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    • 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 3
    • pensionnovicehelp
    • By pensionnovicehelp 24th May 17, 7:14 PM
    • 20 Posts
    • 2 Thanks
    pensionnovicehelp
    benefits earned after April 1997 were transferred to a S32 Buy-Out policy with Scottish Widows on 30 June

    remaining benefits (earned before April 1997 and equal to the value of your Guaranteed Minimum Pension) has been bought-out with Legal & General
    • pensionnovicehelp
    • By pensionnovicehelp 24th May 17, 9:42 PM
    • 20 Posts
    • 2 Thanks
    pensionnovicehelp
    Contact L&G again,

    This letter is further to your request for details of the early retirement value of your pension
    benefits under the above arrangement.
    As a member of the Sxxxxxxx Sxx UK Employee Benefits Plan you currently have the option to
    elect an early retirement pension from your 55th birthday in line with current government
    legislation. However at this present time this option is only available on the proviso that any
    Secured Minimum Pension (SMP) is covered on attainment of your State Pension Age, i.e. 65th
    birthday for males and (currently) 60th birthday for females.
    You may not be familiar with the term Secured Minimum Pension (SMP) which was accrued
    during your pensionable service with the above company. The Sxxxxxxx Sxx UK Employee
    Benefits Plan was contracted-out of the State Earnings Related Pension Scheme (SERPS) and
    this benefit is part of the overall State entitlement. It is the minimum level of pension that is
    payable in respect of your contracted-out service.
    Your pension benefit under this arrangement is predominantly made up, or entirely made up, of
    SMP. This means that you are unfortunately not in a position to take early retirement and,
    therefore, the earliest date that you may take your retirement benefits is at your Normal
    Retirement Date of ??/??/2033. I know that this will be disappointing for you but, as you may
    appreciate, the Legal & General is obliged by law to pay your SMP in full at your State
    Pension Age
    I hope this has helped to clarify the situation and should you have any questions I would be
    happy to assist where possible.
    • xylophone
    • By xylophone 24th May 17, 11:42 PM
    • 23,472 Posts
    • 13,649 Thanks
    xylophone
    https://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/18/what-is-a-gmp/

    If a member asks to take early retirement, a check should be made to see if the early retirement pension will be sufficient to cover GMP at entitlement age. If not the member may be barred from retiring or from taking the maximum cash lump sum, or if the scheme rules allow, the member could receive a ‘step up’ at GMP entitlement age.
    http://forums.moneysavingexpert.com/showthread.php?t=1439747

    The "buy out" appears to mirror the rules of the ceding scheme.

    You have "safeguarded benefits".

    http://adviser.royallondon.com/technical-central/pensions/transfers/safeguarded-benefits/
    • pensionnovicehelp
    • By pensionnovicehelp 25th May 17, 6:58 PM
    • 20 Posts
    • 2 Thanks
    pensionnovicehelp
    So, in 2013 I had enough NI years for the old state pension,
    by 2022 I'll have enough NI years for the new state pension,
    (between 2013 to 2022 9 year to reduce COPE to £0.00)
    I'll be 54 (2022) and worked enough NI years to get max SP (@67).
    My wife will also have enough NI years for max SP.

    I have 4 pensions and will have easy access to 3 of these pensions at 55 (3 post 97 pensions).

    But my 4th pension (pre97) with L&G because SMP / GMP safeguarded this is a bit more complicated, I must pay a financial adviser a few hundred pounds to get MY MONEY.
    (Is this the same financial adviser that sold us endowment policy?)

    So, what is the “Safeguarded” for me or the pension company, sounds to me it’s more for the pension companies and the financial adviser’s.
    • xylophone
    • By xylophone 25th May 17, 8:44 PM
    • 23,472 Posts
    • 13,649 Thanks
    xylophone
    Even if your pension had remained a deferred pension within your employer's scheme, it would appear that early retirement may not have been possible owing to the GMP situation.

    And in view of the value of the pension benefits, you would still have required advice from a Pension Transfer Specialist if you wanted to transfer out.

    Your deferred annuity is a guaranteed income for life, index linked, and provides a widow's pension.

    The requirement to take advice is intended to protect pensioners, all of whose situations will be differ to a greater or lesser degree.
    • pensionnovicehelp
    • By pensionnovicehelp 25th May 17, 8:50 PM
    • 20 Posts
    • 2 Thanks
    pensionnovicehelp
    Thanks xylophone
    • agarnett
    • By agarnett 25th May 17, 10:40 PM
    • 1,282 Posts
    • 536 Thanks
    agarnett
    xylophone mentioned that even if you were still a deferred member in the original FS scheme i.e. if it had not been wound up but still existed, you might still not be able to take the pension at age 60 or earlier. That is most probably likely because of the severe funding strain put upon many of the old schemes.

    In fact I am a deferred member of one such surviving FS scheme and in that case I think I am going to be lucky because the original scheme rules allowed for the full pension including GMP amount to be payable at age 60 by means of a kind of "gap filler rule" in the scheme. The "gap" is the years between normal scheme retirement date and GMP date (which was age 65 and still is despite SPA increasing for most of us to age 66 or more. In those days, such schemes were actively expected to pay GMP plus an excess amount, and trustees were even so optimistic as to say that to keep the pension level, they would fill in the GMP part before age 65 which is when actual GMP should start.

