L&G Buy Out Pension - Ditch/Switch/Drawdown?

saintalan

I have been taking a pension for 2 years from other plans I have had in my career and decided to leave the above (currently valued at £75k) untouched for a while as I was not in need of it.

Over the past month I have been doing my March/April budgeting moving my ISAs & savings etc and my thoughts turned to my S&S ISA and through a link here got interested in Passive Investing and in particular the Vanguard LifeStrategy and the excellent thread on here.

Reading about this turned my thoughts to my L&G Buy Out now invested in their Lifestyle UK Equity Fund but at 75% Fixed Interest & 25% Cash which returned about 2.5% in the past 12 months.

I still dont need this and would like to turn it into a longer term investment for my younger family, hopefully with me:)

Long winded but this has inevitably turned my thoughts to other options, switching funds with L&G, switching companies to one that does Vanguard or using a Flexible Drawdown (which I could qualify for) as a Vehicle for funding direct and/or ISA investment's .

I think I understand what I mean and happy to clarify but any comments help appreciated.

Regards

Alan

dunstonh

Many section 32 buy out bonds have Guarnateed minimum pensions and/or guaranteed annuity rates. You need to take care that guarantees will not be lost on transfer.

saintalan

Thanks dunstonh for your response.

My current plan says that the valuation is not guaranteed so I presume that means there is no GMP? I guess if I took an annuity then that could be factored in.

So if I am right I am back to square one as to my options, I think, maybe, I did not get the Thread Title right:( (Now changed)

"but this has inevitably turned my thoughts to other options, switching funds with L&G, switching companies to one that does Vanguard or using a Flexible Drawdown (which I could qualify for) as a Vehicle for funding direct and/or ISA investment's"

Are there any further options to the above?

Thanks again.

Alan

dunstonh

My current plan says that the valuation is not guaranteed so I presume that means there is no GMP?

No. The fund value can fluctuate. The GMP value is a different thing.

S32 plans also get automatic transitional relief which can mean that some payout different amounts of lump sum to the 25% standard. Some even as much as 100% tax free cash.

You should not treat a section 32 as a personal pension. It needs a bit more research.

xylophone

http://www.pensionsandannuities.co.uk/cash-in-a-personal-pension.htm "A Section 32 contract, sometimes called a buyout bond, can be quite a complex contract. It is not always possible to take a Section 32 contract early if it contains what is known as GMP (Guaranteed Minimum Pension). Before it can provide any benefits, a Section 32 contract sometimes has to ensure that your pension will be a minimum amount at state pension age. This can mean that it reduces the tax-free cash available and forces the insurance company to fund any deficit, if your own fund can not support the GMP. So to some extent, it can offer guaranteed benefits and if you want to take it early as a Section 32 contract, it may not be possible.

However, it is possible to transfer some Section 32 contracts to a the Personal Pension environment. This would mean that the GMP element would be lost and any guarantees would be lost. It would however, allow you to take your pension in the way described above, but with the loss of guaranteed benefits. See Guaranteed Minimum Pension for more details."
http://www.pensionsandannuities.co.uk/Guaranteed_minimum_Pension_GMP.htm

http://www.barnett-waddingham.co.uk/news/2012/07/what-is-a-gmp/

for some information - check with L&G.

saintalan

Thanks guys, I have been digging through my L&G paperwork so will determine exactly where I stand later today.

I have phoned them a couple of times, not re GMP, and they are helpful to the extent they answer questions but they don't tend to elaborate.

Thanks to your posts I will try and gather together remaining questions and call them again.

Many Thanks

Alan

GhIFA

saintalan wrote: »

Thanks guys, I have been digging through my L&G paperwork so will determine exactly where I stand later today.

I have phoned them a couple of times, not re GMP, and they are helpful to the extent they answer questions but they don't tend to elaborate.

Thanks to your posts I will try and gather together remaining questions and call them again.

Many Thanks

Alan

They "don't tend to elaborate" because they can't - they're not authorised to give you any advice, they can only give factual information to you, nothing else.

The reference to the valuation not being guaranteed refers to the fund value - it doesn't mean that there aren't any valuable contractual guarantees attached this plan.

saintalan

OK my BOP was from a previous companies Money Purchase Scheme.

I have NO GMP and NO Protected Rights.

I will get an Annuity Quote from them to compare with others but as stated in the OP I do not really want to go this route.

So any views/opinions/experience etc of keeping this investment as a Pension either with L&G or another company that offers Vanguard LifeStrategy Funds or Drawdown and into ISAs would be much appreciated and welcome.

Kind Regards

Alan

GhIFA

You need to specifically ask them if any guaranteed annuity rates, tax free cash in excess of 25%, or any other types of guarantee apply (if you haven't already done so - your previous posts dont suggest you have) - these benefits won't necessarily be shown on the annuity quote they send.

saintalan

GhIFA wrote: »

You need to specifically ask them if any guaranteed annuity rates, tax free cash in excess of 25%, or any other types of guarantee apply (if you haven't already done so - your previous posts dont suggest you have) - these benefits won't necessarily be shown on the annuity quote they send.

Thanks to you and others, I am sure I haven't yet asked the last question but this is where I am at following a call to L&G.

1 There is NO GMP

2 There are NO Guaranteed Annuity Ratess

3 As at April 2006 I had a Protected Cash Free (PTF) sum of £15983 based on fund valuation of £54686 i.e. approx 29%

4 I have asked for an update on point 3 but told probably remain same percentage on Current Valuation of around £74k

5 I have asked for a Annuity estimate

6 There are no other guarantees.

7 L&G do provide Flexible Drawdown option.

Many Thanks

Alan

atush

so, you get 29% TFLS instead of 25%. Good enough to stay put for an extra 4% TF?

You say you have a young family, then mention annuities. DD is better for preserving value for you family in most cases as 100% of your DD fund can be inherited by your spouse for her own pension usage. Buying even a 50% spousal pension via an annuity can cut your yearly payment in half.

Third, should you leave it (to eventually get the 29% TFLS when you need the money) then look to moving it to a better performing funds as 2.5% is poor performance for 75% equities.