Multiple Small Pension - Cash In Rules?

dunstonh

I'd have thought her Scot Equit Section 32 is almost certainly "in the money", that is, in order to meet the guarantee, the insurance company will have to pay you extra, more than the fund is currently worth.

Although that is true, before they get to that stage, they will usually use your pension commencement lump sum to meet the guarantees. So this one may provide no lump sum benefit.

A group AVC wont have any protected rights but AVCs have been brought under occupational pension rules for transfer purposes due to the impact they have on the occ scheme they were linked to. Under certain circumstances, its possible to get 100% paid out as a lump sum (unusual but possible). The interaction with the occ scheme would need to be investigated.

cloud_dog

Ok sent a standard letter to the Pension providers and the responses are below......If anyone is willing to give me their opinion I would be grateful.......

Equitable Life:

100% Non-Protected Rights
Plan Value: £3800
Fund: Mixed (Units)
Transfer Value - (non quoted, assume bid price of units) £3800 (approx)

Note: Small amount AVC (£250), small amount pre-1997 (£450), majority post-1997

GE Life:

100% Protected Rights (in lieu of SSP)
Plan Value: £4500
Fund: 55% in Unit funds, 45% in life fund
Transfer Value: £5200

COD: £1.75 per week

Note: Approx £970 pre-1997, remainder post-1997.

Pension at NRA after lump sum and with 50% spouce pension £412pa. Based on 5% growth pa, ending with func value of (approx) £13100.

Norwich Union

(Not received a reply to my request)

On the latest statement the plan is referred to as "Unitised Replacement Policy" and all the investments are in Unit linked funds.

100% Non-Protected Rights
Plan Value: £3500
Funds: Unit linked
Transfer Value: Unknown (but would think it would be the bid price of units)

Scottish Equitable (Aegon)

GMP at NRA £1232 (figure all post 88 GMP)
GMP Revaluation Rate: 7%
Annual Policy Fee: £53.50

Plan Value (Non-Reserved): £6680
Plan Value (Reserved): £3450
Funds: one third in Units, two thirds in With Profit fund
Transfer Value: (Non-Reserved): £6530
Transfer Value: (Reserved): £3370
Bonus to be Added to Transfer Value: £2160

Note: At present NO MVR is applicable.

Pension at 60 (5% growth, no lump sum, no spouce pension):
Non-Reserved: £544
Reserved: £198

Sooooooooo, I suppose I would like to know:

* Which ones / elements could I transfer to a SIPP
* Which ones / elements should be left due to better benifits (GMP)

Thanks cloud_dog

EdInvestor

GMP at NRA £1232 (figure all post 88 GMP)

The GMP is the guaranteed minimum pension she will get at her retirement date

GMP Revaluation Rate: 7%

You need to inquire whether the GMP figure mentioned above is subject to revaluation at 7% p.a. since the S32 was set up ( in much the same way as a deferred occupational pension fund is revalued up to cover inflation) and if so, what the pension will actually be at NRD. Sometimes the stated GMP figure includes the revaluation, sometimes it doesn't.

Could be a pleasant surprise

Obviously don't touch this one, it's very obvious that the open market pension is way below the GMP even if it isn't subject to revaluation.

The Equitable and NU pensions could be moved to a SIPP now. The GE Life one can probably be moved to a SIPP from next April.

If you wanted to use the low cost SIPP provider https://www.epml.co.uk, you could move all three of them now, as EPML provides an approved pension fund for protected rights money - but you can only invest it in cash at the moment.

It could then be switched into a proper Sipp in April.Note that PR money from April will need its own separate Sipp, it can't just be added into the non-PR Sipp. :rolleyes:

cloud_dog

Ed, thanks for the response.

Assuming it is in OH benefit any transfers will go into HL SIPP and will be invested in funds that ptovide them commission, that way we should not incur any annual SIPP fees. Obviously if our investment strategy works out in a number of years time we can look at other investment options (within the SIPP) which may incur costs - depends on potential benefits / risks.

With regard to the SE / Aegon, does the GMP relates solely to the Protected Right element, i.e. can we transfer the non-protected right element, or does the GMP bit relate to the plan as a whole (non-protected and protected) - sorry if this is an obvious Q.

Thanks cloud_dog

EdInvestor

With regard to the SE / Aegon, does the GMP relates solely to the Protected Right element, i.e. can we transfer the non-protected right element, or does the GMP bit relate to the plan as a whole (non-protected and protected)

It applies to the whole fund.If you wanted to transfer it (NOT RECOMMENDED at this point as you would lose the guarantee) what would happen is that the S32 would be split into two bits, a protected rights fund (usually but not always smaller) and a non-PR fund. (I think that's probably what's mean by the "reserved" and "non-reserved" slices of the fund on the statement.)

Note that with the existing S32 you would get a pension of 1,232 p.a, which may be further revalued upwards (check this), whereas if the fund were transferred into 2 PPs the likely pension would be only 544 +198 = 742, a reduction of 40% at least.

What I suggest you do is transfer the other pensions in the Sipp first, and then test out your investment skills for a while.If you find out you're good at investing and your fund is increasing well , as many do and you reckon you can make enough to cover the guarantee, then you can transfer the S32 in as well.

But in the meantime, I would leave it alone.

cloud_dog

Ed / DH, thanks for your help, have moved the EL and NU into the HL SIPP. A couple more questions if I may........

EdInvestor wrote:

You need to inquire whether the GMP figure mentioned above is subject to revaluation at 7% p.a. since the S32 was set up ( in much the same way as a deferred occupational pension fund is revalued up to cover inflation) and if so, what the pension will actually be at NRD. Sometimes the stated GMP figure includes the revaluation, sometimes it doesn't.

Could be a pleasant surprise

Obviously don't touch this one, it's very obvious that the open market pension is way below the GMP even if it isn't subject to revaluation.

Dunstonh wrote:

Although that is true, before they get to that stage, they will usually use your pension commencement lump sum to meet the guarantees. So this one may provide no lump sum benefit.

How do I go about correctly formatting a query to ensure I get an accurate answer from Aegon regarding the above, including DH's point, or is it as simple as askings Ed's statement: "whether the GMP figure mentioned is subject to revaluation at 7% p.a. since the S32 was set up"?

Secondly..........

EdInvestor wrote:

The GE Life one can probably be moved to a SIPP from next April.

......has there been confirmation yet regarding inclusion of SSP contributions being allowed into a SIPP (looking specifically at the transfer of the GE Life cons into the SIPP - would like to think I could increase this value significantly over the next 20 years or at least to be valued at more than the £412pa pension).

Thanks cloud_dog

EdInvestor

cloud_dog wrote:

How do I go about correctly formatting a query to ensure I get an accurate answer from Aegon regarding the above, including DH's point, or is it as simple as askings Ed's statement: "whether the GMP figure mentioned is subject to revaluation at 7% p.a. since the S32 was set up"?


Right and ask how much the pension will pay out at retirement (looking at it again I suspect it has already been revalued, but could be wrong).Also ask can tax free cash be taken, if so how much and what effect would that have on the pension. (An S32 is really quite like a company final salary scheme in this respect, perhaps not surprisingly.).

.....has there been confirmation yet regarding inclusion of SSP contributions being allowed into a SIPP

Not yet.However there is movement behind the scenes: Sipp providers are cogitating on how to get around the various obstacles.Watch this space.