    But that is a bit academic in your case unless such a rule did exist and L&G have failed to keep a note of it.

    Xylophone mentioned that your policy is likely to be what is called a Section 32 buy out policy. What that ought to mean is that when L&G agreed to accept fifty odd grand in 2000 to take over responsibility for paying your pension, they ought to have got a full set of the existing FS scheme rules on your file and should be following those rules.

    Trouble is, over the years, insurance companies would rather forget such complicated commitments, and if punters wish to transfer out, that quite suits them, especially if as in your case, they strangely seem to be offering substantially less now to you in cash equivalent transfer value than they took in cash from your employer in 2000.

    So watch out!

    And I apologise for keep labouring it, but please do explore specifically the mandatory GMP annual revaluations in deferment (the +6.25% pa in your case). You will see revaluations mentioned again in post#2 in that old 2009 MSE thread xylophone linked to - under the sub heading in MikeJones post he called "Increases to your Guaranteed Minimum Pension (GMP)"

    You haven't told us how long you were in the old scheme before they wound it up, or given us an indication what salary you were on at the time. If you could do that, then someone like xylophone may be able to comment more confidently on whether your safeguarded benefits are actually significantly higher than you have suggested so far, by virtue of mandatory GMP anuual valuations which you haven't fed anything back to us about so far.
    Last edited by agarnett; 25-05-2017 at 10:44 PM.
    • pensionnovicehelp
    • By pensionnovicehelp 27th May 17, 10:33 AM
    • 20 Posts
    • 2 Thanks
    pensionnovicehelp
    agarnett thanks,

    I've answered all the questions if not as most as I can (I have the answers too).

    The Secured Minimum Pension £ 3,187.56 p.a. is what is guaranteed at 2033
    What I found strange was the transfer value went up from about £46,000 (30/3/16)
    to about £58,000 (15/5/17) but the SMP/GMP stayed the same.

    This L&G pension is not as flexible as my other pensions.

    The pot looks better than GMP and the pot still has years to increase.
    • agarnett
    • By agarnett 29th May 17, 1:04 PM
    • 1,282 Posts
    • 536 Thanks
    agarnett
    What I found strange was the transfer value went up from about £46,000 (30/3/16)
    to about £58,000 (15/5/17) but the SMP/GMP stayed the same.
    Originally posted by pensionnovicehelp
    The SMP seems to be a uniquely L&G piece of policy jargon intended to mean GMP (which does mean something to us all and to HMRC and DWP!) although the jury is still out on that assumption (that the L&G term and GMP are the same thing).

    If SMP at 5.4.2033 is indeed your pre-1997 earned GMP at 5.4.2033, then it won't change with anything at all if it was comprised of a calculated amount in year 2000 and a fixed percentage annual revaluation over 33 years (6.25% in your case).

    Your L&G policy is quite likely invested in a with-profits fund. If it is, you should know that W-P is a black art. Rather than being a "Transfer Value", the £46,000 you mention might possibly have been a "fund value", perhaps provided in an annual statement?

    When you ask for a transfer value, thesedays W-P fund managing insurance providers generally add a somewhat nefarious "final bonus" - I say nefarious because W-P funds were supposed to increase steadily with regular annual bonuses, but that became far too much stability and smoothing for insurance companies to want to continue to be seen to guarantee, so acting rather like a cartel (the W.P actuaries are all buddies in the "profession"), they all eventually knocked most regular bonus on the head, meaning "fund values" generally don't increase much, and they substituted unilaterally reviewable non-guaranteed "final bonus" which they only tell you about if you want to transfer or retire.

    I have one such policy where the latest Transfer Value is 65% greater than the "fund value" making a bit of a nonsense of "annual statements" to put it mildly.

    That might explain the difference in "values" you think you've noticed.

    If you know your policy is not invested in W-P, then there must be some other explanation.
    Last edited by agarnett; 29-05-2017 at 1:07 PM.
    • pensionnovicehelp
    • By pensionnovicehelp 18th Jun 17, 11:44 AM
    • 20 Posts
    • 2 Thanks
    pensionnovicehelp
    Just Received Small Scottish Widow Pension Statement
    Section 32 Buy-Out Plan

    Transfer value £12,113.29

    When you're 65 from payments for pension £134
    When you're 65 from Government payments £145

    I'll have to live until I'm 108 to see the £12,113.29

    £279 a X 43.4 years = £12,113.29
    • xylophone
    • By xylophone 18th Jun 17, 1:48 PM
    • 23,472 Posts
    • 13,649 Thanks
    xylophone
    When you're 65 from payments for pension £134
    When you're 65 from Government payments £145
    £134 a week/ a month /a year?

    What are these "Government payments"?

    In a previous post, you said that you had access to an IFA - I'd suggest that you or he write to SW to clarify exactly what this statement means.
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