Pension taken out pre 1988

harbell

Hi. I read an article in the weekend Telegraph about pensions taken out pre 1988 being on a fixed rate, which pension providers are keeping quiet about. I am about to take my pension pot of about £98,000 and phoned the Pru about this, to be told that my pension, which was taken out in 1981 was for a fixed amount. They are writing with full details of options, etc. but I wondered if anybody had any ideas etc. Thanks for reading.

CannySaver_2

Hi

the term "fixed rate" is one normally more associated with savings or mortgages, I've not heard it used in relation to pensions.

However, I believe you could be talking about a guaranteed annuity rate or GAR.

Some older pensions had a guaranteed annuity rate, which often are significantly higher than today's annuity rates which have been pushed down by increased life expectancy, falling gilt yields, and a couple of EU directives.

It is always worth checking whether you have guaranteed annuity rates and also the form they take. For example if you want to make provision for your husband or wife a guaranteed annuity rate with no spouse's pension might not be particularly useful for you.

Once you get the rates do a quick check with an online pension annuity calculator to compare the rates you have been offered with the current best rates.

If the rates in the open market are better its then time to start shopping around with an IFA to get the best rates and also check whether you qualify for an enhanced annuity.

Hope this helps.

The Canny Saver

dunstonh

I read an article in the weekend Telegraph about pensions taken out pre 1988 being on a fixed rate, which pension providers are keeping quiet about.

I deal with around 300 pension transfers a year and have never found a provider keeping quiet about guaranteed annuity rates (which I assume is what you are referring to when you say fixed rate).

but I wondered if anybody had any ideas etc.

media making up a story is my guess.

Certainly, they dont make a big song and dance about these things but if we take Pru, your provider, they do state in the standard letter template if there are guaranteed annuity rates or other guarantees that exist.

Its good to be aware of guaranteed annuity rates but the providers do not hide the information. Your IFA will automatically find the information out when they look at your pension.