Section 32

BIKER77

My wife's section 32 with gmp from Aviva is due when she is 60yrs next year 2015, she did speak with Aviva yesterday on the phone and everything seems to be on track apart from when my wife asked what the current fund value was and was told 68k but according to her policy details the fund value is 89k!( also confirmed by Aviva last year too), so there is a shortfall of some 21k and with about 11 months to go we cannot see that 21k been made to the 89k.


We were reading on here yesterday about a chap with a section 32 policy and basically this was what was said about the shortfall..


As there is a shortfall in funds to provide the GMP, it is likely that the Co-op may not let you transfer out. If there is still a shortfall by Dec 2014, they will make up for this shortfall and pay you the GMP, but you may find that you do not have any tax free cash.


Because of our shortfall will we be now loosing our tax free lump sum which was to be almost 21k at the 25%.


Thanks for taking your time to read this and hopefully you can help us.

Your_Hero

Hi Biker,

Did you mean that it needs to be £89k to provide the GMP but the 'shortfall' is 21k currently? i.e. Is there a shortfall in providing the GMP?

If this is the case, then even if the fund value has fallen to £68k, this shortfall will be made good by Aviva. The good news of course is that the fund will be enough to provide you with the GMP. The bad news is that that's all it can provide and there will no no fund leftover to give you any tax free cash.

Please clarify the facts if I have mistaken.

dunstonh

My wife's section 32 with gmp from Aviva is due when she is 60yrs next year 2015, she did speak with Aviva yesterday on the phone and everything seems to be on track apart from when my wife asked what the current fund value was and was told 68k but according to her policy details the fund value is 89k!( also confirmed by Aviva last year too), so there is a shortfall of some 21k and with about 11 months to go we cannot see that 21k been made to the 89k.

Current value and transfer value are two different things. The current value may not included any final bonus accrued to date. The transfer value will.

You can still transfer out if there is a shortfall position to meet the GMP. You just have to give up the GMP rights if another company is not willing to accept them. Sometimes that can be justified. Other times, it can be a very bad thing to do.

If there is GMP, the actual fund value may be irrelevant as the real value is in the GMP amount. Do remember that Aviva cannot supply all the options available to your wife. So, do not rely on them for information in making a very important decision. Get advice from a local IFA.

BIKER77

Hi both Your Hero and Dunstonh for your reply's, my wife has just spoken with Aviva and they are now sending us full information which hopefully should explain everything. Because of this and other pensions we have also decided to get advice from a local IFA as we didn't know that Aviva cannot supply all the options etc.
Again thanks both for your time and help,
Biker77.

Your_Hero

Your welcome. Please keep us posted on the actions you take. Can also offer a second opinion on the advice or options.

BIKER77

Will do and thanks again, Biker77...