities for Reassure. It is a commercial agreement. You are asking Reassure to break that commercial agreement and to suffer extra risks and costs that are not already factored for in that commercial relationship just for you.

    What they are doing is not daft. Nice try on your part but there is no logic to your argument.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • PeterBalham
    • By PeterBalham 13th Mar 17, 6:28 PM
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    PeterBalham
    • #5
    • 13th Mar 17, 6:28 PM
    • #5
    • 13th Mar 17, 6:28 PM
    Well I am a tryer

    What I have just been told by Reassure is that at the moment there is £12k in a pot reassure hold on my behalf

    (1) reassure guaranteed me a £1k per annum
    (2) 12k would not buy £1k annuity

    As reassure no longer offer annuites or have in house expertise.

    (3) They have asked Liverpool Victoria to ask a panel of 4 pension providers on behalf of Reassure how much they have to be paid on top of £12k to offer a £1k per annum.
    (4) The best quote on the panel said £13k . So £25k in total

    So reassure will pay over the £12 k they already have on my behalf and add £13k to that.
    This £25k will buy my annuity.

    I have said to both of them just give me £24k and split the £1k saving however you see fit

    I can see admin may prevent that as the computer says no

    I would far rather the legislation meant I had the option of being given the cash value of the guarntee plus pot if it was under £30k without advice or with advice if over £30k
    • dunstonh
    • By dunstonh 13th Mar 17, 6:51 PM
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    dunstonh
    • #6
    • 13th Mar 17, 6:51 PM
    • #6
    • 13th Mar 17, 6:51 PM
    So reassure will pay over the £12 k they already have on my behalf and add £13k to that.
    This £25k will buy my annuity.
    Correct. If you excercise the annuity option that the plan was set up with at the outset, they have to guarantee you get that amount. Either by paying the rate and suffering on an ongoing cost or take the hit in year one along with a commercial agreement with annuity provider.

    I can see admin may prevent that as the computer says no
    How about breach of contract?
    How would you cover off the cross subsidy lost from the mortality gain?

    I would far rather the legislation meant I had the option of being given the cash value of the guarntee plus pot if it was under £30k without advice or with advice if over £30k
    Without the commercial agreement they have put in place, this figure of £25k would not exist.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • GDB2222
    • By GDB2222 13th Mar 17, 7:04 PM
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    GDB2222
    • #7
    • 13th Mar 17, 7:04 PM
    • #7
    • 13th Mar 17, 7:04 PM
    Correct. If you excercise the annuity option that the plan was set up with at the outset, they have to guarantee you get that amount. Either by paying the rate and suffering on an ongoing cost or take the hit in year one along with a commercial agreement with annuity provider.



    How about breach of contract?
    How would you cover off the cross subsidy lost from the mortality gain?



    Without the commercial agreement they have put in place, this figure of £25k would not exist.
    Originally posted by dunstonh
    Forgive me being sightly critical, but it can't be breach of contract. Breach implies one party not doing what they have contracted to do. It is always open to both parties to a contract to agree to change it.

    The OP is entirely logical, and the insurance company is being entirely illogical. Nevertheless, the organisational cost to the insurer of implementing the sensible option is probably much more than £1000. Maybe, if the OP agreed to take £20,000, he might grab the attention of somebody high enough up the system to say yes to that proposition.
    No reliance should be placed on the above! Absolutely none, do you hear?
    • dunstonh
    • By dunstonh 13th Mar 17, 7:40 PM
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    dunstonh
    • #8
    • 13th Mar 17, 7:40 PM
    • #8
    • 13th Mar 17, 7:40 PM
    Forgive me being sightly critical, but it can't be breach of contract. Breach implies one party not doing what they have contracted to do. It is always open to both parties to a contract to agree to change it.
    The two parties are Reassure and LV. LV have agreed terms on the basis of receiving the funds from all the plans with GARs where the GAR is activated. So, Reassure doing something different would be a breach of contract. They are not going to amend a contract because one person wants to break their own pension contract (GARs are a contract event) to get the money as a gift.

