Confusion Section 32 and two funds?

xylophone

There is a lot of unanswered logic going on here and it's that that I want to open up. There must be a reason why two pots were started - this action was never explained.

As in last sentence in my post 7 above ie

Check with your provider.


The link says

If investment returns or bonuses are poor, there may not be enough money in the fund to fund/cover/pay for the increased/adjusted GMP pension.

In these cases, it may mean that you lose some or all of any normal pension benefit you transferred inside the S32 as these may be used to help with any GMP shortfall.


But see post 11.

You need to read your own documents and ask your provider about your situation.

jamesinnewcastle

Thanks All

Basically, if the funds are completely seperate I don't see why I need a Financial Advisor to do anything with the non-GMP part of the pension. All I want is to convert the non-GMP part of the pension to a draw-down and take 25%.

However it seems that Aegon are attaching the legal requirement for a IFA with a GMP fund to the non-GMP part. It makes no sense if the funds are not related.

Going to an IFA is like asking a garage to change your oil and having the mechanic charging you 2% percentage of your life savings.

Cheers
James

cloud_dog

Why don't you just transfer out the non-GMP part and then do what you like with it?

xylophone

Why don't you just transfer out the non-GMP part and then do what you like with it?

It seems from what the OP says that the situation with his policy is that it is like your OH's in that the "GMP element" is "ringfenced" and will either fund the GMP by virtue of growth/bonus or if not, Aegon will stand the loss and meet the GMP.

This would indicate that the "excess" element is a separate segment and can be transferred out.

The question then is whether this segment is a "safeguarded benefit"?

Or does it count as a "safeguarded benefit" simply by virtue of being part of a S32 policy?

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/495377/pension-benefits-with-a-guarantee-factsheet-jan-2016.pdf

Providers should consult their legal advisers to clarify whether benefits under specific pension arrangements or policies are safeguarded, and how to value particular safeguarded benefits, if they are unsure.

jamesinnewcastle

Hi

What I am driving at it this:

The protected and non-protected funds are completely seperate and so the Pension company can have no legal or moral right to prevent my access to the non-protected fund by placing unusual conditions on my access - it is no different from a simple defined benfits pension and should be treated the same way. I don't intend to touch the GMP fund so it need never be mentioned again! So looking at the two likely scenarios...


Scenario 1

When the Pension company received my lump sum they divided it into two, one fund they calculated would grow enough to pay the GMP and the other they invested as a back-up plan in case they got it wrong with the other fund. To prevent the loss of their back-up fund they make out that the non-protected plan is somehow intimately connected to the GMP fund and that they could dip into it when the time came.. Loads of things wrong with that of course. 1. They are responsible for any shortfall - Not ME! 2. They are using my fund without permission! 3. They should have been moving funds across well before the plans matured to make up the shortfall early.


Scenario 2

When the company received my lump sum they divided it into two, one fund they calculated would grow enough to pay the GMP and the other was excess to that need as they saw it and so they just popped into another plan. And, as they have done, they reported on the two funds completely seperately for all the years it has been running.


I would challenge the legality of scenario 1 and the simplicity of scenario 2 is clearly the most likely.

I am currently challenging my Pension company to explain how they regard the two funds - this should be interesting.

Cheers
James

cloud_dog

Utilising the the non-GMP fund to subsidise a shortfall is commonplace in these types of pensions and is detailed in the pension documents. Why do you think we transferred out the OH non-GMP fund.

This is obviously a bone you are keen to chew on, and that is your prerogative so, good luck.

walter_wobblebottom

Just a comparison.My section 32 has two parts.The main part being the GMP portion.Some years later I won a miss-sold case with this transfer.I was awarded a lump sum that ran at the side of the main GMP fund.So now the section 32 had two parts.One part that guarantees the GMP(along with any bonuses that may or may not be added),and part two that doesn't have a GMP which has its own separate benefits.I am not allowed to "cash in" any of the part two on its own.Its either cash in both parts or none of them.The ombudsman made that decision.

walter_wobblebottom

cloud_dog wrote: »

Utilising the the non-GMP fund to subsidise a shortfall is commonplace in these types of pensions and is detailed in the pension documents. Why do you think we transferred out the OH non-GMP fund.

This is obviously a bone you are keen to chew on, and that is your prerogative so, good luck.

The ombudsman ruled in my case that the pension provider must not use any of the non GMP fund to subsidize any shortfall in the main GMP fund and I have a written statement from the pension provider to that effect as instructed by the pensions ombudsman.

xylophone

Basically, if the funds are completely seperate I don't see why I need a Financial Advisor to do anything with the non-GMP part of the pension. All I want is to convert the non-GMP part of the pension to a draw-down and take 25%.

However it seems that Aegon are attaching the legal requirement for a IFA with a GMP fund to the non-GMP part. It makes no sense if the funds are not related.

Have Aegon advised that you are able to transfer out the "excess" segment, leaving behind the GMP segment, but that they will require you to take financial advice first?

If so, see link in post 5 above.