Section 32 options

charoniv

I've had a letter about my old pension plan giving me options about taking an annuity now - which might be better than waiting for the GMP. (No dependants).
I'll be talking to my adviser (or his replacement).

I'm 61 and the state pension age would be 66.
The GMP is £3,023.88 in 2021
Offer is £2,182.08 increasing 8.5% guarantee to 2021 - payment 2021 would be £2,787.36. (+ lump sum £2,192.92 inc interest to cover missed year.) It looks like I still get the GMP of £3,023.88 from 2021 onwards.

I don't need the money now and was assuming I would wait for the GMP to kick in.
I can vary other income so I don't think it will affect my income tax situation. I'm probably retired(Ish).

I'm wondering what would be the benefit of waiting.
I think the GMP will increase - if I take this annuity now is that still the case or would it be fixed to 3023.88

It looks like I've been allocated an amount from my 60th birthday to state pension age which I can start taking as an annuity at any time plus a lump sum to cover the deferred years.
I this just an amount I can take any time from now to 2021 - in which case maybe there's no reason not to take it (in case the rules change)?

Seems remarkably beneficial - maybe there was something that said I should have received the GMP from my SRD, 60, and this is to cater for that - or is this to compensate for losing the GMP increase?

Thanks for any input about this.

xylophone

http://www.financialadvice.net/s32_buy_out_plan/zone/1288

https://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/18/what-is-a-gmp/

Is it all pre 88 GMP?

Is there any excess?

Is it an Aviva plan?

You are male?

Have you obtained a new state pension statement?

https://yourstatepension.campaign.gov.uk/?utm_source=Mail-Online&utm_medium=Partnership&utm_campaign=GTKY

charoniv

>> Is it all pre 88 GMP?
Yes. I guess that's why it's 8.5%?

>> Is there any excess?
If you mean IRS the fund cover the GMP, I don't think so - it stopped paying any bonuses a long time ago.

>> Is it an Aviva plan?
Yes

>>?You are male?
Yes


>> Have you obtained a new state pension statement?
Not since the last one came though.

Thanks for the response but does any of this affect things?

xylophone

https://forums.moneysavingexpert.com/discussion/5439551

Probably explains the offer.

Being male your GMP age is 65 rather than 60 (even though SPA has changed).

If the whole pension is pre 88 GMP, there is no obligation to pay any increase after GMP age.

It may well be worth obtaining a new state pension statement to check on your "starting amount".

http://www.scottishwidows.co.uk/Extranet/Literature/Doc/FP0587

charoniv

Thanks, I'll read through the rest of that thread later but it seems to cover my case.

It sounds like I will be getting paid out from my 60th birthday and that doesn't affect the GMP which I will still get from 66 (currently). Does that sound right?

The way they sent it through with 3 options sounded like they might be materially different but it looks like they end up with a similar result. I'll probably start taking it next year in case things chage again.

charoniv

I've read through that thread - very interesting (apart from the odd unnecessary bits in the middle). I'm a bit surprised my IFA hasn't contacted me about this but I haven't heard from him for 2 years. I would expect Aviva to be copying him in as well but maybe not.

Think the only issue would be that taking the annuity might affect how much I could pay in to a pension plan from now on - I'm not planning to work again but who knows.

Anyway - think I now know enough to start contacting people about it.

greenglide

Think the only issue would be that taking the annuity might affect how much I could pay in to a pension plan from now on

Taking an annuity has no affect on future contributions so shouldnt be a problem.

Taking money under the new drawdown rules triggers the limit of £10,000 per year (currently) or £4,0000 from 6th April.

xylophone

Taking money under the new drawdown rules triggers the limit of £10,000 per year (currently) or £4,0000 from 6th April.

I wonder if this would be the case with a S32 pension which as a "deferred annuity" is akin to a lifetime annuity or scheme pension?


What events don’t trigger the MPAA?
The MPAA will not be triggered by any of the following
payments:
• Pension Commencement Lump Sum (PCLS) from
a flexi-access drawdown arrangement (i.e. no
income taken)
• A trivial commutation lump sum
• Small pots commutation lump sum
• Receipt of a scheme pension
• Receipt of a lifetime annuity

charoniv

Thanks.
Thought it would trigger the reduction.
Doesn't really matter as I think I have enough in my pensions - getting too risky with regard to changes in legislation.

Doesn't seem to be any reason not to take the annuity and lump sum as I can adjust my other income accordingly next year.