R/L Pension

edwin1000

Hi i am having a bit of trouble moving my Royal London Pension pot of £61000 because it has a GMP included on it.
It is a private pension started in 1973 and has never been in a company pension that a  few IFAs have told me it must of been.
I have been informed it needs special permissions looking into costing between £3000 up to £7000.
The plan was to move it  into my Sipp.The GMP i have been told is only if i take out a Annuity with R/L and i can get better rates  elsewhere.
So is there a cheaper way of getting permissions or any other ideas please?



 

coyrls

I think you are referring to a Guaranteed Annuity Rate (GAR) not a Guaranteed Minimum Pension (GMP).  If you told the IFAs the pension had a GMP and not a GAR, they would have assumed that it was originally a company pension.

I think it would be unlikley that you could find better rates than a GAR from 1973.

edwin1000

No it has a  GMP not GAR.You are not the first person to say that.

AlanP_2

GMP relates to company schemes that were "outside" SERPS / SP2 and the employer and employee paid a lower rate of NI based on the "guarantee" that the Minimum Pension would be at least as much as would have been accrued in SERPS / SP2.

A company must have been involved at some stage for there to be a GMP, unless it is something really weird.

edwin1000

AlanP_2 said:

GMP relates to company schemes that were "outside" SERPS / SP2 and the employer and employee paid a lower rate of NI based on the "guarantee" that the Minimum Pension would be at least as much as would have been accrued in SERPS / SP2.

A company must have been involved at some stage for there to be a GMP, unless it is something really weird.

That in a nutshell is the problem it is a totally private policy

dunstonh

It is a private pension started in 1973 and has never been in a company pension that a  few IFAs have told me it must of been.

The term "private pension" is not specific to any pension type. It can also mean different things to different people.   Some call private pensions anything apart from state.  Some call private pensions anything apart from state or occupational.

It cannot be a personal pension as they did not exist until 1988.    Prior to that they were called Section 226 Retirement Annuity contracts.   However, if it has GMP, it wont be one of those.     As mentioned above, this suggests it was an occupational pension at some point.

To get a GMP, you must have been contracted out.   You couldn't contract out in a personal pension (individually) until 1988 (signing up in 1987 at the earliest) and 1988-2012 you didn't get GMP from contracting out.

Prior to that, from 1978 to 1988 you could contract out and it would build up GMP but this was via COSRs (Salary Related Schemes).  

So, we have some anomlies in what you are saying.

1 - 1973 doesn't tie in with contracting out

2 - You say it was not a scheme linked to an employer or through employment.

It is possible to have a 1973 start date but the contracting out didn't start until later.    

How much of the fund is pre 1988 GMP (assuming no post 1988 unless you say different) and how much is excess fund?

I have been informed it needs special permissions looking into costing between £3000 up to £7000.

Not necessarily.   If your intention is to use the pension fund value flexibly then yes you do.  £3000 would be the target ballpark. Not £7000.     Advisers charging £7000 to do it dont really want to do it.  They are using price to erect a passive barrier. 

If the intention is to supply a secure income then additional permissions are not required.    

Funds with GMP often have GARs as well or the GMP is much greater than the fund value can provide and needs to be uplifted by the provider to meet it.   This can make the transferring and giving up of the GMP unsuitable.

So is there a cheaper way of getting permissions or any other ideas please?

Adviser prices vary significantly.   So, yes you could get it cheaper than £7000 but at £3000 you are in the ballpark.

edwin1000

Royal London have advised it is an Annuity pension and can only be used in that way. 

edwin1000

dunstonh said:

It is a private pension started in 1973 and has never been in a company pension that a  few IFAs have told me it must of been.

The term "private pension" is not specific to any pension type. It can also mean different things to different people.   Some call private pensions anything apart from state.  Some call private pensions anything apart from state or occupational.

It cannot be a personal pension as they did not exist until 1988.    Prior to that they were called Section 226 Retirement Annuity contracts.   However, if it has GMP, it wont be one of those.     As mentioned above, this suggests it was an occupational pension at some point.

To get a GMP, you must have been contracted out.   You couldn't contract out in a personal pension (individually) until 1988 (signing up in 1987 at the earliest) and 1988-2012 you didn't get GMP from contracting out.

Prior to that, from 1978 to 1988 you could contract out and it would build up GMP but this was via COSRs (Salary Related Schemes).  

So, we have some anomlies in what you are saying.

1 - 1973 doesn't tie in with contracting out

2 - You say it was not a scheme linked to an employer or through employment.

It is possible to have a 1973 start date but the contracting out didn't start until later.    

How much of the fund is pre 1988 GMP (assuming no post 1988 unless you say different) and how much is excess fund?

I have been informed it needs special permissions looking into costing between £3000 up to £7000.

Not necessarily.   If your intention is to use the pension fund value flexibly then yes you do.  £3000 would be the target ballpark. Not £7000.     Advisers charging £7000 to do it dont really want to do it.  They are using price to erect a passive barrier. 

If the intention is to supply a secure income then additional permissions are not required.    

Funds with GMP often have GARs as well or the GMP is much greater than the fund value can provide and needs to be uplifted by the provider to meet it.   This can make the transferring and giving up of the GMP unsuitable.

So is there a cheaper way of getting permissions or any other ideas please?

Adviser prices vary significantly.   So, yes you could get it cheaper than £7000 but at £3000 you are in the ballpark.

Thank you very concise summing up.
It is and has always been a Annuity pension,never been moved anywhere but all i can do with it is to buy a Annuity with RL or pay to get the Pension permissions required to be able to move it to my Sipp i suppose? 

sandsy

I think this is a terminology issue.
As dunstonh said, the contract is probably a s226 retirement annuity. 
I think it's likely that Royal London sometimes use the terminology 'guaranteed minimum pension' to refer to the lowest amount of pension that they have promised to pay from the contract (rather than in the more typical GMP context where an occupational scheme  member was contracted out). See this Pension Ombudsman determination where 'guaranteed minimum pension' is used by RL in the context of a s226 contract:

https://www.pensions-ombudsman.org.uk/sites/default/files/decisions/PO-13315.pdf

xylophone

You are  now confirming that this is a policy with a Guaranteed Annuity Rate (not a policy with a GMP)?
See
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/495377/pension-benefits-with-a-guarantee-factsheet-jan-2016.pdf

and
https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/pension-transfers-conversions/

Guaranteed Annuity Rates

There is one significant exception to the requirement for a pension transfer specialist, and it is where the advice is on conversions or transfers in respect of pension policies with a guaranteed annuity rate (GAR).

Although GARs are safeguarded benefits, the FCA do not  require these cases to be checked by a pension transfer specialist and as such advice can be provided by an adviser with investment advice permission. This is because an adviser with the investment advice permission, but not the pension transfer and opt out permission, must still prominently highlight the value of the GAR to their client (the firm still needs to hold transfer permissions). The adviser should do this as part of the suitability assessment report for their client.

As of 1 October 2020 the FCA have clarified the rules for Guaranteed Annuity Rates to include a minimum guaranteed income (a contract feature most often seen in Retirement Annuity Contracts (RACs)).

edwin1000

I have double checked my pension with RL. Dunstonh is correct the start date was 1983 not 1973 (other pension sorry)
As i have said it is not a GAR it is GMP checked this also