Where to put GMP element

pompeyrich

I have a deferred pension with a previous employer, which pays out at 65, I have obtained a tranfer value, £39,000 made up of £21,000 + £18,000 GMP ?element. I wish to transfer this to my present employer, as their pension pays out at 50 but they will only accept the £21,000 bit, my old employer will only release the total "pot" and will not look after the GMP bit alone.
Where would be a good place to deposit the rest, I spoke to my bank but they wanted £2,000 to look at it and discuss my options.
Thanks for your time and any ideas.

dunstonh

Section 32s are usually best left where they are due to guarantees on GMP.

You need to speak with an IFA but it is probable that the outcome will be leave it where it is unless you want to lose money.

pompeyrich

dunstonh wrote:

Section 32s are usually best left where they are due to guarantees on GMP.

You need to speak with an IFA but it is probable that the outcome will be leave it where it is unless you want to lose money.

Thanks for the speedy reply, I was hoping to change as I am being made redundant from my current job and their pension pays out at 50, they have agreed to accept the £21,000 and offered me £850 a year from next year, approx 4%, which seems like a fairly good deal. I was prepared to put the rest in a PP, leave it and "see what happens", however no-one seems to want to take it off me.

Any idea if the £2,000 fee asked by the bank is the "going rate" for this sort of advise? Thanks again.

dunstonh

Any idea if the £2,000 fee asked by the bank is the "going rate" for this sort of advise? Thanks again.

Over the top. Plus its a bank and you should never get your advice from a salesforce regardless of whether they are independent or tied. A transaction like this needs an indepedent adviser. Fee based is almost certainly the way to go with it (i doubt any IFA would look at it on commission terms as there is probably only a 1 in 10 chance that it is good to transfer). £150 for a verbal opinion or around £500 for a written report is probably closer to the mark.

The GMP has guarantees. Those guarantees could range from being pretty poor to being very good. You can transfer to a personal pension but you would give up the GMP. That is where most potential transfers would stop because you end up losing more than you would gain. In addition to the GMP, many also have guaranteed annuity rates attached to them. With many S32s, the investment returns are of little consequence as the deficits stand little chance of being made up and the insurer will have to pay up. The only problem is that they can make you wait until the scheme maturity to do so. Who is the S32 with?

pompeyrich

Sorry, S32 ?? Is that the GMP bit, as far as I can see this is a Money Purchase Account, a managed fund with Prudential.

Thanks again for your reply and advice.

dunstonh

I am making the assumption that it is a section 32 buy out bond (which it almost certainly is). Pru did quite a lot of these and some of them had guaranteed annuity rates attached to them as well. Pru have extended the fund range on their pensions for many of the contracts and you may find that you can build a decent portfolio within the section 32 without transferring it and losing the GMP or Guaranteed annuity rate (if it exists).

pompeyrich

Thanks again dunstonh, looks like I've got lots of questions to ask my previous employer. They are far from helpful, telling me that I had a projected pension statement when I left, probably did but that was 15 years ago, moved since and no chance of me finding it. Stll thanks for your input and guidance, really appreciate it.