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  • FIRST POST
    • pensionnovicehelp
    • By pensionnovicehelp 19th May 17, 6:42 PM
    • 20Posts
    • 2Thanks
    pensionnovicehelp
    mystery of pensions
    • #1
    • 19th May 17, 6:42 PM
    mystery of pensions 19th May 17 at 6:42 PM
    Can someone please help with the great mystery of pensions,

    I have a
    Bulk Buyout Group Deferred Annuity (Defined Benefit Scheme)
    Currently with Legal and General

    Post 88 Secured Minimum Pension £ 3,187.56 p.a.
    SMP Transfer Value £ 58,124.82

    This was earned before April 1997 and was bought-out with Legal & General in 2000

    does this pension affect my state pension?

    Can I transfer this pension to a private pension (or other pension),
    so I can get a 25% tax free lumpsum? when I'm 55?

    Legal and General tell me this is not a final salary pension is this right?

    Legal and General told me this,
    "The Post 88 SMP is as off normal retirement date which is the 2033"


    I also have a smaller pension currently with Scottish Widows,
    benefits earned after April 1997 were transferred to a S32 Buy-Out
    (ended September 2000) "benefits from Scottish Widows is age 55"

    The amount transferred to Scottish Widows on 30 June 2008 was:

    Post 97 Protected Rights £2,986.15
    Post 97 Non Protected Rights £2,762.62
    Total £5,748.77

    does this pension affect my state pension?

    Can I transfer this pension to a private pension (or other pension),
    so I can get a 25% tax free lumpsum? when I'm 55?

    Thanks,

    Scott
    Last edited by pensionnovicehelp; 22-05-2017 at 9:04 PM.
Page 1
    • mgdavid
    • By mgdavid 19th May 17, 9:20 PM
    • 5,182 Posts
    • 4,347 Thanks
    mgdavid
    • #2
    • 19th May 17, 9:20 PM
    • #2
    • 19th May 17, 9:20 PM
    Employer or private pensions do not affect State Pension directly, however if you were a member of an employer's Contracted out scheme you would have paid lower NI contributions and 'earned' less SP for the duration.
    Have you obtained a State Pension forecast?
    https://www.gov.uk/check-state-pension
    A salary slave no more.....
    • pensionnovicehelp
    • By pensionnovicehelp 19th May 17, 9:56 PM
    • 20 Posts
    • 2 Thanks
    pensionnovicehelp
    • #3
    • 19th May 17, 9:56 PM
    • #3
    • 19th May 17, 9:56 PM
    Was a member of an employer's Contracted out scheme and paid lower NI contributions,
    State Pension forecast shows no issues and says worked enough years for full SP

    The 2 pensions above are Contracted out schemes (1986 to 1997, and 1997 to 2000)

    Thanks
    Scott
    • Dazed and confused
    • By Dazed and confused 20th May 17, 1:10 AM
    • 1,599 Posts
    • 683 Thanks
    Dazed and confused
    • #4
    • 20th May 17, 1:10 AM
    • #4
    • 20th May 17, 1:10 AM
    There might be "no issues" but state pension is nearly £30 per week less than new state pension so if you are going to be working and earning enough to gain further NI years then it's well worthwhile

    Each extra year adds £4+ to the state pension amount until it reaches the new state pension of £159/week.

    NB. If you meant new state pension it might be worth checking your statement again, at first glance it often looks like you've got enough years but in actual fact when some were contracted out you need the extra post April 2016 years to actually get to the £159 mark.
    • xylophone
    • By xylophone 20th May 17, 7:34 AM
    • 22,360 Posts
    • 12,898 Thanks
    xylophone
    • #5
    • 20th May 17, 7:34 AM
    • #5
    • 20th May 17, 7:34 AM
    In respect of Pension 1 (L&G), it would seem probable that you have "safeguarded benefits" with a value greater than £30,000 - if so, while transfer out could be a possibility, you would be required to take paid for advice from a pensions transfer specialist.

    http://adviser.royallondon.com/technical-central/pensions/transfers/safeguarded-benefits/

    Check with L&G.

    In respect of Pension 2, (SW), it seems to me that a transfer out would be possible without advice.

    Check with SW.

    With regard to your state pension, have you obtained a New State Pension Statement?

    If so, what exactly does it say? Is a COPE shown?

    https://www.gov.uk/new-state-pension/how-its-calculated
    • agarnett
    • By agarnett 20th May 17, 9:50 AM
    • 1,282 Posts
    • 534 Thanks
    agarnett
    • #6
    • 20th May 17, 9:50 AM
    • #6
    • 20th May 17, 9:50 AM
    Employer or private pensions do not affect State Pension directly, however if you were a member of an employer's Contracted out scheme you would have paid lower NI contributions and 'earned' less SP for the duration.
    Originally posted by mgdavid
    mgdavid, I think you are overlooking or have forgotten the fact that tens of thousands of us have a much reduced State Pension forecast because we were encouraged by HMG to take out standalone personal pensions purely as containers for rebated NI contributions for SERPs?

