Am I mad

thebullsback

Hi everyone ,I have a Defined Benefits Pot with Aviva which stands at £16969 .I have not paid into this policy for many years.
Contacted Aviva today as I know it has a GMP attached to this policy wanting to know the GMP value on maturity in 2024?
Boom £349.87 per year.
Whats the best way to get as much out of this pot now as £350ish a year is a joke to me considering the pot size now.
Thank you for reading

woolly_wombat

thebullsback wrote: »

Hi everyone ,I have a Defined Benefits Pot with Aviva which stands at £16969 .I have not paid into this policy for many years.
Contacted Aviva today as I know it has a GMP attached to this policy wanting to know the GMP value on maturity in 2024?
Boom £349.87 per year.
Whats the best way to get as much out of this pot now as £350ish a year is a joke to me considering the pot size now.
Thank you for reading

Suggest you get it in writing before taking further action.

Make it crystal clear that you want to know how much you with get pa from the maturity date.

The figures you have been quoted don't sound plausible.

PensionTech

Is this a GMP only policy? I would guess that it is instead a GMP underpin - so in 2024 you would get whatever annuity you could purchase using the whole pot - say £500 for argument's sake, of which £350 would be GMP. If the annuity you could purchase in 2024 is under £350 for whatever reason then your entitlement to the £350 would still be protected. So it doesn't necessarily mean that the policy will only pay out the GMP - unless of course that's what you've been told.

Having written that, I realise that I'm talking about a GMP underpin to a DC (Defined Contribution) policy. But you say this is a Defined Benefit policy. If it is, then you should almost certainly have some pension on top of the GMP. A Defined Benefit (DB) policy doesn't have a "pot" as such; it is a promise to pay a regular pension at a pre-determined level, and the "pot" value is actually the amount that the trustees of the scheme are willing to pay (to another scheme) in order to get out of the obligation to fulfil the pension promise. A DB pension usually consists of GMP and "excess" pension as well. Perhaps you're only looking at a part of your entitlement?

greenglide

Defined Benefits Pot with Aviva which stands at £16969 .

Is it really a defined benefit pension? DB pensions dont have a "pot".

If it is actually a Defined Benefit pension then £16,969 wouldnt buy much at all whatever you did.

How much did you pay in "many years" ago?

xylophone

Is this a GMP only policy?

See this thread

https://forums.moneysavingexpert.com/discussion/5245197

xylophone

The thread is long and more and more information keeps being added - perhaps post 64 onwards....

dunstonh

Whats the best way to get as much out of this pot now as £350ish a year is a joke to me considering the pot size now.

Doesnt sound like a defined benefit scheme. More likely a section 32 buy out bond. Whilst the £349 is the GMP, how much of it is excess? The GMP is a minimum. If the plan is going to exceed the minimum, then the GMP doesnt really come into play (in respect of what you get paid). i.e. if the pot was £17,000 on maturity and the annuity rate was 6% at 65 then that is £1020 p.a.

PensionTech

The OP did come on here and post more information saying that they had dug up a 2015 statement showing the full pension of £693 and the GMP element as £350ish. Oddly, the post was deleted, but this makes a lot more sense given the transfer value.

AnotherJoe

greenglide wrote: »

Is it really a defined benefit pension? DB pensions dont have a "pot".

One of mine does. The defined benefit is at least 1/80th final salary x years in scheme.

There is most definitely a pot associated. If i could get more than whatever the standard pay out is, based on an annuity from the pot, i could have that instead.

Initially it was envisaged that you would get more and the underpin was only there as a guarantee which would never be needed. Now its needed

thebullsback

A letter from Aviva june 2015;
Policy type UK Defined Benefit Sch Replacement.
The values quoted on the replacement policy represent the total pension available at your normal retirement date 5 February 2024.

From 5 February 2024 the total pension payable is £693.72 per annum , which is revalued on the following basis:-

GMP of £342.68 is revalued at3% per annum compound.
Pension of £351.04 (other than GMP) is revalued at 5% per annum compound.

Please note there is no revaluation on the pension from the date of leaving the Scheme 13 November 1991 to your normal retirement date of 5 February 2024.

dunstonh

Policy type UK Defined Benefit Sch Replacement.

That means it is not a defined benefit scheme. It "replaced" it.

From 5 February 2024 the total pension payable is £693.72 per annum , which is revalued on the following basis:-

GMP of £342.68 is revalued at3% per annum compound.
Pension of £351.04 (other than GMP) is revalued at 5% per annum compound.

So, this is referring to a hypothetical scenario for part of pension on a range of assumptions showing what the minimum could be. That is not the same as what it will actually be.