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

xylophone

Final Salary pensions were by and large missold 

 Nobody was "sold" a FS pension - it was a benefit (and a vey valuable one) provided by the employer, sometimes on a non contributory basis.

Employees could choose not to join the scheme although at one point it was made compulsory to join - I knew somebody who back in the fifties did not join (because he "couldn't afford it") - I can't tell you how grateful his widow was for the fact that he did eventually have to join.......

It seems that  some time between 1978 and the late eighties, you were a member of a Contracted Out Salary Related (COSR) pension scheme.

When you transferred in to the S32, the administrator of the old scheme would have had to provide a statement of your pre 88/post 88 GMP. Do you have a copy of the statement?

The insurer took on the liability of providing the GMP  (revalued up to GMP age) regardless of how well the investments within the  policy fared.

It is likely that the method of revaluation used was "fixed rate" - see here

https://www.barnett-waddingham.co.uk/comment-insight/blog/what-is-a-gmp/

This means that the insurer knows the minimum that must be provided at age 65.

It seems that the fund within your policy is simply not large enough to fund the GMP  and so transfer out is prevented. 

bemac

Marcon said:

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.

Understand that providers cannot simply ignore the original terms and to be fair the holders did say they cannot act until the rules are changed.

That is the next sticking point, "Is anyone actually looking at the rules to make changes?" I asked, the answer was no.

That is when I went on this mission.

There are probably many people in this situation, maybe £millions tied up in red tape. Yet no one is championing a change. A changed based on personal circumstances, possibly a better use of resources and commonsense approach.

Back in the day many relied on advisors to act on their behalf. I don't profess to be a pensions guru and I no doubt believe many advisors would be unable to undertake my previous skills in technology development. The issue I have though is the advisors to date are giving the advice that it can be transferred, the holders are the only ones saying not, despite this line in the options document sent to me, "Other providers might offer products more appropriate for YOUR NEEDS and CIRCUMSTANCES and may offer a HIGHER level of retirement income".

I am unable to find copies of the original paperwork which is disappointing but worse still, when asked, the holders have yet to provide it either.

The link to onlinemoneyadvisor is in itself open to interpretation.. 

"If you have enough funds to honour the rules, then yes it can be transferred" Yet to date the holders have not explained those rules.

"If it doesn't then it is more difficult" - "seek advice from an independent advisor". They then link to their own experts.

Bit wary here, as it was experts that derived these policies in the first place. Pension Wise, a Govt advisory center stated clearly it can be transferred, the holders stated it cannot?

The holders (and others) are now mumbling about penalty charges or high legal costs should I pursue it. Seems an odd statement by them and makes me suspicious of their motives.

Perhaps a letter to the Ombudsman, MP or Secretary of State for Works and Pensions - maybe all 3 - would start an inquiry in to the true value of these GMP's and where the money is. I am sure I can get my trade union to join me in raising the profile of these policies. I have arranged to discuss with them in the week.

Anything is better than what I have now:

A none transferable policy of £xxx,xxx that will yield £4900 a year supplement from 20/3/2023. Even though I have a guaranteed annual pension 5 times higher!

And we have to remember - however it was derived, it was and remains a policy unique to me and for me. I could just sit back and accept their position and not question it. But their nebulous responses have irked me and I have plenty of time to question how it is managed and if the terms remain valuable for me. 

Its not just a case of "winning" its about "knowing" the full facts in clear and concise terms.
You have been very helpful and given me new things to consider - I do appreciate yours and everyone elses input. 

xylophone

See https://forums.moneysavingexpert.com/discussion/1217859/section-32-buy-out-with-gmp/p1

I'm trying to get the GMP reinstated but with no luck so far. The pension was formally reviewed in 2000 when it was found that no compensation was due. I have since appealed to the Ombudsman who has not supported my case.
The most galling thing is that my husband also converted his final salary scheme with the same insurance adviser in 1989 but he has a "Section 32" plan which means he DOES have a GMP!! 

One person is happy about the rules and another isn't......

bemac

xylophone said:

Final Salary pensions were by and large missold 

 Nobody was "sold" a FS pension - it was a benefit (and a vey valuable one) provided by the employer, sometimes on a non contributory basis.

It seems that the fund within your policy is simply not large enough to fund the GMP  and so transfer out is prevented. 

"It seems" is the very term that is banded about that makes me cringe...how can you run a business without Knowing. "It seems " to me that GMP may work for others but not all and should be reviewed on an individual basis. Or perhaps, "it seems" its just another pensions merry go round - how many failed pension schemes have we had in 50 years?

As I have said previously, pensions advisors are employed to give us laymen the best products, "it seems" many failed.

