GMP Buy out - Section 32 Pension pot transfer - getting nowhere!

bemac

I am looking for information in regards to transferring a GMP policy created in the late eighties to an adjustable income policy. In recent conversations with the holders I have been informed that the policy cannot be transferred. Yet many Financial Advisors, The Govt Pension Wise team, CAB and the information available off the internet indicate that it can be.

My back story so far is. In 2014 due to ill health I was forced to give up my profession in Information Technology. In doing so I consolidated all my pension schemes to provide a monthly income and intended to supplement that with part time work until reaching retirement age and in receipt of my state pension.

Due to the Covid crisis I now find myself at risk of losing the part time work and the income it brings. With my age and the number of unemployed it is proving difficult to secure work and I am looking to provide for myself up until reaching state pension age. As I have a monthly pension, no mortgage or debts and some savings, the likelihood of benefits is zero.

As stated, all of my pension schemes, apart from this GMP one have been made to work and provide a reasonable income.

I have been advised it cannot be transferred due to any transfer making the policy less than the guaranteed amount. This amount was estimated to be around £4900 per year. Which may have been reasonable, but many things have changed since the policy was set up. Given that the purpose of the plan is to supplement income in retirement it can be put to better use.

I am asking to transfer the pot into a flexible draw down policy and take £175 a week from it. Effectively fully retiring.

This would mean I would have an annual income consisting of:

£9360 (current pension) + £9100 (flexible draw down) – a total of £18,460 a year until I reach state pension age. At which time the annual income would include the full state pension £9110.

Over time the draw down would obviously diminish but I would still have an income of £18,400 (inflation linked). This given I have no dependents, mortgage or debts is more than adequate and far exceeds the GMP value.

My questions therefore are:

Can a GMP be transferred, if not what are the circumstances that prevent it and can they be challenged

If it can how can I achieve this and what costs are involved?

Many thanks for you time so far I look forward to your response.

Dox

bemac said:

I am looking for information in regards to transferring a GMP policy created in the late eighties to an adjustable income policy. In recent conversations with the holders I have been informed that the policy cannot be transferred. Yet many Financial Advisors, The Govt Pension Wise team, CAB and the information available off the internet indicate that it can be.

If your S32 pension holds enough funds to honour all the rules of the pension when it was initially bought out, then you can transfer out now to a different provider. I think this could be the crucial fact that is being overlooked when you've asked the question/checked on the internet.

If it doesn’t (and bear in mind you can't add further funds now to 'top it up', even if you wished to do so), transferring a section 32 pension becomes more difficult or indeed impossible. It all depends on the specific details and guarantees of your original pension. 

Sounds as if there isn't enough to meet the GMP liability, so that's the reason you can't transfer. You can challenge, but you won't succeed, I'm afraid - the provider is acting correctly from what you've said.

xylophone

https://www.thisismoney.co.uk/money/pensions/article-3680749/I-want-pension-freedom-trapped-section-32-buyout-plan.html

https://techzone.adviserzone.com/anon/public/pensions/Tech-guide-guaranteed-min-pen#anchor_5
 under GMP under money purchase buy out contracts.

bemac

Dox said:

Sounds as if there isn't enough to meet the GMP liability, so that's the reason you can't transfer. You can challenge, but you won't succeed, 

 Thanks for the response, I am kind of at the point of accepting failure, though there is no harm in rocking the boat. The issue I suppose is not knowing the GMP "full" liability. So far all they have said is £4900pa from age 65 - there must be more to it and if there is I am having trouble determining it.

bemac

Thanks for the response it is an interesting if politically phrased article.

A few key phrases in the article:

"Contracting out has been phased out and is no longer available as a future option, although will affect people for some considerable time due to historical decisions."

"regretting a decision to spurn a traditionally generous final salary pension,"

Hmmm Final Salary pensions were by and large missold - mine was "changed" as they couldn't afford it...but that is another area - any out of work PPI agents fancy a new line to follow?

