section 32 buy out

billyboggins_2

Do i have the option under this scheme to take a smaller amount of pension than the GMP and have a lump sum as well,my current provider says that it will not be possible when i retire in June this year because my fund has not grown enough to cover the GMP and i cannott take the current fund and
use it elsewhere as they have to provide the lump sum not the new provider .

dunstonh

You will be limited on what you can do with the scheme if you wish to retain the GMP. However, a transfer would allow you more options. Although its quite possible that will be a financially worse option.

The existing provider will only tell you what they can do. Not what others can do or what other options are available.

Losing the GMP will have an impact on indexation on part of the state pension and annuity income potentially. So, its not a decision to take lightly and without research or advice (if you are not able to understand the different requirements that apply to pre 88, post 88 and excess fund).

xylophone

When do you become eligible to draw your state pension?

xylophone

http://www.financialadvice.net/s32_buy_out_plan/zone/1288 might be worth a read?

billyboggins_2

I retire in june this year,policy was bought from my company scheme 2/2/1990 when i took voluntary redundancy..can anyone explain in laymans terms what"nominal capital sum " means ? i've looked at the link,thks very much, but it full of "maybes" and "mights" nothing concrete.my pension pot has not reached enough to pay my GMP so current provider says they will have to top it up , i have looked at comparison sites and with the amount they say they need to pay my GMP i can get nearly 30% more !

xylophone

Have you thought of consulting an IFA who can look at your situation in the round?

http://www.unbiased.co.uk/pensions

dunstonh

but it full of "maybes" and "mights" nothing concrete

It has to be as there are options to consider and features and terms that may or may not apply. Section 32 buy out bonds are not an easy product to understand. They cant be due to their nature.

my pension pot has not reached enough to pay my GMP so current provider says they will have to top it up

That is correct. They have to honour the GMP.

i have looked at comparison sites and with the amount they say they need to pay my GMP i can get nearly 30% more !

They have to pay the GMP. They do not actually increase the fund size. So, if you transfer elsewhere, you get the transfer value only. If you use open market option instead then you need the new provider to accept the GMP and many may not do on the transfer value. Plus, are you comparing like for like. GMP will have indexation and spouse benefit.

vvvvvvvvvvvvvvvv

Another Q about section 32 pension pots.I have a bonus in my policy which is 11k.Is that bonus a seperate matter to the main policy growth?How is this bonus used?Can it be used by the insurance company to cover your GMP?Can you take the bonus as a lump sum etc?

dunstonh

I have a bonus in my policy which is 11k.Is that bonus a seperate matter to the main policy growth?

No. Returns on the fund will be distributed by means of a reversionary bonus (annual bonus) and a terminal bonus (final bonus). The terminal bonus accrues as you go along although it can be reduced or even removed.

Can it be used by the insurance company to cover your GMP?

It is part of the value. So, yes.

Can you take the bonus as a lump sum etc?

No. The rules governing pensions are not changed due to the fund you are invested in.

xylophone

i've looked at the link,thks very much, but it full of "maybes" and "mights" nothing concrete.

The link in post 4 above seems fairly clear as does the link to which I referred below (post 13) by way of example?https://forums.moneysavingexpert.com/discussion/comment/64347947#Comment_64347947

If you don't understand the options in your particular policy, then post 6 above? You would not wish to make any uninformed decisions with regard to your pension provision?