unable to access pension

Fife59

hi all

I am writing this for my OH

he came out of SERP , took out a pension with royal london which he now wishes to transfer to a drawdown or uncrystalised fun account. The transfer value of which is at present £70k with a DB of a GAR of £2510 

he in now allowed to move it without financial advice as its over the threshold . He is unable to source a FA , he has tried many and no one is interested for various reasons eg to much legislation, time, not big enough pot.

Can anyone give us suggestions on how to progress . I know its not a big pot compared to some but its a big pot to us and getting access to it would be great

thanks 

molerat

https://www.unbiased.co.uk/

dunstonh

he came out of SERP , took out a pension with royal london which he now wishes to transfer to a drawdown or uncrystalised fun account. 

He is already in an uncrystallised "funds account".  So, transferring to achieve that is not necessary.   However, drawdown is something it wont do without transfer.

he in now allowed to move it without financial advice as its over the threshold . He is unable to source a FA , he has tried many and no one is interested for various reasons eg to much legislation, time, not big enough pot.

Overriding a GAR is a very high-risk transaction. Almost up there with DB transfers.    To give you an idea, PI insurance renewal proposals (the liabity cover advisers have to have in place) ask for specific details of each and every GAR override an adviser has done.  Not just the raw numbers but actually a summary of each and every case and the justification.   Each one an adviser firm does increases their annual PI insurance premiums forever more.   And if the PI insurer doesn't like the justifications they could refuse to offer terms or price it higher risk.   And at the moment, there are only around 5 insurers offering PI insurance. 

So, you need pretty good justification for doing it and it needs to be commercially viable for the IFA as they will still be paying for your transaction in 10 years time.

Can anyone give us suggestions on how to progress . I know its not a big pot compared to some but its a big pot to us and getting access to it would be great

What you have actually said there makes it even more likely that transferring it to drawdown would be considered unsuitable. (just that bit in isolation as we dont know the rest of the scenario).     It suggests there is not a lot of money available in your pensions collectively.  So, can you afford to take investment risks with your retirement income?

Is the GAR a decent high rate or a rubbish low rate?  (The old Scottish Life Talisman plans under Royal London tend to have high GARs that are valuable and worth keeping.  The old CIS pensions now under Royal London tended to be quite poor on contracted out GARs for example).

What are you plans for the money and what alternative income will you have in retirement?

Ultimately, you would eventually find an adviser that will do it.   Just that most won't.  And that one that will do it will likely change a very high amount for doing so.

Why do you want to transfer it?

Fife59

dunstonh said:

he came out of SERP , took out a pension with royal london which he now wishes to transfer to a drawdown or uncrystalised fun account. 

He is already in an uncrystallised "funds account".  So, transferring to achieve that is not necessary.   However, drawdown is something it wont do without transfer.

he in now allowed to move it without financial advice as its over the threshold . He is unable to source a FA , he has tried many and no one is interested for various reasons eg to much legislation, time, not big enough pot.

Overriding a GAR is a very high-risk transaction. Almost up there with DB transfers.    To give you an idea, PI insurance renewal proposals (the liabity cover advisers have to have in place) ask for specific details of each and every GAR override an adviser has done.  Not just the raw numbers but actually a summary of each and ever case and the justification.   Each one an adviser firm does increases their annual PI insurance premiums forever more.   And if the PI insurer doesn't like the justifications they could refuse to offer terms or price it higher risk.   And at the moment, there are only around 5 insurers offering PI insurance. 

So, you need pretty good justification for doing it and it needs to be commercially viable for the IFA as they will still be paying for your transaction in 10 years time.

Can anyone give us suggestions on how to progress . I know its not a big pot compared to some but its a big pot to us and getting access to it would be great

What you have actually said there makes it even more likely that transferring it to drawdown would be considered unsuitable. (just that bit in isolation as we dont know the rest of the scenario).     It suggests there is not a lot of money available in your pensions collectively.  So, can you afford to take investment risks with your retirement income?

Is the GAR a decent high rate or a rubbish low rate?  (The old Scottish Life Talisman plans under Royal London tend to have high GARs that are valuable and worth keeping.  The old CIS pensions now under Royal London tended to be quite poor on contracted out GARs for example).

What are you plans for the money and what alternative income will you have in retirement?

Ultimately, you would eventually find an adviser that will do it.   Just that most won't.  And that one that will do it will likely change a very high amount for doing so.

