what does 'protected rights pension' mean?

daviecol

Hi guys, I have a pension with the Pru. It appears to be split into two parts (I assume this must be from when I opted out of serps-I am back in now).

My pension fund is £16,000
My protected rights pension fund is £32,000

However I don't understand what this means, why are these amounts kept separate?

Debt_Free_Chick

Because the protected rights is the part that was funded by the NI rebate and this part replaces the SERPS you gave up at that time. There are some specific rules about how/when you can convert the protected rights in to a pension/annuity.

DavidLaGuardia

In addtion to what Debt Free Chick said, "protected rights" may also exist if an occupational pension scheme was transferred to a personal arrangement.
If the scheme was contracted out (in exchange for low employer and and employee National Insurance) it had to replace the addtional state pension (previously SERPS and now State Second Pension) that the employee lost out on. There was therefore always an elemement of "Guaranteed Minimum Pension" (GMP) that this notionally supported. if the pension scheme was then transferred, part of the fund was deemed to represent the GMP and had to be convereted to "Protected Rights" in a personal arrangement.

cyclonebri1

daviecol wrote: »

Hi guys, I have a pension with the Pru. It appears to be split into two parts (I assume this must be from when I opted out of serps-I am back in now).

My pension fund is £16,000
My protected rights pension fund is £32,000

However I don't understand what this means, why are these amounts kept separate?

I asked the same question a few years ago when it affected me. Regardless of why it came about, the bit that affects you now is that the protected rights fund, when converted to an anuity has to provide an element of protection for your spouse, ie, you would get a lower pension, but a reduced one would continue to be paid to her on your death.

annie_tanks

With a protected rights part, you will get a reduced pension as provsion for your other half.It is indeed tied up with contracting out linking it to GMP.It becomes a nightmare if like me you have a hybrid pension whereupon I started out with a DB pension ( final salary) coupled with an occupational pension scheme, on amalgamation with other companies to create harmony in the pension scheme. I cannot get early retirement as the GMP part has lost so much money recently , until I am 60, when the campany is then obliged to augment any loss.Having been made redundant, Im struggling on low paid work taking its toll on my health, until I can get hold of my pension.And dont get me started on why civil servants can get early retirement on index linked pensions.

dunstonh

I cannot get early retirement as the GMP part has lost so much money recently , until I am 60, when the campany is then obliged to augment any loss.

You are partly right. That plan cannot offer year early commencement. However, if you wanted it and accepted that you would probably be worse off in a monetary sense, then it is possible to commence benefits earlier.

Geoffo_M

cyclonebri1 wrote: »

I asked the same question a few years ago when it affected me. Regardless of why it came about, the bit that affects you now is that the protected rights fund, when converted to an anuity has to provide an element of protection for your spouse, ie, you would get a lower pension, but a reduced one would continue to be paid to her on your death.

I am single, approaching retirement and have protected rights of about £30,000. Does this mean when I purchase an annuity, I have to select one that covers my spouse (and consequently lower) even though I am not married?

dunstonh

I am single, approaching retirement and have protected rights of about £30,000. Does this mean when I purchase an annuity, I have to select one that covers my spouse (and consequently lower) even though I am not married?

No. If you buy before the proposed 2012 rule changes then you will be able to buy a single life version (although you will probably have to transfer or OMO). If you buy post rule change it wont matter.

waltzer

Can anyone clarify? Are you compelled to buy a dual life annuity with protected rights? What will post 2012 bring re this? I've asked about this a while ago and got a reply along lines that transferring it to drawdown would bypass need to buy dual life annuity? Is this correct? If not, is there any way PR can be used to buy single life annuity (in about 5 yrs time)?

Geoffo_M

dunstonh wrote: »

If you buy post rule change it wont matter.

Sorry to be thick, but are you saying that post 2012, I can use 'protected rights' to buy a single man's annuity i.e. effectively protected rights disappears?

cyclonebri1

Geoffo_M wrote: »

Sorry to be thick, but are you saying that post 2012, I can use 'protected rights' to buy a single man's annuity i.e. effectively protected rights disappears?

Dunstonh, can you please elaborate on these post 2012 changes, we remain confused by what you suggest is about to happen, ????(shruggy emoticon gorn).