Gmp---s32

yorkshireOAP

I have a pension S32 with Guardian Financial. I am trying to access up to 25% under new pension rules. GFI keep telling me it is a GMP so cannot have early pension OR lump sum. Not even lump sum on retirement! My NRD is June next year, but am to continue working.
Because of cicumstances I require some funds now. Surely, surely this aspect of pensions should have been addressed by Mr. Osborne under the new regs. They have asked If I want to transfer to another company of my chioce but too much to lose. Fund value is £40.

Any way of geetting them to release funds??

dunstonh

I am trying to access up to 25% under new pension rules. GFI keep telling me it is a GMP so cannot have early pension OR lump sum. Not even lump sum on retirement!

Section 32 buy out bonds are not personal pensions. They have different rules applying to them.

surely this aspect of pensions should have been addressed by Mr. Osborne under the new regs.

No changes were needed by the chancellor. The existing rules didn't require any changes.

Any way of geetting them to release funds??

They have already told you that you can by transferring to another company and giving up the GMP.

When you say £40, that is clearly a typo. Can you clarify the actual amount as it may dictate whether advice is mandatory or not. Although many receiving schemes will require you do it under advice if you are giving up the GMP.

Have you worked out whether giving up the GMP and taking the 25% is the financially better option than not taking the 25% and keeping the GMP?

yorkshireOAP

Yes, typo . Fund value is 40K.

yorkshireOAP

Present fund will give pension of £3800 pa. Transfer to best policy and take 25% will give pension of £1900pa according to my FA. No brainer.

dunstonh

yorkshireboy wrote: »

Present fund will give pension of £3800 pa. Transfer to best policy and take 25% will give pension of £1900pa according to my FA. No brainer.

So, why are you posting here if your FA has already recommended an alternative? Surely the FA told you what I did.

Is it a no-brainer. There is going to be indexation on that £3800pa. So, its going to be under 10 years to recover the fund value.

Whereas £10,000 lump sum and £1900 is going to take over 15 years to recover the fund value and will never catch up with the indexed option with the GMP. Plus, you may be penalised via the state pension depending on the years that the GMP relate to if you give the GMP up.

woolly_wombat

dunstonh wrote: »

There is going to be indexation on that £3800pa.

The OP has stated that their NRD is June next year.

I thought that indexation of GMP was due to cease from 6 April 2016.

….or have I missed something?

xylophone

Indexation through the state scheme is ending.

If the GMP includes post 88 GMP, then indexation up to 3% on that part should be provided through the pension policy.

Even had the old state pension arrangement continued, it is quite possible that the policy holder would have seen no indexation on pre 88 GMP for a long number of years if the "fixed rate" method had been used by the insurer to revalue the GMP in deferment.

It is unclear whether the pension offered is all GMP (and if so how split) or whether there is GMP and excess.

If there is excess then a PCLS might be available. Some sort of indexation on the excess might be available.

Presumably the OP's IFA would have looked at all the circumstances?

dunstonh

woolly_wombat wrote: »

The OP has stated that their NRD is June next year.

I thought that indexation of GMP was due to cease from 6 April 2016.

….or have I missed something?

The annuity option built into most S32 buy out bonds is often indexed. Sometimes through requirement. Sometimes as the default priced option. This is why I mentioned "depending on the years that the GMP relate". There are a lot of variations here that could apply as we have limited facts. We dont know how much the GMP is and how much is excess (if any) for example. The £3800 income on £40k fund suggests a high level of GMP.

However, even if you look at the worst case scenario, the transfer to get 25% lump sum and £1900 does not look favourable compared to £3800 p.a. level (let alone indexed).