    Those standalone policies for most people were started because a financial adviser way back said it was a no brainer, and their purpose was never properly explained by the adviser (who was usually there to explain an occupational pension scheme offered by his or her client, the policyholder's employer). Nor then was the purpose understood by most policyholders. Consequently many have long been transferred or even cashed and spent, long before State Pension age and the ultimate providers and current day advisers involved in such transfers and cashings-in have largely not explained the original purpose or likely effect either.

    I have one with a current transfer value of £60K, and not once has the provider offered any caution about a lower State Pension when providing a Transfer Quote or (early) retirement quote. Current day staff have little idea of the history of their company's product offerings. That's especially because their company has done their best to tip all the diverse products over decades into the same bland wrappers.

    I would be foolish to try to cash my £60K now if I didn't realise that having that policy has reduced my SP forecast significantly. I do realise it. Most policyholders haven't a clue and some have just spent it like some unexpected windfall at age 55 or even I think at age 50 perhaps until a few years ago?

    And bearing in mind what xylophone has just posted, it is perhaps even more surprising that last year a Pension Transfer Specialist at a major SIPP provider told me that this particular policy did not require specialist advice to be transferred into a SIPP (thereby losing any GMP rights it contains?). The same transfer specialist of course did tell me I'd have to receive specialist advice if I wanted to transfer my contracted out DB scheme. Yet another clue that the GMP rights in the standalone private pension SERPs policies have never been taken seriously enough?
    Last edited by agarnett; 20-05-2017 at 9:57 AM.
    • bigadaj
    • By bigadaj 20th May 17, 10:24 AM
    • 9,581 Posts
    • 6,096 Thanks
    bigadaj
    • #7
    • 20th May 17, 10:24 AM
    • #7
    • 20th May 17, 10:24 AM
    Many people have got double bubble on the contracted out pot though, with the new single tier pension that have the ability to still reach the maximum state pension.

    In terms of the sipp provider and their specialist then that's their problem, you transfer, raise as a complaint and they have a potential liability, so you effectively have some free insurance and the company has no one to blame but themselves.
    • pensionnovicehelp
    • By pensionnovicehelp 20th May 17, 10:41 AM
    • 20 Posts
    • 2 Thanks
    pensionnovicehelp
    • #8
    • 20th May 17, 10:41 AM
    • #8
    • 20th May 17, 10:41 AM
    Thanks Guys

    This is my update from my HMRC login,
    You can get your State Pension on 2035.
    Your forecast is £159.55 a week
    £693.76 a month, £8,325.09 a year

    Contracted Out Pension Equivalent (COPE),
    Your COPE estimate is £24.03 a week.

    I'm still waiting for SW to get back to me but I didn't
    think I would have any problems transferring this policy.

    As for the L&G policy they were a bit coy giving me any info
    on this policy, they originally said a couple of years ago they
    could not find me having a policy with them.

    I've asked both L&G and SW for yearly statements, but L&G say they
    don't give statements on these policies.

    Thanks,
    Scott
    Last edited by pensionnovicehelp; 20-05-2017 at 12:02 PM.
    • LHW99
    • By LHW99 20th May 17, 11:17 AM
    • 828 Posts
    • 650 Thanks
    LHW99
    • #9
    • 20th May 17, 11:17 AM
    • #9
    • 20th May 17, 11:17 AM
    Does L&G have an online portal you could register for? That would give at least basic information if so
    • pensionnovicehelp
    • By pensionnovicehelp 20th May 17, 5:23 PM
    • 20 Posts
    • 2 Thanks
    pensionnovicehelp
    Don't think L&G have a online portal, but SW does.
    • agarnett
    • By agarnett 21st May 17, 12:38 AM
    • 1,282 Posts
    • 534 Thanks
    agarnett
    Many people have got double bubble on the contracted out pot though, with the new single tier pension that have the ability to still reach the maximum state pension.
    Originally posted by bigadaj
    I am not so sure about that ... my elderly father was getting over £200 pw from the State Pension without receiving pension credits. How likely is it now that anyone, with your idea of double bubble or not) is likely to get near that much in total under the New State Pension unless they are still in stable employment?

    For far too many ordinary working people who have been spat out by consecutive retrograde UK economies, the opportunity to earn more NI credits now requires an unusual level of diligence at finding and remaining in work in a very low wage environment. We have the poorest working conditions of my lifetime to somehow tolerate, and probably they are especially worse than at any time during my father's last twenty years of working life too.

