Old Exec PP/S32 with Protected Tax free cash of 37% not 25%

Silverwirerhino

Hello, I would appreciate a little information about a S32.
One of my MP Pensions has a guarantee. I had no idea until I came to look at transferring it out. Its and old single member Exec PP, paid up and it appears is now a S32.
I thought it had simply become a PP when my company closed, but it seems not. The information sheet says "this policy has a protected tax free cash entitlement .......blah blah ... and please find salary information form to enable us to calculate the max tax free cash available".  That sounded nice
They then say, they have worked out the entitled tax free amount. I've calculated that this is about 37% of the total transfer value. Even better.
There are no other guarantees. 
I've done a little investigation into the and ended up with the company saying...
1. If I transfer out to a SIPP for Flexi Drawdown (e.g. to Fidelity) I will lose this entitlement and my tax free cash will become the 25% norm.
2. To get the full 37% Tax free cash I would have to take out an Annuity (This makes me think any move to drawdown would lose the benefit) 
An Annuity at my current age is a no, no, so it looks like I will have to transfer and accept a percentage loss. I'm willing to do this.
But who knows? Pensions are a maze of rules and I'm sure I haven't identified all of them. And it wouldn't surprise me if each company had a different view.
I'd really appreciate any help/views of the two points above. I have read of ways around it e.g. 'a blink of an eye transfer'?, but my company has not heard of this.

ffacoffipawb

Silverwirerhino said:

Hello, I would appreciate a little information about a S32.
One of my MP Pensions has a guarantee. I had no idea until I came to look at transferring it out. Its and old single member Exec PP, paid up and it appears is now a S32.
I thought it had simply become a PP when my company closed, but it seems not. The information sheet says "this policy has a protected tax free cash entitlement .......blah blah ... and please find salary information form to enable us to calculate the max tax free cash available".  That sounded nice
They then say, they have worked out the entitled tax free amount. I've calculated that this is about 37% of the total transfer value. Even better.
There are no other guarantees. 
I've done a little investigation into the and ended up with the company saying...
1. If I transfer out to a SIPP for Flexi Drawdown (e.g. to Fidelity) I will lose this entitlement and my tax free cash will become the 25% norm.
2. To get the full 37% Tax free cash I would have to take out an Annuity (This makes me think any move to drawdown would lose the benefit) 
An Annuity at my current age is a no, no, so it looks like I will have to transfer and accept a percentage loss. I'm willing to do this.
But who knows? Pensions are a maze of rules and I'm sure I haven't identified all of them. And it wouldn't surprise me if each company had a different view.
I'd really appreciate any help/views of the two points above. I have read of ways around it e.g. 'a blink of an eye transfer'?, but my company has not heard of this.

Losing the extra 12% tax free cash is a hit of 2.4% (in extra tax) for a basic rate taxpayer and 4.8% for a 40% taxpayer. Markets can move that much in a week, sometimes even a day.

Dont let the tax free cash tail wag the taxable dog.

You will lose far more by annuitising at a young age. Unless I was 70 plus, I would transfer.

Silverwirerhino

Wise words, sometimes its easy to get tied up in the detail rather than look at to bigger picture. Thanks.

Albermarle

If I transfer out to a SIPP for Flexi Drawdown (e.g. to Fidelity) 

As will be giving up  some guaranteed benefits , you can not just transfer to a SIPP online .

Probably you will have to have a telephone discussion with the SIPP provider so they can be  sure that you are fully aware of what you are giving up and fill in a form and sign it . They may even insist you get financial advice but probably not if you are just giving up some tax free cash status.

xylophone

https://www.gov.uk/government/publications/pension-benefits-with-a-guarantee-and-the-advice-requirement/pension-benefits-with-a-guarantee-and-the-advice-requirement

4.3 Scheme specific protected tax-free lump sums

Members who had a right to more than 25% tax-free cash on 6 April 2006 may still have their tax-free cash entitlement protected. However, as this relates to a lump sum rather than a secure retirement income, it does not constitute a safeguarded benefit, provided that there are no other safeguarded benefits attached to the policy.

https://forums.moneysavingexpert.com/discussion/6026867/section-32-pension-about-to-close-what-to-do/p1 may be of interest.