R/L Pension

edwin1000

These plans are no longer available but some of the older plans had guaranteed pensions (or guaranteed annuity rates) attached them. Although there are no guaranteed annuity rates attached to your plan although there is a guaranteed minimum pension. The guaranteed minimum pension applied to plans taken out before 1st September 1986. As your plan was taken out on 1st March 1983 the attached guaranteed minimum pension amounts apply. (Taken from e mail sent to me from RL)

dunstonh

These plans are no longer available but some of the older plans had guaranteed pensions (or guaranteed annuity rates) attached them. Although there are no guaranteed annuity rates attached to your plan although there is a guaranteed minimum pension.

Its poor quality terminology. Not your fault but just the way RL use a phrase that actually has a different meaning.    It must get confusing if RL have a plan that actually has GMP as well as this.  They would end up using the phrase GMP to refer to two different things.

As you have now realised from our responses, the term guaranteed minimum pension has a specific meaning in respect of contracting out of SERPS based on a date range.       Royal London have, unfortunately, called their guaranteed basic annuity a guaranteed minimum pension.   So, we have the same phrase meaning two different things in this case.   

You have a guaranteed basic annuity which is in effect like a guaranteed annuity rate (GAR).   Technically it's not a GAR but has a similar outcome to one in that the annuity rate they offer can be higher than the standard in-house rate or the open market option.

The bottom line is that this is classed as a safeguarded benefit.  If your fund value is above £30k and you have a safeguarded benefit, you are required to use an adviser if you carry out a transaction that gives up that safeguarded benefit.   This is because in the majority cases, the safeguarded benefit is better than alternatives.  Not always.  But a sufficient majority for an extra level of consumer protection to be in place to prevent people from doing something that is not in their interests.

If you have been phoning around advisers telling them you have GMP/guaranteed minimum pension and you want to transfer to a SIPP, they will assume you are referring to GMP in the regulatory/legal sense.  Not Royal London in house marketing speak.   In reality, you would be better referring to it as a GAR as that is the closest match.   However, you are still going to find the majority not interesting in offering terms or pricing them very high as its a very high risk transaction for an adviser to carry out.    It is also one that the advisers have to declare to their liability insurers specifically when obtaining renewal terms and something that increases the price of the insurance every year for as long as they are in business.   A lot of advisers shy away from getting involved in high risk business.  Others will only do it if the fee is high enough to reflect the risk.  However, some may offer terms you are happy with.

xylophone

As i have said it is not a GAR it is GMP checked this also

But not a GMP as generally understood - see https://www.barnett-waddingham.co.uk/comment-insight/blog/what-is-a-gmp/

 and https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/section-32/

This is  not a S32  policy with a Guaranteed Minimum Pension but simply one kind of policy written by RL which in return for the premium/contributions guaranteed to pay at least a certain pension at a selected retirement date?

This is therefore a "safeguarded benefit" akin to a guaranteed annuity rate and would be treated like a GAR in terms of a transfer permission?

coyrls

There is a RL document here: http://www.royallondongroup.co.uk/Documents/Coop/pdf/CIS_ISB_Retirement_Annuity.pdf where they now refer to the guarantee as a "Basic Annuity":

Your Pension Annuity policy was written to provide you with a guaranteed regular income at your Normal Retirement Date as long as you pay all your pension contributions up to that date. This regular income is known as your Basic Annuity.

And:

The combination of lower than expected investment returns and increased life expectancy means that your policy could be worth less than the Basic Annuity plus annual bonuses. However, if on your Normal Retirement Date you use your pension pot to buy a regular income from Royal London, we guarantee to pay you your Basic Annuity and any bonuses we have added.

edwin1000

Cheers guys some nice advice about terms.
Nothing like a simple pension that the average man in the street would know about.
Know to find a IFA,think i may have a  job on to find one that is willing to take on the risk.
Dm,s welcome.lol  

edwin1000

Just wondered if a 2% fee with an ongoing 0.5% fee would be fair to be able to get permissions to move this to a  Sipp please? 

dunstonh

edwin1000 said:

Just wondered if a 2% fee with an ongoing 0.5% fee would be fair to be able to get permissions to move this to a  Sipp please? 

Ongoing at 0.5% is the dominant figure. So, that is fine.   2% on a value of £61k for a plan with a safeguarded benefit that needs is very good value.   For such a high-risk transaction that will cost the adviser every year forever more, £1200 seems too low.
In respect of the ongoing fee.   You only need that if you are wanting the IFA to provide ongoing services.  If you are moving it to your own SIPP and running your own investments then you should only have that initial fee with 0% ongoing.

edwin1000

dunstonh said:

edwin1000 said:

Just wondered if a 2% fee with an ongoing 0.5% fee would be fair to be able to get permissions to move this to a  Sipp please? 

Ongoing at 0.5% is the dominant figure. So, that is fine.   2% on a value of £61k for a plan with a safeguarded benefit that needs is very good value.   For such a high-risk transaction that will cost the adviser every year forever more, £1200 seems too low.
In respect of the ongoing fee.   You only need that if you are wanting the IFA to provide ongoing services.  If you are moving it to your own SIPP and running your own investments then you should only have that initial fee with 0% ongoing.

 Dunstonh,very good of you to inform me of the above  details.
Not sure what people on here would do without you?
Thank you