Why do you want to transfer it?

brilliant thanks for your reply, the OH is away playing golf and I will get him to take over from here. 

be back shortly and thanks again

Fife59

Many thanks Forumite for your detailed but ultimately disheartening reply. This Royal London account was indeed an old CIS pension and even the roughest of calculations concerning a GAR of £2,510 from a pot of £70,000 would appear to suggest I would need to live to almost 95 years old before gaining any advantage from it? I do not have any income at the moment (deliberately) and am living off my savings till I reach state retirement age in 2026. My thoughts on the best way ahead would be, if transferred to a drawdown account,  to take the 25% tax-free immediately and then withdraw a sum up to my personal allowance every year for the next five years. This, allied to my remaining savings and state pension, would leave me comfortable in retirement.

From your reply I am guessing that these thoughts would not meet the justification test for an IFA or their insurers?

Many regards

Dazed_and_C0nfused

I do not have any income at the moment (deliberately) and am living off my savings till I reach state retirement age in 2026. My thoughts on the best way ahead would be, if transferred to a drawdown account,  to take the 25% tax-free immediately and then withdraw a sum up to my personal allowance every year for the next five years. This, allied to my remaining savings and state pension, would leave me comfortable in retirement.

Posters on here regularly make an awful lot of assumptions or have misconceptions about the State Pension they will receive in the future.

Have you actually checked your State Pension forecast on gov.uk and, most importantly, read past the likely headline of £175.20, to see what you had actually accrued by 5 April 2020?

Audaxer

Fife59 said:

Many thanks Forumite for your detailed but ultimately disheartening reply. This Royal London account was indeed an old CIS pension and even the roughest of calculations concerning a GAR of £2,510 from a pot of £70,000 would appear to suggest I would need to live to almost 95 years old before gaining any advantage from it? I do not have any income at the moment (deliberately) and am living off my savings till I reach state retirement age in 2026. 

I'm no expert on this but interested to know if the GAR of £2,510 is index linked to increase with inflation each year? Even if it isn't it would take just under 28 years to get to £70k total income, which if you are 62 now, would take you to 90 years old. However if it is index linked you would get to £70k total income a good bit before 90.

I know it's a tough decision, but if you do decide to transfer it, bear in mind that the net transfer value will be below £70k after deducting the IFA costs.

Fife59

Thank you Dazed and Confused + Audaxer. I have regularly checked my state pension prediction on gov.uk and have worked out my figures on the prediction. Doesn't say anything on my annual Royal London statement as to whether the GAR is index linked or not, be worth a phone call but I don't think even an index linked element would sway me from my preferred course. if I could possibly bring it to fruition. IFA costs would be a choker lol, but not so much as turning my toes up at 75 and leaving Royal London with a windfall.

Regards to you all 

Albermarle

Fife59 said:

Thank you Dazed and Confused + Audaxer. I have regularly checked my state pension prediction on gov.uk and have worked out my figures on the prediction. Doesn't say anything on my annual Royal London statement as to whether the GAR is index linked or not, be worth a phone call but I don't think even an index linked element would sway me from my preferred course. if I could possibly bring it to fruition. IFA costs would be a choker lol, but not so much as turning my toes up at 75 and leaving Royal London with a windfall.

Regards to you all 

Inflation linking is probably more valuable than you think.
For example if you were to buy an annuity for life with a lump sum, then £100K should get you at least £5K pa , maybe a bit more . However if it was inflation linked you would be looking at less than £3kpa 
so much as turning my toes up at 75 and leaving Royal London with a windfall.
Or you might live to 95 and they would be out of pocket .

dunstonh

its been a few years since I have seen an ex CIS protected rights plan with GARs but I have seen several over the years.   They paid the GAR on the former protected rights on the same basis as protected rights had to be paid.  i.e. 50% spouse and RPI.  So, the figures mentioned on this thread likely match that.

Royal London no longer do the annuity in-house.  They use Just [Retirement].     If the Just annuity is lower than the GAR, Royal London uplift the fund value to meet the GAR.  I did one recently that was non-protected rights and wanted different terms to the default and RL used the base figure and adjusted it pro-rata to reflect the revised requirements.  So, it was still higher than an open market rate. That was a Talisman plan though.      It is possible that RL will work the same basis on the ex CIS plans with GARs.    

Daz147

I have a similar plan with CIS, my GAR of 7% is detailed in the original pension details that you get when the plan was taken out, (£70 per £1000), annual statements only mention that you have this benefit.  I think the GAR is only guaranteed if you take the pension at the agreed date, in my case aged 60.  One possible way around the transfer would be to let the retirement date laps, therefore the GAR would no longer apply.  (This is only theory, dont know if they could force you to take the pension at an specific date)