Talisman Buyout Bond?

TraceyB_2

Is anyone able to advise me on what one of these is please?

My Dad who is probably the most gullible person I've ever met has brought me over some documents he has had 'for some time' dating back to 1994 when he took out a Talisman Buyout Bond - which means absolutely nothing to me. It means even less to my Dad who unfortunately gets mail, reads it and bins it - so I haven't got much to go back over.

From what I can gather, he invested about £7k (his redundancy money - he thinks!) and he has now had a letter saying he is due to get a rather substantial amount at 65 (which is only a couple of years away for him).

What is really confusing me is that there are four different funds shown, a 'With Profits Account', a 'Deposit Fund', a 'Fixed Interest Fund' and a 'Managed Fund'. The total figure they are showing as at November 06 is in excess of £100k:eek: It says that this is guaranteed benefit at 65. He is somewhat excited bless him!

Can anyone help and explain this to me - preferably in laymans terms! It seems too good to be true seeing as he only invested £7k- so no doubt is!

Thanks in advance.

jd79

Hi TB

If you google the bond name you will come up with further info. It is run by Scottish Life and shows the various funds that can be held under the name. Hope this may be of some assistance.

JD

EdInvestor

This looks to be a pension. It has a guarantee attached to it and this guarantee appears to be "in the money".

The full name of thiss kind of pension is a "Section 32 buyout bond".What will have happened in 1994 is that his company pension fund ( not his redundancy money) was transferred over to the policy at Scottish Life, ie his company pension was "bought out".

The money transferred over would have included the contributions into the pension made by his company, and it's very possible that they were much more than 7k.The fund value transferred over might have been around 25-30k if the 7k was his own contributions.

But the more important point is not the value of the fund, but the "GMP" - the guaranteed minimum pension he will get when he retires.

This is very likely to be much more than what he would get if he tried to buy an ordinary annuity with the fund.See if you can find out what pension they will pay him at his retirement date and we can compare the two and you'll see how these guarantees are valuable.

There are some winners in the pensions mess out there, and it looks like your father could be one of them.;)

dunstonh

Talisman is the marketing name for legacy (i.e. non current) Scottish Life pensions. The name was used for all their pension products in the past but in this case refers to the section 32 that Ed describes.

The 100k is a fund value but your Father may not see a penny of that as a lump sum. Depending on the GMP, it may have to all go in providing for that. Obviously we dont have figures to hand, what the GMP is and the GAR that may apply and what lump sum would be available. An IFA would be able to find this out for you.

lolly5648

I had a Talisman Buyout Bond with Scottish Life and it did not do very well - the only good thing was the guarantee. My IFA had to shop around to transfer me into something producing better results with the same guarantee at the end of it.

As there is still a couple of years to run, see an IFA who specialises in pensions who will be able to advise you

EdInvestor

Be VERY cautious about moving or otherwise doing anything to the S32 pension, as the company will be absolutely delighted if you make the mistake of invalidating the guarantee.

An IFA will normally make no money by advising you to do nothing - you can see the danger of being misadvised.

My IFA had to shop around to transfer me into something producing better results with the same guarantee at the end of it.

The meaning of the guarantee is this: the company MUST pay you that pension, regardless of how well your fund has done. In the old days before the stockmarket and pension annuity rates crashed, it was possible for a fund to grow enough so that there was a surplus on top of the amount needed for the guarantee.

In such a situation, it might have been worth trying to move.But it isn't now, as the vast majority of funds are well below the cost of the guarantee, so the insurance company will have to pay up. Thus you wouldn't be able to transfer the S32 anywhere else.

dunstonh

An IFA will normally make no money by advising you to do nothing - you can see the danger of being misadvised.

And will be finanancially out of pocket if they recommend the wrong option. So you can see the danger of being mis-advised from the advisers point of view.

Some GMP guarantees on S32s are not worth the tie in to a poorly performing fund, assuming no others were available.

EdInvestor

Some GMP guarantees on S32s are not worth the tie in to a poorly performing fund, assuming no others were available.

Not a factor these days surely especially for anyone close to retirement.