Deferred Annuity Pension

SelfBuild

I have a 'Deferred Annuity' pension. I thought the new legislation in April would allow full access to my 'pension pot'. This is not the case according to my Pension company. I have tried to understand my policy, but I am having difficulty since I have also read that it may be possible to access my money. Can anyone help?

xylophone

Is this by any chance a S32 policy?

http://www.pruadviser.co.uk/content/knowledge/technical-centre/section_32/

SelfBuild

No, it isn't a S32. It is a 'Deferred Benefit Occupational' pension.

TH1878

SelfBuild wrote: »

No, it isn't a S32. It is a 'Deferred Benefit Occupational' pension.

Will they give you a transfer value?

This sounds like it's effectively a bulk section 32 scheme where an insurer has bought the rights to a DB pension scheme.

If they will give you a transfer value and allow a transfer, you can transfer it to a money purchase scheme and take benefits under the new rules. If not, there's not much you can do I'm afraid - it may be in your best interests to keep the money where it is anyway.

xylophone

OP, did you used to work for a company which provided a Defined Benefits/Final Salary pension scheme?

At some point, was that scheme bulk transferred into a S32 with an insurance company?

Or are you referring to a defined contribution occupational pension scheme administered by an insurance company and leaving your pot within the scheme even though you left that employment?

Could you supply more details?

SelfBuild

Hi, first of all thank you so much for responding. Yes, this pension was a 'final salary' pension. The Assurance Co policy refers to it as a 'Deferred Annuity Policy'. It is not an 'open market' option and the value cannot be used immediately to purchase an annuity. The Scheme was contracted out after 06/04/1997 on a Reference Scheme Test basis.
I have a letter dated 17 April 2014 which states -Surrender Value Quotation. The surrender value is £31,217.25. Another letter from the FAS dated October 2014 states an annual top up payment of £766.01 to my annual pension of £1,132.58.
This is not enough to live off. Based on media coverage and experience of the holiday let business and the terminology 'Surrender Value', we assumed we would be able to access my pot for our own self build project. This would yield an annual return of at least £6,000.00 plus we would have an asset.
I hope this helps.

xylophone

How old are you?

You seem to have had a Final Salary Pension Scheme which went into wind up?

Members' benefits were transferred to an Insurance Company?

(Bulk transfer to S32 as suggested above?)

Which Insurance Company was this?

FAS = Financial Assistance Scheme as here?

http://www.pensionprotectionfund.org.uk/FAS/Pages/Fas.aspx

http://www.pensionprotectionfund.org.uk/FAS/howfasworks/Pages/HowFASworks.aspx

At what age are you permitted to take benefits from the pension?

SelfBuild

I am 60 years old, my date of retirement is 2019. I can take reduced benefits now. The company is Prudential who I asked about the S32 and was told by them that it was not.

TH1878

SelfBuild wrote: »

I am 60 years old, my date of retirement is 2019. I can take reduced benefits now. The company is Prudential who I asked about the S32 and was told by them that it was not.

I'm confused with Prudential and FAS being mentioned in the same context. Did your old employer become insolvent and their pension sheme was taken over by the Financial Assistance Scheme (FAS)?

What is Prudential's role in this? Did they run an AVC pension alongside the main scheme benefits?

xylophone

I have found this

http://www.pruadviser.co.uk/content/efactsheets/79311/195772/106695/

OP, is this a Bulk Deferred Annuity?

How did the FAS get involved?

You say that you can take reduced benefits now - reduced by how much and what would the benefits be?

Would the pension increase in payment? Would it provide any widow's benefits?

It would seem from the BDA information that benefits can only be taken as a regular pension payment.

It also appears that a transfer out to another pension arrangement would be allowed.

If a transfer out was allowed, would the transfer value be in the region of the £30000+ to which you refer above?

If you transferred out, what would happen to the FAS top up?

If you transferred out and then wanted to take the pension under new rules from Aprl 2015, you would only be able to take 25% tax free with the rest taxed as income?

You refer to the pension as not being enough to live on - were you expecting this pension to provide enough to live on?

You become eligible for state pension in 2019?

See https://www.gov.uk/new-state-pension/overview

SelfBuild

I have a letter dated 06/02/2015. The letter heading says Prudential, DBOPS Deferred Admin Team, Bulk Annuities so I assume it is a Bulk Annuity.
I am not sure why the FAS got involved. A letter dated 21/04/2012 states ' the pension scheme has satisfied the qualifying conditions for the FAS'.
Reduced benefits offered £1137.00/per annum which has a dependence pension following death of £568.00
Lump sum of £5000.00 with £972.00 per annum dependants pension on death £568.00
Spoke to FAS if this was taken they would still top up as required at normal retirement date.
The amount can increase with retail price index.
Having given a surrender value last March I would assume that the transfer out would be similar or higher.
I don't know what would happen to the FAS top up.
The 25% tax free and the remainder was what we were hoping to be able to take. We are not worried about having to pay tax on the remaining 75% as the project should provide sufficient income to cover this.
We are also on low incomes so could, perhaps, recover this.
We weren't expecting to live off my pension, but hoped with the change of regulation, we could make our investment pay substantially more annually.
I think I am eligible for state pension in 2019.
Hope this is of help.