Section 32 absolute confusion

somersetlad

I have a section 32 policy with a GMP of just under 10k and widow’s pension. At this time last year I requested a statement just to see where it was and according to my pension company Aviva I had two options, take the GMP with a small cash sum or take approx 225k as an ‘open market ‘ option. The latter appeared to be the value of the fund and I believe it covered the GMP as there was a small surplus. I didn’t go deeper into the options at the time.
I am aged 62 and actively looking at retiring. I have requested the information again within the last two weeks and I wonder if anyone can give me some ideas on the options available with a section 32 policy where I don’t elect to take the GMP as I am absolutely confused from my recent experiences in trying to find out. It seems all is possible or not possible depending on whom you speak to. There is a lot of information about, a lot of it conflicting as well.
I was told categorically at the first request for the information that it was not possible to transfer anything out of this type of policy.
For a second opinion I phoned the Pension advisory service and was told that I could transfer but I wouldn’t get anything better so transfer was effectively a non option.
As I hadn’t received the information I phoned Aviva again and was told I could transfer but only to an annuity that provided at least the GMP and the widow’s pension.
So far then, three different pieces of advice, two from the same company.
I have yet to receive the new statement, but in my simple world, if I still have about 225k to play with and the GMP is catered for I would perhaps want to get a single life annuity and take a lump sum. The associated widows pension is not a must have as my wife would be adequately catered for, so for us a maximum income and a lump sum is our ideal option. The value of such an annuity would easily beat the GMP.
I believe I have seen something on here where my option would be possible but I’d have to sign away my rights to the GMP.
I’m not too comfortable about going to an IFA as I fear if I go to one on a Tuesday I’ll get one piece of advice and if I go to a different one on Wednesday I’ll get another, basically how do I find the right one? But this may be the only route open to me.
Any ideas/thoughts welcome.

dunstonh

I wonder if anyone can give me some ideas on the options available with a section 32 policy where I don’t elect to take the GMP as I am absolutely confused from my recent experiences in trying to find out. It seems all is possible or not possible depending on whom you speak to. There is a lot of information about, a lot of it conflicting as well.

Aviva will only tell you what the section 32 can do. They will not tell you what other providers can do or what other options exist outside of that plan.

For a second opinion I phoned the Pension advisory service and was told that I could transfer but I wouldn’t get anything better so transfer was effectively a non option.

That is a very strange thing for them to say as they are not advisers and would not have the information to make such a judgement. They normally avoid advice issues and tell you to see an adviser.

I’m not too comfortable about going to an IFA as I fear if I go to one on a Tuesday I’ll get one piece of advice and if I go to a different one on Wednesday I’ll get another, basically how do I find the right one?

And you think the internet is any better?

At least with an IFA you get consumer protection. IFAs have tiny complaint rates at the ombudsman despite dominating pension advice. Most complaints get rejected as well.

You can leave it with Aviva to meet the GMP and pension benefits.
You can use open market option (OMO) if another provider is willing to take on the GMP.
You can transfer it to another provider and lose GMP rights (which can also impact on the state pension) allowing the use other retirement income options and potentially 25% tax free cash.

Which is best will depend on a range of things. Some financial. Some personal.

peterth125

Please can you explain how a section 32 being transferred to supply a lump sum instead of a GMP can impact on the amount of state pension received

dunstonh

peterth125 wrote: »

Please can you explain how a section 32 being transferred to supply a lump sum instead of a GMP can impact on the amount of state pension received

Depends on whether it has pre/post 88 GMP. indexation on Post 88 GMP is paid via the annuity provider. Pre 88 GMP is paid via the state pension.

xylophone

Pre 88 GMP is paid via the state pension.

it would seem that the OP will reach state pension age in single tier.

Under the current state pension arrangements, increases on pre 88 GMP and anything in excess of 3% on post 88 GMP are paid with the state pension provided that the pre 97 additional state pension is not exceeded by the contracted out deduction.

It would seem that the OP will become eligible for state pension under single tier arrangements (on or after 6 4 2016) - it would seem that except in certain public service schemes, such indexation may be lost?

Discussed here https://forums.moneysavingexpert.com/discussion/4920460