    The OP is entirely logical, and the insurance company is being entirely illogical.
    The OP is entirely illogical, and the insurance company is being entirely logical.

    Maybe, if the OP agreed to take £20,000, he might grab the attention of somebody high enough up the system to say yes to that proposition.
    Requiring both insurers to agree it and once you do that with one person, you open the floodgates to everyone which then devalues the contract agreed between the two companies. Who is going to pay for that? Plus, the costs of the changes in actuarial data that would need to be completed again as the insurer would have to price on a new model.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • GDB2222
    • By GDB2222 13th Mar 17, 7:52 PM
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    GDB2222
    • #9
    • 13th Mar 17, 7:52 PM
    • #9
    • 13th Mar 17, 7:52 PM
    The two parties are Reassure and LV. LV have agreed terms on the basis of receiving the funds from all the plans with GARs where the GAR is activated. So, Reassure doing something different would be a breach of contract. They are not going to amend a contract because one person wants to break their own pension contract (GARs are a contract event) to get the money as a gift.



    The OP is entirely illogical, and the insurance company is being entirely logical.



    Requiring both insurers to agree it and once you do that with one person, you open the floodgates to everyone which then devalues the contract agreed between the two companies. Who is going to pay for that? Plus, the costs of the changes in actuarial data that would need to be completed again as the insurer would have to price on a new model.
    Originally posted by dunstonh

    I may have misunderstood you. Clearly, the OP has a GAR policy with Reassure, and (I think) we agree that they can come to some arrangement together without it being a breach of contract.

    You state that Reassure has a contract with LV to deal with all their GAR policies. If so, then you are right that Reassure won't want to break that contract. I assumed that it was more flexible than that, which is obviously where we differ.

    How come you have details of that contract between Reassure and LV?
    No reliance should be placed on the above! Absolutely none, do you hear?
    • PeterBalham
    • By PeterBalham 13th Mar 17, 8:14 PM
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    PeterBalham
    Thanks GDB I like the idea of working out a number that might flag up interest to someone senior at Reassure .

    I appreciate your comments

    I do have an IFA now who I am using for another matter who is technically competent and charming (well the MSE bar is quite low ) but you know what I mean.

    He said that I should do something along the lines you suggested
    I must say I always though my soft / sales skills as quite poor then I come to MSE
    • dunstonh
    • By dunstonh 13th Mar 17, 8:14 PM
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    dunstonh
    How come you have details of that contract between Reassure and LV?
    Not specific in details but many providers have signed with annuity providers to be their in-house option. Its fairly widespread and understood.

    The receiving provider (LV) would have agreed terms with Reassure to provide specific terms that allows Reassure to price its liability on the plans with GARs. Those terms would be better than market rates. If Reassure were just picking LV using off-the-shelf rates, then the figure would probably not be £25k but £30-35k. LV have priced their rates on the assumption of getting x% of the total GAR book from Reassure. The contract would not allow Reassure just to give it away in cash. If that happened, it would cost Reassure more. Not save them money as the annuity rate LV offer would be lower and Reassure would have to increase the sums being paid. So, this proposal to save them money is anything but.

    Reassure don't want the costs and insurance liability of the annuity as its not their market. LV do as its part of their business. Reassure already bought most of its book on the cheap. So, can afford to sell its liability at what would appear a loss but its not.

    Bottom line is that if the OP wants the lump sum then it is already cheap at £12k. Why would they want to pay £20k instead of £12k?
    Last edited by dunstonh; 13-03-2017 at 8:17 PM.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • PeterBalham
    • By PeterBalham 13th Mar 17, 8:25 PM
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    PeterBalham
    As a PS GDB

    LV told me they are not providing the Annuity themselves they have a panel of companies they approach on behalf of Reassure and select the cheapest quote they can from this panel.

    They asked me lifestyle questions when I first asked for an anuity quote which initially confused me but in the contest if what is happening I understand it now.