As one person commented, "like platting fog"

Will keep on though really don't expect anything due to historical red tape and no one applying commonsense to peoples financial situation.

elouise01582

I take it that it is your existing pension provider who are stating there are insufficient funds to cover the £4,900pa GMP at age 65? If so then can any other pension annuity provider do so.  Also some used to be able to step back the GMP income so that say it increases at 3%pa then they ensure at that rate by age 65 the income is the required £4,900.  You need to find out if that makes any difference to your existing pension provider who has the GMP liability.

elouise01582

Most GMP liabilities include a requirement to include a 50% spouse's pension - yes even if you do not have a spouse - that's pretty much the full extent - you do need a breakdown between pre '88 and post '88 GMP also as some escalates and some does not.

elouise01582

Other considerations: ill-health & triviality

Ill-Health: In the event of the member's ill-health, a pension scheme can offer to pay benefits before the normal minimum pension age of 55. But if the benefits include GMP rights, they can only be paid out early on grounds of ill-health where the revalued GMP benefit promise from age 60/65 is covered.

If the member's life expectancy is less than a year, uncrystallised pension funds can generally be paid as a lump sum under the serious ill-health rules. Where GMP rights are involved, the amount of the lump sum depends on the member's marital status:

• Single - the full value of the GMP rights can be paid as a serious ill-health lump sum.
• Married or in a civil partnership - the scheme needs to keep sufficient funds to provide the survivor's GMP. The balance of the value of the GMP rights, if any, can be paid out as a serious ill-health lump sum.

Marcon

bemac said:

Dox said:

Sounds as if there isn't enough to meet the GMP liability, so that's the reason you can't transfer. You can challenge, but you won't succeed, 

 Thanks for the response, I am kind of at the point of accepting failure, though there is no harm in rocking the boat. The issue I suppose is not knowing the GMP "full" liability. So far all they have said is £4900pa from age 65 - there must be more to it and if there is I am having trouble determining it.

There seem to be various answers on this thread which don't actually have much relevance/add much to your understanding, so I'm not surprised you are confused.

Rocking the boat, as you put it, simply creates needless work at a time when pension providers are under massive pressure. Dox has already explained the position (correctly), but if you want it stated again, have a look at https://www.onlinemoneyadvisor.co.uk/pensions/pension-transfers/transferring-a-section-32-pension/

Some of the others posting on this thread would be well advised to do the same.

bemac

Marcon said

Rocking the boat, as you put it, simply creates needless work at a time when pension providers are under massive pressure. 

 Thanks for response, hear what you are saying its just that the provider isn't really saying anything I have asked twice now for an explanation on "why" and met with no real detail...the paperwork sent just states a "savings value", tells me there "are a number of options available " from other providers and then when I ask what are the options,they say "none its a GMP and the transfer value wouldn't meet the liability". But no explanations like, what is the transfer value, after several weeks they did offer that it would pay £4900 a year in two years, no indication of any other life/health benefits, no indication of spouse pension, never even had an expression of wish form! Speaking with the current holders, pre covid and during, is frustrating - they need to explain it better.

Marcon

bemac said:

Marcon said

Rocking the boat, as you put it, simply creates needless work at a time when pension providers are under massive pressure. 

 Thanks for response, hear what you are saying its just that the provider isn't really saying anything I have asked twice now for an explanation on "why" and met with no real detail...the paperwork sent just states a "savings value", tells me there "are a number of options available " from other providers and then when I ask what are the options,they say "none its a GMP and the transfer value wouldn't meet the liability". But no explanations like, what is the transfer value, after several weeks they did offer that it would pay £4900 a year in two years, no indication of any other life/health benefits, no indication of spouse pension, never even had an expression of wish form! Speaking with the current holders, pre covid and during, is frustrating - they need to explain it better.

I can understand that sort of response must be incredibly frustrating and completely agree that a better explanation might have saved a lot of time and grief. Sadly all too many administrators/pension providers aren't exactly great when explaining technical concepts.

They are right not to supply a transfer value, since that could lead you into believing you could transfer that amount elsewhere, and your next frustrated post would, quite reasonably, be along the lines of 'why give me a transfer value if I can't transfer' !

Can you find/have you read the paperwork which accompanied this buy out? I don't imagine it is a riveting read, but it might give you some of the answers. Your financial situation might have changed, but pension providers can't simply ignore the terms of the buy out contract they entered into at the time the deal was done, however inconvenient and annoying it must be.