Alternative to an annuity?

kidmugsy

bumblebee5 wrote: »

(i) I have requested a new projection for DB pension, yesterday, but all previous paperwork and conversation suggests the pension amount without a tax free lump stays at the same amount (£7k), therefore not inflation linked. The transfer value, without the lump sum, has however increased from £78k, in 2009 to £131k, as of yesterday. I thought I asked that question and was told the pension I would get would be maximum £7k. Is there another question I should ask?


(ii) On the figures from 2009, I have worked out the 'commutation' rate, (£22k lump sum, reduction in pension is 1.5k, therefore 22/1.5=14.66). Is 14.66, is that better or worse than your 10?

Well, 15 is better than 10: for a fixed size of annual pension, if you had a compelling reason to take a lump sum - e.g. an expensive debt to clear, or the desire to keep a decent emergency fund in cash - it might be worth taking the lump sum. But if the pension were index-linked then 15 still looks pretty feeble, because inflation-linking makes a pension more valuable and therefore you'd want a bigger lump sum to compensate you for giving up part of it. If I were you I'd try to get an unambiguous statement in writing about the index-linking: then you can pass a copy to your IFA.

As for help on this forum, I suggest you start a new thread with a title calculated to attract our most experienced commenters in hopes that one of them has come across a case like yours before.

atush

Esp including employers name.

xylophone

Did you once work for Norwich Union and now work for Aviva?

Or have a S32 policy with Norwich Union?

Or work for a company whose Retirement Plan was run by NU?

bumblebee5

Thanks for all the replies.


xylophone - no did not work for NU or Aviva. DB Pension was with NU, (? ran by them) then big problem from employer not paying in, who then went bankrupt, went to pension ombudsman, policy went/stayed to NU. I thought pension originally was inflation linked, and on final salary scheme, with benefits for spouse/partner.


No idea what S32 is!


sandsy - I left company employment in 1991, they went bust in 1992! I thought original pension was with NU prior to problems, but not 100% sure - don't have any paperwork for those dates.


Is it worth me talking with Aviva yet again?

dunstonh

xylophone - no did not work for NU or Aviva. DB Pension was with NU, (? ran by them) then big problem from employer not paying in, who then went bankrupt, went to pension ombudsman, policy went/stayed to NU. I thought pension originally was inflation linked, and on final salary scheme, with benefits for spouse/partner.

How have you ended up with a defined benefit scheme with Aviva if you were not employed by them (or an earlier branded company under the Aviva group)?

Are you sure it is not a section 32 buy out bond? (in which case, indexation could be part of it depending on the GMP).

bumblebee5

dunstonh - thanks for reply, as I have said before the pension ended up with Aviva, as bought/taken over form NU.


Pension was originally a DB with NU, have seen some paperwork saying that! Employer stopped paying in. Lots of problems, it was taken to pension ombudsman. I have not employed/involved with them since 1991 and have eventually found that I am entitled to a pension from the company.


If the original pension was DB (therefore now should be inflation linked), could I assume that any new company that had taken it over, ie Aviva, would also inflation link it?


If that is the case, who can I ask at Aviva about this? Whilst they have been helpful, I get the feeling that the policy is more complicated and I am just getting standard answers from a switchboard person, who is perhaps not up to scratch with it all. I would like to talk with someone who is up to date with that particular policy! Any suggestions of who to ask for?


No idea what a section 32 buy out bond is.............? How do I find out?

dunstonh

dunstonh - thanks for reply, as I have said before the pension ended up with Aviva, as bought/taken over form NU.

The problem is that you are also saying that it is a defined benefit scheme. That is why there is confusion. I suspect that you used to have a defined benefit scheme but it was transferred into (probably) a section 32 buy out bond with Aviva.

If the original pension was DB (therefore now should be inflation linked), could I assume that any new company that had taken it over, ie Aviva, would also inflation link it?

depends on dates and if there is GMP involved.

If that is the case, who can I ask at Aviva about this? Whilst they have been helpful, I get the feeling that the policy is more complicated and I am just getting standard answers from a switchboard person, who is perhaps not up to scratch with it all. I would like to talk with someone who is up to date with that particular policy! Any suggestions of who to ask for?

Aviva can answer basic factual questions but they cannot offer opinion or go into real technical depth as it would be outside the knowledge and remit of their immediate call centre staff. You may be able to get through to a more knowledgeable person behind the scenes but you will not get through to someone with adviser permissions who can go into more depth than someone without adviser permissions.

No idea what a section 32 buy out bond is.............? How do I find out?

There is a strong chance that this is what you actually have. You can ask Aviva what type of pension is it or if its a section 32 buy out bond.

bumblebee5

dunstonh


Yup, having trawled through, yet again, lots of old correspondence, it was a DB scheme that was transferred. NU wanted to wind it up when ombudsman involved. My guess is that the independent trustees had to 'negotiate' and it looks like the pension was bought/transferred by independent trustees, to Aviva, and it does specify on several documents that my pension due in 2015, which is called a Defined Benefit Replacement Plan, will not increase from the £7k, they predicted. So, I assume I have to accept it and that looks like it, no inflation increase!


As far as the 'current fund value', which is £131k (gone up from £53k in 2009), this presumably is only relevant if I wanted to transfer the fund? (I have looked at spouse pension etc, all of which are irrelevant to me, if I did decide to transfer.)


Thanks to all for all the info/comments so far!