frozen pension advise please

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
24 replies 3.2K views
steveh6874steveh6874 Forumite
23 Posts
Eighth Anniversary 10 Posts
Hi everybody i need some pension advise please , i have a frozen pension of £23.500 it is a money purchase pension with a GMP underpin Should i transfer this into my current workplace pension where i have a bigger fund
I dont really understand what the frozen pension is really and if it as any special features or anything but i just feel with it being a low value fund i wouldnt gain anything much from the features anyway,

I wont be charged a transfer fee if i did transfer so i am seriously considering transfering

Any advise would be very much appreciated

Thank You
«13

Replies

  • xylophonexylophone Forumite
    38.2K Posts
    Part of the Furniture 10,000 Posts Name Dropper
    ✭✭✭✭✭
    i have a frozen pension of £23.500 it is a money purchase pension with a GMP underpin

    Not frozen but deferred?

    The Scheme (at GMP age presumably) offers you the better of the MP benefits (which hopefully have shown investment growth over the years) OR the GMP revalued to GMP age?

    Is the GMP pre 88/post 88/both?

    How is the GMP revaluing in deferment (fixed rate? full rate?)


    If fixed rate, what is the expected value at GMP age?

    Because of the underpin, if the value of the benefits is greater than £30,000, the advice of a pension transfer specialist would be required before transfer out.

    https://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/18/what-is-a-gmp/
  • BrynsamBrynsam Forumite
    3.6K Posts
    Fifth Anniversary 1,000 Posts Name Dropper Combo Breaker
    ✭✭✭✭
    £23,500 is lower than £30,000 so advice not needed.
  • greenglidegreenglide Forumite
    3.3K Posts
    Part of the Furniture Combo Breaker Hung up my suit!
    ✭✭✭✭
    But the underpin may be greater than 30k in which case it would be required?
  • xylophonexylophone Forumite
    38.2K Posts
    Part of the Furniture 10,000 Posts Name Dropper
    ✭✭✭✭✭
    £23,500 is lower than £30,000 so advice not needed.

    The OP does not state whether the figure he gave included GMP revalued to GMP age.
  • steveh6874steveh6874 Forumite
    23 Posts
    Eighth Anniversary 10 Posts
    hi everybody the pension is deferred and the value ive been given to transfer is £23.500 with the value of the GMP is £20,622 but it says guaranteed annuity rates do not apply to this plan which is very confusing

    The plan was started july 1988 and was deferred august 1991

    Its giving an example of guaranteed minimum pension as follows



    pre 1988 date of leaving £59 current value £417
    post 1988 £105 current value £740
    thank you for replies much appreciated
  • xylophonexylophone Forumite
    38.2K Posts
    Part of the Furniture 10,000 Posts Name Dropper
    ✭✭✭✭✭
    How old are you?

    Have you obtained a new state pension forecast?

    https://www.gov.uk/check-state-pension
  • xylophonexylophone Forumite
    38.2K Posts
    Part of the Furniture 10,000 Posts Name Dropper
    ✭✭✭✭✭
    The plan was started july 1988 and was deferred august 1991

    Then how can you have pre 88 GMP?

    Service from 6th April 1978 to 5th April 1988 becomes the Pre 88 GMP, and service from 6th April 1988 until 5th April 1997 becomes the Post 88 GMP.

    Ask the administrator to confirm how the GMP is revaluing in deferment.

    A guaranteed annuity rate is not relevant in this case - at scheme retirement age (65?) your pension is based on the better of the GMP or the DC pension?

    The revalued post 88 GMP must escalate in payment up to 3% CPI.
  • steveh6874steveh6874 Forumite
    23 Posts
    Eighth Anniversary 10 Posts
    ive been in touch with the provider and received the following

    the gmp underpin is the minimum amount of pension we are allowed to pay upon your 65th birthday

    upon retirement your MPTfund is converted into a pension per anim , if the the pension provided by the MPT fund is lowerthan the GMPpayable then the underpin bites and the benefits would not become payable until the earliest of age 62

    for example

    if the GMPunderpinon your plan was £100pa this would be the minimum amount we could pay from age 65 , if the MPT fund was to provide a pension of £800pa we would be unable to pay you before the scheme retirement age of 62

    from age 62you would then receive £800pa and from 65 the pension would increase to £1000pa in line with the GMP payable
    if theMPT fund was to provide a pension of £1200per annum {after early retirement factors ad been applied } you would be able to this pension prior to scheme retirement age but not before 55
    as well as your pension the plan also provides an additional lump sum upon retirement and the plan provides a spouses pension of 50% upon your death



    so what i need to know is it better to stick with this pension even though its only a very small pension per annum or transfer into my workplace pension where it as the potential to grow more

    thanks for your help much appreciated
  • edited 7 October 2018 at 1:26PM
    luckyfool151luckyfool151 Forumite
    21 Posts
    edited 7 October 2018 at 1:26PM
    The info you have provided is not very clear and I don't think you have asked all of the relevant questions. For example.

    How old are you?
    What is the revaluation rate applied to your GMP from date of leaving?
    Do you definitely have pre and post-88 GMP?
    What is the GMP at SPA (State Pension Age)?
    Have they given you a CETV (Cash Equivalent Transfer Value)? If so is it higher than the current fund value?
    Will they let you take the GMP early if there is a funding shortfall if your NRD is less than SPA?
    Do you need a spouse pension?
    What is the growth rate/ projected fund value of your GMP fund?
    Is your other fund DC and what is its growth rates/projected fund at retirement?
    When would you like to retire?

    These are just some of the questions that you need to provide the answer to.
  • sandsysandsy Forumite
    1.6K Posts
    Part of the Furniture 1,000 Posts Name Dropper
    ✭✭✭
    steveh6874 wrote: »
    so what i need to know is it better to stick with this pension even though its only a very small pension per annum or transfer into my workplace pension where it as the potential to grow more

    thanks for your help much appreciated

    It looks like your GMP pension income is increasing in value at about 7.5% each year. That will continue until 65. That's a healthy rate of growth and would be hard to beat consistently, year after year, after charges, if you transferred. As indicated above, the income you get once you start taking it would also increase, although at a lower rate.

    It might be a small pension but it's already worth £1157pa. It might be helpful to retain as a guaranteed income if your other pensions are not guaranteed. If you were 65 already and the amount would start paying out immediately, it's unlikely you'd be able to better that level of guaranteed, increasing lifetime income based on the underlying transfer value.
This discussion has been closed.
Latest MSE News and Guides

Card providers to reserve up to £100

When you pay at supermarket fuel pumps

MSE News

Cheap contents insurance for tenants

DON'T assume your landlord covers you

MSE Guides

Summer sizzlers round-up

Incl £2ish sun cream & £1.50 disposable BBQs

MSE Deals