Section 32 N.U. Due next month! HELP!

Daveee

My selected retirement date is next month when I am 60. My retirement pot is £190,000 in 2 policies one of £136k and the other which was a compensation payment for the first one being missold. There is a guaranteed pension of £6,700 at 65 on the main policy guaranteed for 5 years with 50% spouse pension. NU is allowing me to draw my 25% tax free from the second policy giving a tax free amount of £47,000.
I received my retirement pack in December saying I may receive £8900 per annum in total plus the 25%. The estimate has now gone down to £8250 in less than a month! (all figures are approx).
I do qualify for impaired life having heart and cancer problems but NU are offering me less for this because of the guarantees on the main policy. I have been told transferring to another provider would not be easy or worthwhile because of these guarantees. I am about to accept the offer from NU having completed the forms, are there any other options?

dunstonh

The estimate has now gone down to £8250 in less than a month!

Which is not unexpected. (following Novembers run on the markets)

I do qualify for impaired life having heart and cancer problems but NU are offering me less for this because of the guarantees on the main policy.

Again, not unexpected (knowing NUs impaired or enhanced rates compared to others)

I have been told transferring to another provider would not be easy or worthwhile because of these guarantees.

The correct wording would be to say it may not be worthwhile. However, it may be and its certainly easy to do it if its best to do so.

I am about to accept the offer from NU having completed the forms, are there any other options?

Get an IFA involved ASAP. Its non cost option for you. NU pay between 1 and 1.5% on a section 32 annuity to the IFA if you use one. If you dont, NU keep it for themselves or pay the original adviser that set the section32 up.

So, even if the IFA says stay with NU, the IFA isnt going to charge you as they get paid. If they say Just Retirement, MGM, Partnership or one of the other enhanced or impaired annuity providers can offer better terms then you get more and those companies pay the IFA instead. Its a no brainer to use an IFA at retirement commencement. Go on an agreed fee basis (where commission offsets fee) you may get even better terms.

Daveee

Thank you for the reply. I do have a IFA and he has said although the NU rate is very poor I may not get a better deal elsewhere because of the guarantees and if I did it would be a nominal amount. I would withdraw the spouse pension option but have been told I am unable to do so with a Section 32 even if I transfer it. I am just making sure I am about to do the best thing. Waiting a year or 2 could make things even worse a bird in the hand etc.

dunstonh

I do have a IFA and he has said although the NU rate is very poor I may not get a better deal elsewhere because of the guarantees and if I did it would be a nominal amount.

He is probably right but I would have thought that its worth taking a look. It doesnt take 10 minutes to fill out the common quotation form and record your medical details. This is a once in a lifetime decision as well. No going back if you get it wrong.

. I would withdraw the spouse pension option but have been told I am unable to do so with a Section 32 even if I transfer it.

The Section 32 almost certainly has a guaranteed annuity rate. That is the thing that will make it hard to beat. However, spouses pension is available on transfer. Its just a case of whether the rate is good enough or not.

Waiting a year or 2 could make things even worse a bird in the hand etc.

If its at maturity, then you may find it no longer gets any bonuses and no enhancement to annuity rate making it pointless deferring it within the section 32.

MikeJones_2

Hi Daveee,

I don't know whether the cash lump sum is important to you or not, but one other point to consider is that NU appear to have quoted you 25% of the fund as a tax free cash lump sum.

Pre A-Day (April 2006) rules may have allowed you to take more than that as a cash lump sum depending upon your service dates and salary with your former employer. For some people the pre A-Day figure will be higher - for others it would be less.

If the lump sum is attractive to you, then ask your IFA to check up on this and to see if the pre A-Day figure is higher. The figures will probably be on the Section 32 Buyout policy schedule - but get NU to confirm the figure too.

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

whiteflag_3

MikeJones wrote: »

Hi Daveee,

I don't know whether the cash lump sum is important to you or not, but one other point to consider is that NU appear to have quoted you 25% of the fund as a tax free cash lump sum.

Pre A-Day (April 2006) rules may have allowed you to take more than that as a cash lump sum depending upon your service dates and salary with your former employer. For some people the pre A-Day figure will be higher - for others it would be less.

If the lump sum is attractive to you, then ask your IFA to check up on this and to see if the pre A-Day figure is higher. The figures will probably be on the Section 32 Buyout policy schedule - but get NU to confirm the figure too.

Agreed

Davee looks like your current IFA is being very lazy and not acting in your best interests-then again if you do nothing the IFA will pick up circa £1500 - nice work if you can get it. Its crucial you get all the figures before you commit to NU.

Get a new IFA!

Daveee

I was wondering if there is any way I can remove the 50% spouse pension, what if I had no spouse? I would sooner have the extra pension.