    I do not have to take the annuity for 16 years

    If it was not for the fact I tend to tell the truth I am tempted to ask for one in a years time when I say , I smoke 50 cigarettes a day, consuem 70 units of alcohol a week and have taken up sky diving and volumtary work in Iraq
    • GDB2222
    • By GDB2222 13th Mar 17, 9:58 PM
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    GDB2222
    Not specific in details but many providers have signed with annuity providers to be their in-house option. Its fairly widespread and understood.

    The receiving provider (LV) would have agreed terms with Reassure to provide specific terms that allows Reassure to price its liability on the plans with GARs. Those terms would be better than market rates. If Reassure were just picking LV using off-the-shelf rates, then the figure would probably not be £25k but £30-35k. LV have priced their rates on the assumption of getting x% of the total GAR book from Reassure. The contract would not allow Reassure just to give it away in cash. If that happened, it would cost Reassure more. Not save them money as the annuity rate LV offer would be lower and Reassure would have to increase the sums being paid. So, this proposal to save them money is anything but.

    Reassure don't want the costs and insurance liability of the annuity as its not their market. LV do as its part of their business. Reassure already bought most of its book on the cheap. So, can afford to sell its liability at what would appear a loss but its not.

    Bottom line is that if the OP wants the lump sum then it is already cheap at £12k. Why would they want to pay £20k instead of £12k?
    Originally posted by dunstonh
    Fair enough. I'm surprised that anybody has told the OP what it is costing Reasure to reinsure his annuity. If it's a done deal, it's not really his business.
    No reliance should be placed on the above! Absolutely none, do you hear?
    • Malthusian
    • By Malthusian 14th Mar 17, 1:40 PM
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    Malthusian
    If it was not for the fact I tend to tell the truth I am tempted to ask for one in a years time when I say , I smoke 50 cigarettes a day, consuem 70 units of alcohol a week and have taken up sky diving and volumtary work in Iraq
    Originally posted by PeterBalham
    The insurer would be the winner in that case. We'll start by assuming you're actually proposing to take up chain smoking and binge drinking rather than commit insurance fraud. The rate they will quote for a chronic addict would reflect the life expectancy of the average chronic addict - but where you differ from the average addict is that the addict will have spent their whole life smoking and drinking and the fact that they're still alive to claim their pension indicates that they have built up a pretty high level of tolerance. You on the other hand being a relatively clean-living person up till now don't have that tolerance. All that smoking and drinking will most likely kill you pretty quickly - and the insurer will get most of your pension fund.

    Said it before and will say it again - the way to beat the insurers is a purposeful life with plenty of physical and mental exercise.
    • PeterBalham
    • By PeterBalham 14th Mar 17, 4:50 PM
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    PeterBalham
    Thanks for the advice about the exercise and eating well I am a bit OCD about both

    Another odd thing now is that LV say that if they "set up" my pension my LTA will be reduced by 2.5% = 25k/ £1million

    Whereas if reassure do so only 1.2% of my LTA will be used up = £12k /£1milion

    That is not what reassure told me but their contact was very polite but now really knowledgable

    The LV woman who gave me the annuity numbers wrote an email to me saying it would definantly be 1.2%

    In some way 2.5% makes more "sense" to me but I will see what reassure now say
    • sandsy
    • By sandsy 14th Mar 17, 7:58 PM
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    sandsy
    You are crystallising a fund of £12k. The fact that Reassure have to pay LV more than that to secure the benefit they promised you should not impact on your LTA.
    • PeterBalham
    • By PeterBalham 14th Mar 17, 8:24 PM
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    PeterBalham
    Thanks Sandsy I can see how that makes sense I may well use exactly that turn or words if Reassure do not see it that way , Thanks agian,
    • dunstonh
    • By dunstonh 14th Mar 17, 9:00 PM
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    dunstonh
    I concur.

    The pension value is not being increased. The money being paid to LV is being increased from a payment by Reassure. If it was going into your pension, then you could do what you wanted to do in the first post. (i.e. buy the annuity then cancel it within the cancellation rights period. The money wouldnt go back to the original plan but would need to be transferred elsewhere)
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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