phoenix life annuity quotation

xylophone

But surely the distinction between protected rights and non-protected rights has gone?

http://www.aviva.co.uk/retirement/news-views/frequently-asked-questions.html

"Protected rights were the value of the government's payments paid into your own pension arrangement. The money came from National Insurance contributions you made above those needed for the basic State Pension. If you contracted out of the State Earnings Related Pension Scheme (SERPS) or the State Second Pension, the government redirected your contributions to your personal pension instead. This was known as 'contracting out'.

Non-protected rights were the value of the payments that you and/or your employer made into your pension fund.

There used to be a difference between how you could use protected rights and non-protected rights benefits. When contracting out ended on the 6 April 2012 this difference ended and protected rights and non-protected rights are now treated the same."

jamesd

If contracted out before 1997 it was mandatory for pensions taking protected rights money to offer GMP. And GMP is a safeguarded benefit. So we can surmise that this is why there's a former protected rights pot here that has GMP attached to it. I'm presuming that there's a GAR associated with it as well that applies to the non-FPR pot, in part because I know that GARs were common when the GMP requirement existed and in part because I can see that the annuity rates for the two pots are similar.

Various requirements for protected rights money, like the requirement to buy a joint life annuity with it, have gone from 6 April 2012, and it was freely moveable just like any other pension pot. Until 6 April 2015 when the unhelpful folks at the Work and Pensions Committee added the restrictions on safeguarded benefits where the value of the benefit was £30k or more. At that point the FPR pots with GMP ceased to be freely usable if their value was too high.

dunstonh

But surely the distinction between protected rights and non-protected rights has gone?

It has. However, the guaranteed annuity rate that was put in place on protected rights originally will be applied to the former protected rights. So, the base point for former protected rights would be different to non-protected rights. However, some providers allow the GAR to be taken in a different way and when you select the same method for both, the adjustments often work out to be the same. If you dont ask for specific methods, they may just quote the default as originally set for that pot.

thebullsback

my wife will be 61 in october this year and she is in receipt of her NHS pension but has chosen to continue to work full time

dunstonh

thebullsback wrote: »

my wife will be 61 in october this year and she is in receipt of her NHS pension but has chosen to continue to work full time

Do the guarantees change over time? Very often the case that leaving the pension in does change it. Although some actually do not change a penny if left.

thebullsback

we are mystified as to why the two quotations are so different bearing in mind the small time gap.

jamesd

thebullsback wrote: »

my wife will be 61 in october this year and she is in receipt of her NHS pension but has chosen to continue to work full time

Thanks, Close enough for state pension deferral to be good but maybe not better than the annuity offer, depending on just what it is.

Still looks likely that borrowing is the best way to get a lump sum, then repay out of the income.

If there's money around to do it one thing she and probably you can do is exploit the nearly immediate access to personal pension money from age 55. In spite of the issues you're having now, those don't apply to any new personal pension you might set up because the issues you're encountering no longer affect new personal pensions.

That lets you do things like paying in and taking money out either immediately or after the tax relief has been added, if you don 't mind to withdrawals. One thing to be aware of is that after taking more than the 25% tax free lump sum from a pot like this the annual pension contribution allowance is reduced to £10k and carry forward is no longer allowed. This may affect her NHS pension because presumably her years still in service will be increasing its value and potentially by more than that. If that is an issue and the money is around the contributions can be made and the money not taken out until the reduction to 10k no longer matters.

The gain from this is the tax relief.

thebullsback wrote: »

we are mystified as to why the two quotations are so different bearing in mind the small time gap.

You're not the only ones who are mystified, same here, no way to know without asking them.

thebullsback

Spotted this note one quotations
1st quotation of £932 " This option uses the Guaranteed Minnimum Annuity Rate.
2nd quotation of £525 This Option does NOT use the Guarenteed Minnimum Annuity Rate.

Does this mean we have missed out on the GMA by delaying the choice ?

jamesd

Maybe. No way to know without asking them about the reason.

They might also have issues if they didn't mention an expiring limit in the earlier discussions and encouraged her to do things that delayed until after the limit expired. But rather than wondering, just ask and find out.