Aegon Section 32 GMP problem 29 October 2014 at 11:06PM edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning 40 replies 7.2K views

Narfie

I have a policy with Aegon (Scottish Equitable) under a section 32 buyout. The policy schedule when issued included reserved contributions for a GMP of £752.44 revalued to state pension age of £6,275.44. The rate of revaluation was 8.5%
The service under the original pension started in 1977 and ended in 1987, the contracted out service also ended in 1987
When I queried the current value of the fund two years ago Aegon referred to the GMP and stated that although there was insufficient value for the GMP they would make up the difference,
As my retirement date is imminent Aegon have notified me of my options but the GMP entitlement is considerably less with no benefits accrued post April 1988
I have wrote to them 7 weeks ago pointing out this discrepancy and enclosing the original policy schedule but they have not yet replied
Can anyone comment on this?

Your_Hero

What is this discrepancy from the original policy schedule then? You have not told us, how do you expect us to comment?

Your contracted out service was from 1977 to 1987 and the rate of revaluation is 8.5% which is correct. You'll be entitled to a revalued pension of £6,275.44 p.a.

xylophone

GMP entitlement is considerably less

Do you mean that the GMP figure is less than the GMP at leaving revalued to age 65?

http://www.scottishlife.co.uk/scotlife/Web/Site/faq2.asp?category=S32%20buyout%20bonds

http://www.financialadvice.net/s32_buy_out_plan/zone/1288


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

Narfie

The descrepancy is that Aegon have now stated that the GMP under the policy is £2,675.52 pa accrued pre 6 April 1988 and there is no accrual post 1988 This is a significant reduction and I do not know why, they had previously confirmed the GMP of £6,275.55 and stated that although there was insufficient value to fund this they would still honour it in accordance with the policy,

Your_Hero

Narfie wrote: »

The descrepancy is that Aegon have now stated that the GMP under the policy is £2,675.52 pa accrued pre 6 April 1988 and there is no accrual post 1988 This is a significant reduction and I do not know why, they had previously confirmed the GMP of £6,275.55 and stated that although there was insufficient value to fund this they would still honour it in accordance with the policy,

Seems strange because £752.44 revalued at 8.5% for 26 years is £6,275 assuming your retirement age is 65 this year ("imminent" retirement date as stated).

Have you tried phoning Aegon to follow up on the letter and find out why?

Ickle

I would definitely speak to Aegon.

They are correct to state that you did not accrue any Post88 GMP benefits as you had left the scheme by then.

However, your benefits revalue between date of leaving and state pension age at the fixed 8.5% p.a. If the benefits were £752.44 this does revalue to £6,275.44.

I would get them to confirm the amount of GMP entitlement you have at both Date of Leaving the scheme (i.e. when you ceased to accrue further GMP benefits) and at State Pension Age (i.e. the revalued amount).

xylophone

http://www.pruadviser.co.uk/content/nav/about/26674/pghome/49880/53732/53759/53768/53789/

If fixed rate was chosen, then the rate is indeed 8.5%. See above.

You need to speak to Aegon.

Have you yet had your state pension statement?

What is the contracted out deduction shown?

Aegon have no obligation to index link your GMP pension (all pre 88) when it comes into payment.

WobblyDog

I can't help noticing that £2,675.52 and £6,275.55 are almost the same, with a couple of figures transposed. Perhaps someone at Aegon has fat fingers?

I have a deferred GMP pension myself, and can't quite believe that it's really going to rise by 6.25% per year for the next 20 years.

xylophone

I have a deferred GMP pension myself, and can't quite believe that it's really going to rise by 6.25% per year for the next 20 years.

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

There's gold in them thar rules.......

ffacoffipawb

Narfie wrote: »

The descrepancy is that Aegon have now stated that the GMP under the policy is £2,675.52 pa accrued pre 6 April 1988 and there is no accrual post 1988 This is a significant reduction and I do not know why, they had previously confirmed the GMP of £6,275.55 and stated that although there was insufficient value to fund this they would still honour it in accordance with the policy,

Your_Hero wrote: »

Seems strange because £752.44 revalued at 8.5% for 26 years is £6,275 assuming your retirement age is 65 this year ("imminent" retirement date as stated).

Have you tried phoning Aegon to follow up on the letter and find out why?

Also £752.44 revalued at 5% for 26 years is £2,675.40.

Perhaps an LRP was paid on leaving contracted out service?

Your_Hero

ffacoffipawb wrote: »

Also £752.44 revalued at 5% for 26 years is £2,675.40.

Perhaps an LRP was paid on leaving contracted out service?

Quite possible, as Limited Revaluation applied to leavers pre 6 April 1997. For other readers, LRP is the full rate revaluation (via NAE) capped at 5%.

My understanding so far is that OP said Aegon had confirmed it will use 8.5% on the policy statement upon leaving. I hope OP can confirm what Aegon has said.