GAR pensions

Terron

£25k was the result of adding the two valuations together, £32k is the actual transfer value.

There is indeed very litle mention of a bonus in the document.

I always planned to sell the property, just held on to it a while to take advantage of the uplift from CrossRail (it is in Reading).

Selling the property would keep me under the threshold. My net income would be roughly the same, but under the new rules finance costs of my BTLs would not be deducted when calculating the tax rate. I would be close and the GAR income might put me over.

The GAR does increase if delayed, but not rapidly. At 65 it would be 12.2%.

Terron

I have emailled Aviva asking about paying in extra.

atush

Take advantage of the flexibility of income options under the new pension reform rules, and the ability to take more income earlier in your retirement than your GAR allows. Once the GAR has been taken, under current legislation it is not possible to reverse this decision


The ability to access your tax free cash without taking income

Access your tax free cash without taking income and at the maximum regulatory level of 25% of fund value.

Take advantage of improved death benefits.

Option one is a possible reason, but not a huge reason.

Options2/3 are the same reason, and you should be able to get your 25% TFLS anyway before the GAR- have yu checked this?

Option 4 makes no sense, you dont need any death benefits as you have no one to leave the cash to?

Terron

Yes death benefits are unimportant.
Access to 25% tax free doesn't look important either, given that these are a small part of my overall pension pot. I should get enough from my other pensions.

It may put me abouve the HRT threshold, but I don't really mind that so long as I am being taxed on income I am actually getting.

The more I think about the less inclined I am to transfer the GAR pensions. Rather I think it would be worth contributing as much as I can to increasing them.

dunstonh

The more I think about the less inclined I am to transfer the GAR pensions. Rather I think it would be worth contributing as much as I can to increasing them.

have you had it verified you can increase them? It would be extremely rare for you to be able to increment a S226 RAC nearly 30 years after the Govt abolished them for new business. Generically, you would expect most to be closed for increments and only those with a contractual increase built in still able to contribute to that level.

Terron

As I wrote I have emailled Aviva but they have not yet replied.

Both policies have clauses saying I can pay in more, prior to the benefit date.

The one that started off as regular payments allowed for 1 years of premiums (~£420) payable on the anniversary of the commencement date. It is too late for this year so only one such date remains. Also it was converted to a paid up policy when I moved to a job with a pension scheme, but the effects of that are not fully defined in what I have.

The other is more flexible. I started it with a lump sum, and paid another in the following year. It says I may pay in additional sums "at any time and from time to time" unless the "policy ceases to be to be approved" by the inland revenue or I remain an individual 'chargeable to tax in respect of "relevant earnings"' "or, would but for an insufficiency of profits or gains, be". It looks like I should be able to add to that one.

dunstonh

Both policies have clauses saying I can pay in more, prior to the benefit date.

Were those clauses written after 1988 when the Govt closed S226 RACs for new business and increments?

Terron

dunstonh wrote: »

Were those clauses written after 1988 when the Govt closed S226 RACs for new business and increments?

They were written in 1985. New business was stopped by the government in 1988, but I don't think increments were. I have seen several web sites saying they were not. This is from a Norwich Union document from 2002

New plans are not being written, but new members and increments are permitted to existing Group Personal Pension plans and increments to existing Individual Personal Pension Plans and Free Standing Additional Voluntary Contribution Plans.

dunstonh

They were written in 1985. New business was stopped by the government in 1988, but I don't think increments were.

I have never come across a section 226 that allows increments above the amount that was being paid in 1988. I have been told they exist but are extremely rare. You would ask the question as to whether it can be incremented but the expectation in the majority of cases is that the answer would be no. Some may be in payment holiday and allow reinstatement if you pay the back amounts. Some have an RPI or other indexation that as in place by 1988 but that is typically the only way to get extra money into them after 1988

This is from a Norwich Union document from 2002

New plans are not being written, but new members and increments are permitted to existing Group Personal Pension plans and increments to existing Individual Personal Pension Plans and Free Standing Additional Voluntary Contribution Plans.

Notice there is no mention of the a section 226 RAC in that list?

Aviva, like most providers, tended to introduce new versions of their products at various stages. They would close their old product for new business but still allow increments for those that already had them. This was not a problem as there has been no changes in legislation affecting personal pensions since 1988 when they were introduced (and FSAVCs no longer exist as they were reclassified as personal pensions).

I'm afraid you are misunderstanding what that document is saying. it is referring to products that are still allowed contributions in legislation but are no longer open for new business by the choice of the provider. A section 226 RAC was not at the choice of the provider. It was a change in legislation

Terron

The list includes "Personal Pension Plans" which is what mine are called. It is part of a longer list that appears to be all Norwich Union policies and that section looks the best match for mine.

I am certain that people were able to continue paying into such policies past 1988 as I continued to make regular payments until 1989.

I found a L&G document about old policies which says that additional contributions can be made to a type of policy they stopped selling in 1987, which indicates that the government did not forbid such contributions.

The document appears to be a valuation of Norwich Union made when Aviva took over . I am not allowed to post a link to it.