Protected rights and Guaranteed Min Pension

green_man

As we know protected rights was abolished a couple of years ago, however I am unclear how this affects my previous protected rights pot.

I contributed to a pension through my work from approx 1986 -1996 and for most of this period I was contacted out of SERPS. This Pension was originally with Standard Life and is now looked after by Phoenix. My arrangements changed in 1996 and so I have not contributed to this scheme since then.

My latest statement from Phoenix shows this pension split into two pots. Protected and Non protected.

The protected having a GMP in 2031 (when I am 65). So it shows a current value, a transfer value and a GMP.

So with the protected rights rules being abolished what does this mean?
- Can I take my pension from 55 ?
- Can I transfer this pot ?


For Interest the Current pot and transfer value is around £62K. The GMP is £95K.

Also what I find strange is that my none protected pot is so much smaller (less than half the value) despite me thinking that my contributions were greater than the NI rebate going into the protected pot!.

Your_Hero

green_man wrote: »

My latest statement from Phoenix shows this pension split into two pots. Protected and Non protected.

The protected having a GMP in 2031 (when I am 65). So it shows a current value, a transfer value and a GMP.

So with the protected rights rules being abolished what does this mean?
- Can I take my pension from 55 ?
- Can I transfer this pot ?

GMP and protected rights are similar in the sense that they came about because of contracted-out rights but are separate things. You can only take the pension at 65, or earlier if the GMP can be met.

Transfer is possible but only if the transfer value is at least equal to the CETV of the GMP (see below)

What is the Total transfer value then? Is it £62k or £157k? It's not quite clear.

green_man

So the Current pot and transfer value of the protected rights bit is approx £62K.
The non-protected pot is approx £28K

So If this 62K pot reaches the GMP then I can take the pension?

Your_Hero

green_man wrote: »

So the Current pot and transfer value of the protected rights bit is approx £62K.
The non-protected pot is approx £28K

So the total transfer value is £90k?

green_man

Your_Hero wrote: »

So the total transfer value is £90k?

Yes - Including the protected and non-protected elements.

I assume though that the GMP just applies to the Protected element, so isn't the value of the non-protected bit irrelevant to this?

Your_Hero

green_man wrote: »

Yes - Including the protected and non-protected elements.

I assume though that the GMP just applies to the Protected element, so isn't the value of the non-protected bit irrelevant to this?

No it is the total transfer value because in order to provide you with the GMP, the provider will use both the 'protected' rights and the 'non-protected' rights. So let's say you are 65 tomorrow, your provider will make up the £5k shortfall and pay you the GMP but you will not have a tax-free lump sum.

green_man

Really - that sounds strange to me.

Could I not transfer my none protected pot somewhere else? or are are the two inextricably linked.
Can I not have a tax free lump sum at least from my non-protected pot.?

xylophone

Is what you have a S32 policy?

green_man

xylophone wrote: »

Is what you have a S32 policy?

I'm not sure, that's not a term that means anything to me or I have seen in any of the documents I have. Is there a way to tell?

These pots were built up by my contributions to a private pension pot contracted out of serps and (as far as I can remember) all contributions were prior to 1997. My understanding was that my contributions went towards the non-protected pot and the NI rebates went to the protected rights pot.

xylophone

Your policy should show whether or not it is a S32 policy. it doesn't sound as though it is. http://www.pension-transfer-advice.com/html/article.php/zcid/2248/type/article/finance/S32_Buyout_Pension_Transfer

I am no expert ( your hero is?) but was what you originally had a COMP Scheme?

http://webarchive.nationalarchives.gov.uk/+/http://www.hmrc.gov.uk/nic/cosr-schemes.htm

"Contracted out Money Purchase (COMP) schemes
In these occupational schemes the employer pays minimum payments to the scheme that are equal to the Contracted-out rebate the employer and employee receive on their respective National Insurance contributions (NICs). From 6 April 1997 the member will receive an additional rebate on their NICs, from NISPI, which is based on their age and paid to their scheme. These payments along with any other contributions from the employer and/or member provide the member with a pension based on the value of his or her fund at retirement. The Contracted-out rights built up in a COMP scheme are known as protected rights. The difference between this type of scheme and a COSR scheme is that there is no guarantee to the pension paid. Members of COMP schemes can take a pension from their protected rights between the ages of 60 and 75, although the lower age limit will change to age 50 from April 2006 and will change again to age 55 from April 2010."

Protected Rights as such are no more - as I understand it, these are now just ordinary rights under your pension policy.

http://www.torquilclark.com/blog/post/24012012/Opportunity-Knocks-For-Protected-Rights.aspx

However, I find the mention of a GMP confusing, as what you have does not appear to be what is normally understood by this?

http://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/18/what-is-a-gmp/

Is it possible to clarify with Phoenix?

green_man

Right - Yes I've read the links in your post and I'm just as confused. The GMP in my statement seems to be defining a Minimum Pension pot rather than a Minimum pension. My company scheme was never a DB scheme it was always DC. It may have been a COMP scheme, in which case the pot should be available to me from 55?

What questions would I need to ask of Pheonix?