    So is it really worth strapping yourself to that sort of grindstone just to get ... what - I dunno ... a maximum extra fifty quid a week State Pension? (My SP forecast is about £135 at the moment I think and I am guessing my £60K SERPs policy might fund £20pw eventually?). Rather a lot of people might say sod that for a game of soldiers, I'll make do with my sundry private pensions including the SERPs policy, and when those run out then I'll be too old to care about the missing thirty or fifty quid a week I could have got by slogging my guts until I was 66 at some low wage UK grindstone.

    There are perhaps better things to do in the third age than hitching up to a low wage!

    As I say, if you are still in a secure job, maybe the chances of double bubble are better.

    In terms of the sipp provider and their specialist then that's their problem, you transfer, raise as a complaint and they have a potential liability, so you effectively have some free insurance and the company has no one to blame but themselves.
    Really? That doesn't sound much like cricket. It sounds like "do unto unsuspecting FAs what insurance companies might do unto you, because insurance companies will end up paying anyway!"
    Last edited by agarnett; 21-05-2017 at 12:43 AM.
    • mgdavid
    • By mgdavid 21st May 17, 1:14 AM
    • 5,182 Posts
    • 4,347 Thanks
    mgdavid
    I am not so sure about that ...
    ...and probably....
    ... - I dunno ...
    ... I think and I am guessing ...
    ........
    by agarnett;72580741
    ....
    If I may make a suggestion - how about you only post when you have some facts and are 100% certain with what you are talking about.
    A salary slave no more.....
    • agarnett
    • By agarnett 21st May 17, 9:48 AM
    • 1,282 Posts
    • 534 Thanks
    agarnett
    And you have facts mgdavid? The one truth? You must tell us how you created that. For the moment, because I haven't yet been given answers to the question of what my £60K SERPs policy is supposed to provide as a pension, either by HMRC NICO who are operating under a backlog which has increased by 3 weeks in the last 3 weeks (yes a standstill), and because the insurance company is Aviva, I have to say "I dunno". Fact.
    Last edited by agarnett; 21-05-2017 at 9:52 AM.
    • hyubh
    • By hyubh 21st May 17, 10:18 AM
    • 1,859 Posts
    • 1,378 Thanks
    hyubh
    I am not so sure about that ... my elderly father was getting over £200 pw from the State Pension without receiving pension credits. How likely is it now that anyone
    Originally posted by agarnett
    No one in the future will earn the level of state pension (allowing for inflation) your father did because the maximum nSP is well short of what most people (or rather, most men) who were never contracted out would earn under SERPS/S2P. This is a feature not a bug, because nSP (in the long run) is intentionally redistributive.

    , with your idea of double bubble or not
    You are conflating different things. Under the old system, someone with material period(s) of contracting out in their earlier life would not be able to earn a full amount of additional state pension simply by working in contracted-in employment afterwards. One of the reasons was that SERPs was supposed to be a salary-related scheme for people who did not benefit from a salary-related scheme from their employer, ergo it wouldn't be fair for someone to benefit from both. Under the new system however, this is no longer the case - i.e. someone previously contracted out can now 'double dip' from the point of view of the old state pension.

    This topic has been done to death in previous threads by the way...

    For far too many ordinary working people who have been spat out by consecutive retrograde UK economies, the opportunity to earn more NI credits now requires an unusual level of diligence at finding and remaining in work in a very low wage environment.
    The ability to earn more state pension than you would have is a bonus. If someone previously contracted out doesn't want to bother, then don't bother...
    • agarnett
    • By agarnett 21st May 17, 10:51 AM
    • 1,282 Posts
    • 534 Thanks
    agarnett
    Exactly, it seems a bit corny to say so, but "am I bovvered?" is perhaps the real question when it comes to deciding whether in later working life it should be an aim to try to fill in NI contributions by working or by qualifying some other way e.g. as a carer, or of course by paying HMG for any contracted in incomplete years which are still possible to pay for at £700 a pop or similar ...

    As for the general comment of the subject having "being done to death" I disagree. It remains an unholy muddle. The new State Pension forecasts are assuming a full NI contribution record for everyone, right up to SPA. That isn't at all realistic. So hundreds of thousands of late baby boomers are clutching bits of paper with a headline SP forecast figure which they actually are not going to get near because they will not actually work continuously until 66 or 67 or at all! There are an unpublished number of economically inactive pre-pensioners in the age 50 to 65 bracket. They are living off of savings and equity release and rising offset mortgages and Lamborghini release pensions.

    Even my father, a normal manual worker, retired early at 57 in good health. He wasn't well off, but his 1970s £3,000 mortgage was all paid off

    He only ever bought one new car in his life and then only in retirement. A mini for about £5,000 I think!

