Personal pension and GAR

gocat

Im in the process of getting a pension from a personal plan. Im retiring on grounds of ill health. I went to see a pensionwise advisor and was told that some of the old pension plans had a GAR attached, and would be in my best interest to find out if my plan has a GAR.
So had another look at the Retirement pack that had been sent to me from Phoenix, and there is a pension plan summary where it mentions a Guaranteed annuity rate is available please see notes below on these guarantees. But Ive looked and looked and cant see any notes. All I can see with reference to guaranteed annuity is some Annuity illustrations shown but it says "this option does not use the guaranteed minimum annuity rates"
So Im confused. Why don't they mention what the GAR rate is and why don't they include it in their Annuity Illustrations.

If I phone up Phoenix. And ask them if there is a GAR and if there there is one, what it is, do they tell me a percentage e.g. yes you have a GAR of 10%
Is it usual for the pension companies to be so secret about any GAR .

Linton

GARs wont appear in the Illustrations because these are calculated on standardised assumptions. One of my pensions had a GAR and was with Phoenix.. The % was never stated as such but could be inferred from some of the other documentation. You should have no problems talking to Phoenix. I found their customer support line to be knowledgable and helpful. Certainly there is no secret about GARs. A guess - GARs are only available with old pensions managed by old software and at that time as there was no real practical ability to go elsewhere for an annuity the % GAR was regarded as a technical detail.

dunstonh

Why don't they mention what the GAR rate is and why don't they include it in their Annuity Illustrations.

The regulator sets the rules for illustrations. They can't include guaranteed annuity rates.

Is it usual for the pension companies to be so secret about any GAR .

I have dealt with thousands of policies from Phoenix and not once had any issues over GAR disclosure. They are not secretive about them. The GARs are recorded in the policy schedule/policy document. They are nearly always in the policy information pack (something advisers request when dealing with clients and their policies). They are required to be disclosed under the safeguard rules when you request to crystallise your pension.

A lot of Phoenix plans are now administered under what was the old Pearl Assurance software. Pearl closed in 2003. So, the hardware and software is old. They had a good layout for info in general and for a closed life company. Phoenix are pretty good on information requests and turnaround for info. Indeed, they put some open insurance companies to shame.

gocat

Thank you Linton and Dunstonh for your replies.
This gives me more confidence to phone them and then take it from there

dunstonh

I will just add that with Phoenix (and any insurer for that matter) that its best to get things in writing. Now, that is, in part, me speaking as an adviser that needs the audit trail. However, it is also in part down to experience where you get told something on the phone by a low knowledge call centre worker and turns out to be wrong (which happens far too often in my experience). If you get it in writing, it comes from behind the call centre from staff who know a bit more about things and the chance of error is far lower.

gocat

Ok thanks I have done that. I have a GAR of 7%
But cant take it out till Im 55 next year, even though I have managed to potentially get my pension on ill health.
So guessing will have till wait till then (luckily I can afford to) and then compare with other enhanced equities at the time.

So my question is, is this GAR on what they are saying they would pay me monthly now i.e. 7% on top of say £200 per month or does this include 7% on top of what would have been the 25% lump offered now e.g. lump sum £10000 would be £10000 + 7%
Not actual figures but just want to get an idea of what the GAR is.

tia

xylophone

http://www.pensionsadvisoryservice.org.uk/about-pensions/retirement-choices/buying-an-annuity-how-to-shop-around/guaranteed-annuity-rates

Linton

gocat wrote: »

Ok thanks I have done that. I have a GAR of 7%
But cant take it out till Im 55 next year, even though I have managed to potentially get my pension on ill health.
So guessing will have till wait till then (luckily I can afford to) and then compare with other enhanced equities at the time.

So my question is, is this GAR on what they are saying they would pay me monthly now i.e. 7% on top of say £200 per month or does this include 7% on top of what would have been the 25% lump offered now e.g. lump sum £10000 would be £10000 + 7%
Not actual figures but just want to get an idea of what the GAR is.

tia

Neither. Is your GAR for an inflation linked annuity or a flat rate? I will assume the latter and that your total pension is £100K. A non GAR pension would pay a market rate annuity - say £4500/yr ( I dont know the current annuity rates). Your 7% GAR would pay £7K/yr. But it will have conditions attached - typically retirement at 65. So you will need to check the exact conditions that apply to your pension.

You may find that because of your GAR it is not sensible to take the lump sum.

mania112

Yes there is normally a table of GAR's based on different retirement ages.

Unless you requested otherwise you would have been given the GAR for your default retirement age - probably 60 or 65. And if this is the case, age 55 will be lower and probably on a lower pension pot value.

To benefit from the guarantee you might have to take a single life annuity, which if you're married, might not be ideal - best to check that out too.

dunstonh

Which original company is it with. e.g. is it ex Pearl? If so, their GARs changed every 5 years starting at age 60. (so at 59 or earlier you got no GAR. At 60-64 you got one rate. 65-69 another rate etc.

At 55, you may find it is too early for the GAR to apply.

gocat

Oh wow so many replies, thanks guys

Will look at the link later thanks xylophone

Unless you requested otherwise you would have been given the GAR for your default retirement age - probably 60 or 65

My policy says on 55th birthday

Is your GAR for an inflation linked annuity or a flat rate?

Not sure. Will I have to ask that or should it be on the pension summary?

Which original company is it with

Sun Alliance. Way back in 1990 but I stopped paying into it in 2008 .