Transfer of Section 32 pension

dunstonh

I have a GMP buy out plan pension which I wish to transfer out to a stakeholder pension and take a lump sum and annuity now.

That would be a very strange way of doing it. Why would you do that?

Im 55 yrs old. I realise this will mean I will lose my guarantee, but how do I do this and can I do this myself?

You can DIY but it will likely result in a lower option than using an IFA. However, if you are losing valuable benefits (you mention GMP but there could also be protected tax free cash and GARs) then possibly an IFA would be quite pleased you are not using them given the risks you pose. Some providers may not accept the pension transfer from a S32 without an IFA signing off on it first as (until 2006) it was classed as an occupational scheme. Whilst that is no longer the case technically, compliance departments of many firms still treat them that way from a risk point of view (and for good reason).

xylophone

I have a GMP buy out plan pension which I wish to transfer out to a stakeholder pension and take a lump sum and annuity now. Im 55 yrs old. I realise this will mean I will lose my guarantee, but how do I do this and can I do this myself?

Some providers may not accept the pension transfer from a S32 without an IFA signing off on it first as (until 2006) it was classed as an occupational scheme. Whilst that is no longer the case technically, compliance departments of many firms still treat them that way from a risk point of view (and for good reason).

See below.

http://www.fca.org.uk/firms/financial-services-products/investments/pension-transfers/when-transfer-required

mania112

kennyzola wrote: »

I have a GMP buy out plan pension which I wish to transfer out to a stakeholder pension and take a lump sum and annuity now. Im 55 yrs old. I realise this will mean I will lose my guarantee, but how do I do this and can I do this myself?

not sure if serious?

xylophone

not sure if serious?

Entirely serious I should think - the attraction is the

take a lump sum and annuity now

ozbrit

Hard to see how terminating a NU section 32 early can be beneficial.

Mine was taken out in 1988 with an agreed minimum pot in 2019 at age 65 of £101,330. Then between 1988 and 2000ish they added a further £63000 in annual bonus. So presumably they will have to offer me a pay out figure of at least £164330 with which to buy an annuity. In my last year's annual statement they offered me a buyout figure of £80,000.

I'd have to be either very needy or greedy to take a payout that low and which means that I'd have to invest it and achieve annual returns over the next 7 years of ~12.5%pa to get near the guaranteed amount.

Then there's the chance of a final bonus on maturity - though this might be a pipe dream.

One thing I can't understand is why Aviva wants policy holders to not take the money and run. I'm in Oz and if for example they offered me 120k I'd transfer it over here and sink it in with my personal pension to remove the variable forex component. With cash returns running at such a low level and not likely to improve in the forseeable future it looks to me that Aviva are 1. being greedy in the short term and 2. making it as costly as possible for themselves down the road.

worn_out

I'm due to get my NU GMP next march (2015)..Like everybody else the GMP from 1988 will not increase as the guaranteed fund is £50k, the value is £35k but to buy an Annuity for my GMP would cost £150k.

I suppose 26 years worth of returns at 8.5% though is the way to look at it ...and not the original 'possibilites' of large cash sums and fantastic pensions with 'possible' 12.5% returns (ha ha).

As an aside though, do the Budget changes mean you can take the 'pot' and forget the Annuity now..if you wanted to..and which 'pot' would it be..£50k or £35k ? Another thought is would Aviva be amenable to negotiation if it's costing them £150k to pay the GMP ...could I negotiate a release for them at somewhere between the current value and £150k ?..or am I being silly..

dunstonh

I suppose 26 years worth of returns at 8.5% though is the way to look at it ...and not the original 'possibilites' of large cash sums and fantastic pensions with 'possible' 12.5% returns (ha ha).

You may laugh but 12.5% p.a. would have been considered low in the 70s and 80s.

As an aside though, do the Budget changes mean you can take the 'pot' and forget the Annuity now

only if you transfer the pension and give up the GMP.

and which 'pot' would it be..£50k or £35k ?

The transfer value of the fund typically.

Another thought is would Aviva be amenable to negotiation if it's costing them £150k to pay the GMP ...could I negotiate a release for them at somewhere between the current value and £150k ?

That isnt how GMP works. It is not a guaranteed they can play with. It is set in legislation.

worn_out

The 'pot' (transfer value) will be known in April 2014, as I reach 65 before next April. NU will write to me anyway with quotes for Annuities later on..I don't suppose the final bonus will lift the transfer value up to the guaranteed value, but I would have thought the pot was the guaranteed value + bonuses..although you're prob right about t/f value...

As for 'cashing in', ie taking the whole pot and buying a posh car (?) ..I presume NU can't do this from what you say, it would have to be t/f elsewhere first then 'cashed' ...expect NU would be glad to see the back of it..

dunstonh

As for 'cashing in', ie taking the whole pot and buying a posh car (?) ..I presume NU can't do this from what you say, it would have to be t/f elsewhere first then 'cashed' ...expect NU would be glad to see the back of it..

The staff dealing with it wont care what you do. However, financially, Aviva will stand to gain as they won't have to honor the guarantee if you do that.

Financial_Saddler

dunstonh wrote: »

You may laugh but 12.5% p.a. would have been considered low in the 70s and 80s.

80s - I agree.
70s - not really, unless you want to fully discount the first half of the decade, which was generally terrible for equity investment.