Conclusion of a Section 32 policy

PaulCooper

I thought I'd inform the Forum of the conclusion of my S32 policy, more for information than a discussion subject.
Back in 1985 I'd been with an employer for just over 7 years, pensions at that point in my life weren't very meaningful (I was about 29). I changed jobs & as I'd been with the employer for more 7 years (in their final salary scheme---- 80ths if my memory serves me correctly) I could not withdraw the money, if I'd had less than 7 years employment then I could have withdrawn the pension monies (<£2000) very tempting as this would have been around 3 months salary & at that time we didn't have much money. So the choice was leave it with the employer, or transfer it to something else. We knew an IFA (could have been an FA, I don't know) They recommended transferring to a Sun Life policy that would take the £1900 & at age 65, guarantee to pay me £1050 pa, with a 50% widows payment. So that is what I did. 
Yearly statements would come in with annual & terminal bonuses. The Policy eventually became the responsibility of Aviva. 
Once I got to around 50, I started to take an interest in Retirement planning & after joining this forum, found out that the policy was a section 32 buyout policy which had a very attractive GAR (about 9.8%)
With the help of this forum I've monitored this policy, I have to say Aviva have been excellent in their communications with me, answering all my questions clearly, concisely & in words I can understand. 
The policy matured mid January and the fund is now worth just over £50k & it will pay a pension of £5040pa to me, 50% widows
To me that is a fantastic investment, started with a bit of luck, as I could so easily have taken the £1900 in 1985 & spent it on something/anything, but culminating in what I see as a great performance by Aviva
Thanks all on this forum for the time taken in educating people such as myself
Paul

JonathanBFS

Is the spouse benefit full term or only first 5 years?

parcival

I agree - I have a couple of GMP's which I had no clue about until taking an interest in this forum. Certainly helped me decide about going down an incorrect path. I am 63 this year so looking forward to benefiting from all the good advice on here soon!

PaulCooper

The spouse benefit is full term

Boomer58

It's heartening to hear from someone who's satisfied with their Section 32! My husband and I left our employer's final salary scheme at the end of the 1980's, transferring the funds to Section 32 plans, he with Legal & General and me with what is now Aviva. It was subsequently agreed that we had been mis-sold and were each given significant re-dress in apparently separate policies. In spite of this, due to woeful performance, both of us have ended up thankful to have had a Guaranteed Minimum Pension: neither of our plans had sufficient funds to support the GMP let alone a higher level of income, and nowhere close to original projections.

We were long expecting this and knew that, given the T&C of our plans, we couldn't withdraw any of the money or even transfer it to, say, a QROPS. However, there was one nice surprise which we discovered when I was 60 and able to start my pension which I took through an annuity with Aviva in 2019. I would agree that Aviva's communication was excellent and I can't fault their support. It turned out that they viewed the original policy as providing the GMP and the re-dress policy as a top-up or, if I chose, a lump sum, which is what I very gladly took.

This led us to expect the same treatment of my husband's policies when they came due earlier this year. However, it is not what was initially proposed by ReAssure, to whom L&G has sold their pension business. Had we not had my experience of a straight-forward, honourable company we would probably just have accepted their view that the funds of both policies were to be used to provide the GMP. It has taken months to persuade L&G that the purpose of the re-dress was supposed to be to my husband's benefit rather than theirs in making up for the shortfall in the two policies. The end result is that L&G have paid my husband a lump sum from the re-dress policy and transferred the funds from the original policy (albeit inadequate) to ReAssure who have set up an annuity to pay him his GMP.

I hope this will help other plan-holders falling for the same unfair and incorrect initial offer.

dunstonh

In spite of this, due to woeful performance, both of us have ended up thankful to have had a Guaranteed Minimum Pension: neither of our plans had sufficient funds to support the GMP let alone a higher level of income, and nowhere close to original projections.

The GMP is the reason for the "woeful" performance.    Where there is GMP or guaranteed minimum maturity values and With Profits funds are used, they invest to minimise the liability increasing further.    So, returns tend to be very low.    

However, they would never be near the original projections as returns kept falling (gross of inflation) every decade from the 60s.   The projection percentages used were based on performance that had been achieved with no consideration that the future would be lower.     Today, projections are pessimistic and understate the likely outcome..... we hope!!!

and I can't fault their support. It turned out that they viewed the original policy as providing the GMP and the re-dress policy as a top-up or, if I chose, a lump sum, which is what I very gladly took.

That is the normal outcome.  The excess part of the section 32 buy out bond doesnt go towards the GMP.  Redress should go into the excess part.    So, you were right to push L&G on that.