Pru GAR pension!

189raydon

I am just about to take my Pru personal pension, started in 1985, which has a GAR attached. I am 60 in March 2013 and my specified date is the 1/1/18. The figures I have are as follows:
Pot now is £134,000. I have been offered £5,800 annual pension with 10 year guarantee and lump sum of £33,500. However, I also have a projection of £15,500 per annum, no lump sum, no guarantee to be paid on the specified date. This is made up of £8,500 basic guarantee and £7,500 annual bonuses (approx).
Nobody will tell me what difference or how much the final bonus could be.
My question is: What would the final bonus be if the specified date were today or recently as I realize it is impossible to forecast the future?
I am really keen to take what is on offer now but just need anybody to tell me that if the pension were to more than double by waiting for all the benefits of that specified date, I may wait, less than double I fancy the money now over the next 5 years and no premiums to pay (which are £150 per month).

Thanks.

PaulCooper

There's a couple of things in play here. You mention your pension has a GAR and your normal retirement is 2018. I would wager that if you take it early as you are suggesting, then no GAR will apply. I think you will find that when you took out the pension, GARs were around 10%, they would love you to take your pension early as they don't have to honour this, you'll then get 3-4% which is the market rate now (might be even less as you'll only be 60).
You'll not get clear answer on the bonuses side of things but you will get clear answers on the GARs if you ask them
Hope that might help
Paul

Linton

From my understanding....

I take it from the way you present your data that the £8500 is guaranteed by the GAR but the £7500 depends on the actual annuity rate applied to the total of annual bonuses. Annual bonuses cannot be taken away and current annuity rates are at an historically low value, so it would seem that your £15,500 is roughly guaranteed. I would not assume any final bonus as the company could well be making a loss on the GAR. It would be better for them if you were to take the money now: £5800 would seem to be the annuity based on current market rates, any deviation from the default conditions may well lead to the GAR being withdrawn.

So does that give you a factor of 2 or were you looking for the pension at 65 to rise to £30K? In which case I think you will be disappointed.

Of course there are many other factors you will be taking into consideration. For example
1) It seems to me from the figures that the annuities will not be inflation linked.
2) Does £5800 give you sufficient to live on for the rest of your days, together with whatever other retirement income you will have?
3) Do you want any provision for a spouse? The GAR pension may or may not provide that.
4) Is there any reason why you may not live to an average life expectancy and so really enjoy the benefits of the later but much more lucrative GAR annuity?

189raydon

Thank you so much.

The £15,500 in 5 years time on 1/1/18 has no lump sum or spouses pension, so if I live to 74 from then I will take about £140k all in. However, the £5,800 now is 5.8% and has a 10 year guarantee and a lump sum of £33,500 which till 74 is £130k, all in (approx) with interest on the £33,500 throughout the period.

What would you do? I took an NHS pension early and didn't regret that.

Still want to know from anyone...

What the final bonus is today or recently, at the specified date.

Many thanks.

dunstonh

What would you do? I took an NHS pension early and didn't regret that.

When you say you didnt regret it, do you mean financially or personally? Taking pensions early in some cases carries very little or no penalty. Others can see significant penalties which mean financially they are best left until the penalty no longer exists or is more reasonable. Some people will still do what is financially bad to do because of their personal situation and will see that is the right thing even if financially the wrong thing.

Still want to know from anyone...

What the final bonus is today or recently, at the specified date.

It will be whatever it will be. No-one can answer that without a working crystal ball.

atush

Personally, if you have a spousal pension with your NHS one, or your spouse has a pension, I would take the higher GAR pension on 2018.

Esp as you are giving figures of you living til just 74, when in fact you would be likely to live more than 10 years beyond that (unless you are not of good health).

Linton

189raydon wrote: »

Still want to know from anyone...

What the final bonus is today or recently, at the specified date.

Many thanks.

I doubt anyone will be able to help you with that as it will undoubtedly be dependent on the details of the pension. The figure may be in your annual statement, if not your best bet is to ring Pru. But, assuming that there is a final bonus, whatever it is now has no bearing whatsoever on what it will be in 5 years time.