Occupational Pension AVC

dunstonh

I want transfer the AVC to a SIPP is there anyway round this

Why?

Personally, I dont think you have an AVC. I think you have a section 32 buy out bond.

What is a GAR

Guaranteed annuity rate. Looking back on the thread it appears you did this transaction back in 2004 so a guaranteed annuity rate is unlikely. However, it is possible that the transaction was done with primary or enhanced protection as 2004 was in the run up to A day and Section 32s were used a lot then to lock in the protection.

If it is a section 32 buy out bond then this should be treated as an occupational pension and not a personal pension or FSAVC. There are going to be retained benefits in there which could be far more valuable than losing them if you move to a SIPP. The GMP is one of them.

Also, Scot Eq funds are not that bad. Unless you are a high risk investor, there are a lot of funds Scot Eq have on offer which should allow you to build a decent portfolio spread. That could make it both cheaper than HLs SIPP and allow you to retain benefits.

sabelu

Grateful for your advice dunstonh. How is the 18k GMP calculated as a % of the total fund? Will the 18k stay invested in the existing fund, believe it will be used to supplement my state pension @ 65 and surely will grow between now and then. Will that payment be made to me diect from Scot Eq @ 65 and do HM Pensions include that in their estimated pensiuon you can get on the Newcastle website?
I currently receive annual statements from this fund should I receive the same regarding the GMP annual progress?

Can you take any % of GMP @ 50 as in the case of a SIPP?

sabelu

dunstonh wrote: »

Why?

Personally, I dont think you have an AVC. I think you have a section 32 buy out bond.



Guaranteed annuity rate. Looking back on the thread it appears you did this transaction back in 2004 so a guaranteed annuity rate is unlikely. However, it is possible that the transaction was done with primary or enhanced protection as 2004 was in the run up to A day and Section 32s were used a lot then to lock in the protection.

If it is a section 32 buy out bond then this should be treated as an occupational pension and not a personal pension or FSAVC. There are going to be retained benefits in there which could be far more valuable than losing them if you move to a SIPP. The GMP is one of them.

Also, Scot Eq funds are not that bad. Unless you are a high risk investor, there are a lot of funds Scot Eq have on offer which should allow you to build a decent portfolio spread. That could make it both cheaper than HLs SIPP and allow you to retain benefits.

dunsonh - surely the GMP is protected and cannot be lost?

sabelu

Is HL a good SIPP operator fees etc or would you know of others that could be better?

dunstonh

How is the 18k GMP calculated as a % of the total fund?

Its not. It is a guaranteed minimum pension on maturity. If the fund is able to perform to beat that figure you get the higher figure. If the fund isnt able to beat that figure you get the guarantee.

Will the 18k stay invested in the existing fund, believe it will be used to supplement my state pension @ 65 and surely will grow between now and then.

It has no impact on your state pension. It is a personal arrangement that will provide an income in addition to what your basic state pension will pay. It has elements of SERPS/S2P but going forward there is no impact on state pension provision.

Will that payment be made to me diect from Scot Eq @ 65 and do HM Pensions include that in their estimated pensiuon you can get on the Newcastle website?

Scot Eq pay it and it wont appear on any estimated state pension forecast.

Can you take any % of GMP @ 50 as in the case of a SIPP?

Only if you break the guarantee or you have a very rare case where the retirement age is 50.

My belief is that you have a section 32 buy out bond. You dont have a personal pension or AVC. Effectively, you are doing an occupational pension transfer. Not a personal pension transfer. That means you have to look at more information than just charges and fund choice (being 2004, chances are charges are going to be higher on the SIPP).

sabelu

Just spoken to the Administrators (WW) and it is not a section 32 buy out bond. They assure me altho must admit to questioning them that this is the way most funds take in transfers, not my experience tho. My previous employer fund was transferred into an AVC which runs alongside my OP it is invested in a Scot Eq Ext Balanced (XE7) and carrys a life policy benefit. This can be used at retirement to add to my OP annuity or lump sum etc.

dunstonh

Ok. Well very weird is my response to that. Its blown my theory. Transfers typically go 1 of 3 ways.

1 - into another occ scheme
2 - into a personal pension (sipp or stakeholder)
3 - into a section 32 buy out bond

Wherever it is, the GMP is quite possibly very valuable and I wouldnt want to transfer it out without verifying the terms of the GMP. A 2004 set up isnt likely to have the favourable terms of a say a 1990s version (where GMP is often far far in excess of what the fund is likely to achieve) but I wouldnt want to transfer it without verifying it.

How much is the GMP (income at retirement) and how much is say a projection at 7% going to pay based on transfer value? If the critical yield is low then it could be worth a punt. If the critical yield is high, then it gets harder and less likely to be worth transferring it.

sabelu

dunstonh wrote: »

Ok. Well very weird is my response to that. Its blown my theory. Transfers typically go 1 of 3 ways.

1 - into another occ scheme
2 - into a personal pension (sipp or stakeholder)
3 - into a section 32 buy out bond

Wherever it is, the GMP is quite possibly very valuable and I wouldnt want to transfer it out without verifying the terms of the GMP. A 2004 set up isnt likely to have the favourable terms of a say a 1990s version (where GMP is often far far in excess of what the fund is likely to achieve) but I wouldnt want to transfer it without verifying it.

How much is the GMP (income at retirement) and how much is say a projection at 7% going to pay based on transfer value? If the critical yield is low then it could be worth a punt. If the critical yield is high, then it gets harder and less likely to be worth transferring it.

Sorry but can I just clarify that the GMP will stay with the current fund and still payout the 49k thats the transfer amount I will invest seperately in a SIPP. In short I would'nt be transferring the GMP would I? Are we at cross purposes? Sorry to be a pain

dunstonh

It depends on whether the plan you have will allow the splitting of the GMP or not without having any impact. If it has no impact, then fair enough.

How are you going to invest the money in the SIPP?

Last person on this board to say they were moving away from Scot Eq into the HL SIPP ended up picking a fund with 50% more charges and worse past performance than the Scot Eq pension they were already in.

EdInvestor

Anything with a GMP is normally required to be invested in the insurer's With profits fund.Is that the case here?

Where an occupational pension derived lump of money with a GMP is transferred into a personal pension (or SIPP) it will be converted into two bits.One bit will be the "protected rights" and the other bit the non protected rights.The GMP will be lost when this conversion is made. .You won't be able to put the protected rights bit into a SIPP (at least not yet).

You may like to ask whether you will lose your GMP if you switch into other Scot Eq funds.