Prudental Bond 32

thebullsback

Hi all bit financially unaware so would like some advice on my position please
Male -55-married
Own home-no debt
Wife and I both work joint income £32000
I have a Pru Bond 32 which I took out in 1989 using funds from a deregulated nationalized company total funds transferred £10,124.97p inc redress payment of £7,318 added 12/4/2000

Questions are can I cash this in now as in I believe I could claim 25% lump sum then receive a monthly payment from Pru?
If this was possible does remainder of Bond go into an annuity and if so do I have a choice of which one?

If I could take lump sum out would that be best thing to do or should I leave it in .

extra information
value of cash accumulation fund at 1/5/2013---£20.484.99
Amount allocated to Guaranteed Element Fund ---£110.28

Final bonus is currently added to cash accumulation fund when with drawn to meet a claim dependent on investment performance
If benefit due now on retirement or death fund above would increase to £27,860.82.

Thank you for reading

PaulCooper

Before going much further, you need to ask the provider, if there is a GAR (Garaunteed Annuity Rate) with this bond, if so, what is it and at what date is the pension due.
I have something like this taken out in about 87 & it has a GAR of 9.9%. In other words, what that means is that when I reach their specified date (which for me is when I reach 65), they will pay me 9.9% of the value of the funds every year that I exist

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in other words it's extremely valuable as a pension. The provider would dearly love you to break the contract (take 25% now) as 'all bets would be off' and they'd end up paying you about 4% on the fund value when you wanted to draw a pension
Paul

dunstonh

Questions are can I cash this in now as in I believe I could claim 25% lump sum then receive a monthly payment from Pru?

1 - you cannot cash in a pension. You can commence a pension.
2 - it is not a personal pension. The rules applicable to section 32 buy out bonds are different. For example, the tax free cash payment may range from 0% to 100%.
3 - It may not be able to commence this pension until scheme retirement age. Transferring it out to another pension that allows earlier commencement is possible but any guarantees built into the S32 would be lost.

If this was possible does remainder of Bond go into an annuity and if so do I have a choice of which one?

No you do not get the choice of annuity as open market option is not available to you. However, a transfer to an immediate vesting personal pension is. Guarantees would be lost on a such a transaction.

You have the potential of guaranteed minimum pension (GMP) and guaranteed annuity rates (GAR). These may scupper your plans or at least make them financially inappropriate to take the pension early.

thebullsback

Thank you both for speedy and informative replies.
I shall try and contact the Pru for more details of my Bond .
No doubt I will be back for more advice .
Thank you

thebullsback

Hi ,just had a reply from the Pru about a couple of questions I asked and to say I,m confused is an understatement.
Prus reply is -Normal retirement date 2021 (age 62)
-Guaranteed Annuity Rate does NOT apply
-There IS a Guaranteed minimum pension of £2,313.48 at State pension age .The GMP at date of leaving service (31 July 1987) was £2.56 a week pre 1988 and £0.00a week post 1988 with a revaluation rate of 8.5%
The GMP is a minimum amount of pension income pais as a condition of contracting out of SERPs.

Bearing in mind the value of my fund now and my present circumstances what are my options and what the hell do the reply's from the Pru mean .
Male -55-married
Own home-no debt
Wife and I both work joint income £32000
I have a Pru Bond 32 which I took out in 1989 using funds from a deregulated nationalized company total funds transferred £10,124.97p inc redress payment of £7,318 added 12/4/2000

What do I get if I draw down the pension at 55 as opposed to leaving it alone and if I leave it alone can I get it at 62 or do I have to wait until state retirement age whatever that is going to be in the future .
Thank you for reading

dunstonh

What do I get if I draw down the pension at 55 as opposed to leaving it alone and if I leave it alone can I get it at 62

You may not be able to with Pru. The GMP could prevent it. That would require a transfer to a personal pension with immediate commencement. However, that leads to a few more problems. Until April 2006, Section 32 buy out bonds were classed as occupational pensions. Whilst they are now classed as registered pension schemes, they are still viewed as occupational by many firms. That means those firms would want an IFA to sign off on the transaction.

The transaction you want to do is known as pension unlocking and is a current hot potato at the FCA. i.e. you want to take your pension pre-retirement for what appears to be consumer spending. That will nearly always be considered bad advice. So, an IFA isn't going to be keen on doing that unless they can find suitable justification for recommending it. Some IFAs will be happy to recommend you dont do it and then document that you are overruling the IFA. Others may choose to not get involved given its current high profile.

If you do transfer it, the GMP would be lost and it looks like it is a highly valuable amount given the low fund value vs the GMP payable.

Why do you want to engage in pension unlocking?

xylophone

Do you still have the original literature from when you took out the Section 32 bond?

http://www.pru.co.uk/existing_customers/products/section_32/

thebullsback

I am not desperate to unlock the Bond but I had thought if I could take it now and the figures were right I would do so on the simple basis of a bird in the hand is worth 2 in the bush .
It appears now that I shall have to wait until I,m 62 to qualify for this Bond ,any ideas from the figures shown what I COULD get at that time IE lump sum then monthly income ?
And yes I do still have the original policy literature but to be honest it might as well be written in hieroglyphics as I dot understand it
Again thank you for taking time to help

dunstonh

I am not desperate to unlock the Bond but I had thought if I could take it now and the figures were right I would do so on the simple basis of a bird in the hand is worth 2 in the bush .

It is nearly always considered bad advice to do that.

It appears now that I shall have to wait until I,m 62 to qualify for this Bond ,any ideas from the figures shown what I COULD get at that time IE lump sum then monthly income ?

Probably little or no lump sum as the current value seems to low to support the GMP. The GMP will be the income (in todays terms as it will be increased).

thebullsback

So to find my monthly income do I simply divide £2,313.48p by 12 -which is £192.79p ?
And then is this figure sort of index linked or have I got this all wrong .
This is when I reach my plan retirement age of 62.

xylophone

the current value seems to high to support the GMP.

Too low to support the GMP?