    He'd simply had enough of the typical hassles of modern working life as of 30 years ago and took a reduced pension in order to explore the meaning of life in a little more detail whilst he still had time! I am not sure he discovered the secret, but he was fairly high up on the happiness index without working till he dropped, and he improved his already fairly good snooker prowess - in later days mostly from what he picked up on the telly!
    Last edited by agarnett; 21-05-2017 at 11:00 AM.
    • Dazed and confused
    • By Dazed and confused 21st May 17, 12:39 PM
    • 1,599 Posts
    • 683 Thanks
    Dazed and confused
    PENSIONNOVICEHELP

    This is my update from my HMRC login,
    You can get your State Pension on 2035.
    Your forecast is £159.55 a week
    £693.76 a month, £8,325.09 a year

    Contracted Out Pension Equivalent (COPE),
    Your COPE estimate is £24.03 a week.


    Was there an entry between these two sections, for some people there is another element which explains that the £159.55 forecast is subject to x years additional NI contributions. Think a few have posters on other threads have misunderstood the "forecast" and thought they'd already got enough years to qualify for the £159.55 irrespective of what happens in the future.
    • agarnett
    • By agarnett 21st May 17, 1:10 PM
    • 1,282 Posts
    • 534 Thanks
    agarnett
    Exactly.

    If I recall correctly that incorrect current forecasting style even put the (overly rosey) forecasted amount in very large font?

    The tone of the thing is not of a caring government, but of a corporate which is trying to put customers off the scent of low performance and misleading their expectation.

    Is it deliberately that way to minimise political awareness and protest I wonder?

    It's all spin.

    If the forecast said something like "Your current new SP forecast is £Xpw but you could increase it by £Y pw for every extra year of full NI contributions you manage to squeeze in between the date of this forecast and your State Pension Age birthday (i.e. you could work continuously to top up to an absolute maximum State Pension of £Zpw - but only if you succeed in putting in ___ {(Z-X)/Y} extra full years of NI contributions before SPA)", then the so called New State Pension Forecast might result in spin-free communication.

    Or if each forecast contained a warning to those not in work at the point of the forecast, to the same effect as the above, then it might mean a bit more to large numbers of economically inactive in our age group.
    Last edited by agarnett; 21-05-2017 at 1:13 PM.
    • pensionnovicehelp
    • By pensionnovicehelp 21st May 17, 5:28 PM
    • 20 Posts
    • 2 Thanks
    pensionnovicehelp
    Dazed and confused,

    Nothing else between the two sections,

    I thought because I've got another 18 years of work I'll make up the £24.03 (COPE).
    • pensionnovicehelp
    • By pensionnovicehelp 21st May 17, 5:36 PM
    • 20 Posts
    • 2 Thanks
    pensionnovicehelp
    Legal & General call my pension policy a,

    "Bulk Buyout Group Deferred Annuity (Defined Benefit Scheme)
    Normal Retirement Age 65

    Searching on line a "Defined Benefit Scheme" is also called a "Final Salary"

    Legal & General says this is NOT a Final Salary pension?????

    Reading on-line some Defined Benefit Schemes can only be transferred to another Defined Benefit Scheme, but other Defined Benefit Schemes can be transferred to a Defined Contribution pension,
    something to do with Funded or Unfunded scheme.
    • xylophone
    • By xylophone 21st May 17, 11:59 PM
    • 22,360 Posts
    • 12,898 Thanks
    xylophone
    With regard to the L&G policy, it seems fair to assume that at some point you were in an occupational contracted out defined benefits pension scheme.

    It is likely that the scheme was closed/wound up and the Trustees of the Pension Scheme chose to transfer the liabilities of the scheme to an insurance company, - each pensioner was thus provided with a "deferred annuity" which would pay out at Scheme Pension Age which appears to be 65. A S32 is a "deferred annuity" policy and it is quite possible that this is one such.

    I am rather surprised not to see a reference to GMP but perhaps the SMP amounts to the same thing? Check with L&G.

    It would appear that you have "safeguarded benefits" because you have a "secured minimum pension" .

    It may be possible for you to transfer out of this policy but if you have "safeguarded benefits" (probable) then you would require the advice of a pensions transfer specialist.

    You can clarify the position with L&G since they now appear to have confirmed the fact that you hold a policy with them.

    Your New State Pension should have been calculated under old and new rules on 6 4 16 and your "starting amount" would have been the higher of the two.

    Old rules BSP + (SERPS/S2P - deduction for contracting out ( the "rebate derived amount").

    New rules £155.65 - COPE.

    https://www.gov.uk/government/publications/new-state-pension-glossary/new-state-pension-glossary

    You are sure that there is nothing in your statement to indicate that you will receive the full NSP only if you continue to pay NI?
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