The final salary I was provided/sold seemed really good until it was nearly time to cash in, them "it seems" the policy failed and replaced with decent one but not quite as good - as did many others.

It seems to me that advisors need more training and maybe accountability?

Tommyjw

bemac said:

Marcon said:

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

Perhaps a letter to the Ombudsman, MP or Secretary of State for Works and Pensions - maybe all 3 - would start an inquiry in to the true value of these GMP's and where the money is.

You know exactly what the value is, it is a defined amount that grows at a fixed rate.

You know exactly where your money is, it isnt hidden from you, it isnt locked away without a true value, you simply can't access it in the way you would like.  

hyubh

bemac said:

"It seems" is the very term that is banded about that makes me cringe...how can you run a business without Knowing. "It seems " to me that GMP may work for others but not all and should be reviewed on an individual basis.

'It seems' you are trying to have your cake and eat it... Neither the original final salary pension, the S32 policy, nor (in particular) the GMP was ever something to 'cash in' at a later date. Morever, if you had never been contracted out in the first place, you would have been contracted in to SERPS instead, i.e. earning additional state pension at the whims of future government policy - and the state pension even now is not something you can 'cash in', in any sense.  (As an aside, due to those whims, there's a good chance you are a gainer from the 2016 changes, whereas if you had been contracted in, a likely loser.)

The deal when you took the S32 policy was, the insurer would have money from the final salary scheme to create an investment pot, but if the pot on retirement would not fund an annuity equivalent to the revalued GMP accrued with the final salary scheme, you would get the latter instead. At the time this was to ensure you would be no worse off for having contracted out in the first place, in essence. However, what you are now wanting, it seems, is a cash equivalent value of that revalued GMP in order to take advance of rules introduced in 2015 for DC pensions with no sort of DB underpin. All very anachronistic I'm afraid...

"it seems" its just another pensions merry go round - how many failed pension schemes have we had in 50 years?

'Failure' in this context would your S32 pot is of lower value than the GMP and the insurer cannot pay the GMP. As that isn't the case, your situation is not one of a 'failed pension scheme' at all...

The final salary I was provided/sold seemed really good until it was nearly time to cash in

Even in 2020 a final salary scheme is not some sort of saving scheme that you 'cash in' at the end - it is for providing an income in retirement.

xylophone

The issue I have though is the advisors to date are giving the advice that it can be transferred, the holders are the only ones saying not, despite this line in the options document sent to me, "Other providers might offer products more appropriate for YOUR NEEDS and CIRCUMSTANCES and may offer a HIGHER level of retirement income".

I don't know what you mean by advisers.

You referred in your first post to Pension Wise, CAB and the internet - when you spoke to Pension Wise/the CAB and checked on the internet, did you seek specific information concerning a S32 policy?

Below is what I found when checking Pension Wise :

https://www.pensionwise.gov.uk/en/after-your-appointment

"You should have had a phone or face-to-face appointment with a Pension Wise guidance specialist.

Some information in the summary may not apply if during your appointment we found that you:

• have a Section 32 arrangement – you may not be able to transfer your pension"

xylophone

And from the internet
https://www.financialadvice.net/s32_buy_out_plan/zone/1288

In summary, your S32 Buy Out policy may have two elements to it

• Guaranteed Minimum Pension (GMP) - the scheme must guarantee to pay at least this at retirement.  The GMP increases in value each year, depending the year your left the company scheme.
• Non GMP (normal pension benefits) - sometimes known as the Excess Over GMP.  Any pension benefits that are not linked to providing the GMP part are known as excess pension benefits. 

GMP Shortfall - What if S32 Buy Out Returns are low?

• 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.
• If this is the case, the S32 Buy Out Provider is unlikely to allow you to transfer the S32 pension elsewhere
• They will stand the loss and make up the shortfall.
• In these cases, it may mean that you lose some or all of any normal pension benefit your transferred inside the S32 as these may be used to help with any GMP shortfall.

minty777

I was wrongly sold one of these section 32 plans in the early 1990's.I won a miss sold claim in or around the year 2000.The firm that sold it to me was'nt in business any more so some governing body investigated on my behalf.I was awarded a second section 32 pension with its own separate benefits that runs at the side of the original section 32.Both payout on my 65th birthday.The original plan has a GMP.The compensation plan doesn't have a GMP but has a guaranteed  maturity amount,it's in the £ thousands.

elouise01582

Have you already explored the advice route for claiming benefits early from your plan? Due to the GMP being classed as a safeguarded benefit the Adviser would need the pension transfer qualification but they may be able to get more out of your provider than has been gleaned thus far? Info on safeguarded rights can be found here: https://www.gov.uk/government/publications/pension-benefits-with-a-guarantee-and-the-advice-requirement