Prudential Bond 32

thebullsback

Purely out of interest.
Letter received
Prudential pension transfer plan -Bond 32 
total value Inc. Final bonus £52111.This also includes redress payment £27806 ( Pru informed me i had been mis sold this pension)
I can take benefits now or leave them .
GMP Level pension £2313 pa
Spouse Level pension £1156
GMP payable for life no Guarantee period 
Based on our calculations the cost of providing your GMP is £68216 As your fund Excluding the redress is not large enough to provide this prudential will meet the shortfalland your redress of £27806 is available to provide additional benefits
Fund available after GMP
figures below not guaranteed and may change 
The amount of £27806 can be used in one of the following ways 
A-Buy an Annuity 
B-Cash Lump sum -25% tax free
C-Open Market. Open market value estimated at £36013 This is based on Prudential paying a Tax free lump sum of £16097 and the GMP being provided by the reciving insurer. Please note in this scenario Prudential will not pay shortfall in cost of providing GMP
D-Move into Drawdown
E-Transfer out .AS your GMP has been secured you could look to transfer out the fund after GMP
out of curiosity what would be the best way to get the most out of these options?
Do I have to involve a IFA as i see two Figures £52111 and £27806?
 

dunstonh

Do I have to involve a IFA as i see two Figures £52111 and £27806?

Yes as it exceeds £30k.

Croeso69

thebullsback said:

Purely out of interest.
Letter received
Prudential pension transfer plan -Bond 32 
total value Inc. Final bonus £52111.This also includes redress payment £27806 ( Pru informed me i had been mis sold this pension)
I can take benefits now or leave them .
GMP Level pension £2313 pa
Spouse Level pension £1156
GMP payable for life no Guarantee period 
Based on our calculations the cost of providing your GMP is £68216 As your fund Excluding the redress is not large enough to provide this prudential will meet the shortfalland your redress of £27806 is available to provide additional benefits
Fund available after GMP
figures below not guaranteed and may change 
The amount of £27806 can be used in one of the following ways 
A-Buy an Annuity 
B-Cash Lump sum -25% tax free
C-Open Market. Open market value estimated at £36013 This is based on Prudential paying a Tax free lump sum of £16097 and the GMP being provided by the reciving insurer. Please note in this scenario Prudential will not pay shortfall in cost of providing GMP
D-Move into Drawdown
E-Transfer out .AS your GMP has been secured you could look to transfer out the fund after GMP
out of curiosity what would be the best way to get the most out of these options?
Do I have to involve a IFA as i see two Figures £52111 and £27806?
 

dunstonh said:

Do I have to involve a IFA as i see two Figures £52111 and £27806?

Yes as it exceeds £30k.

Are there two separate policies here (redress may have gone into an increment policy)?

Policy 1: Value £24,305 to provide a GMP of £2,313 (cost of GMP is really £68,216 so best to take the GMP here)

Policy 2: Redress policy with a value of £27,806 which you can do what you like with?

xylophone

Fund available after GMP
figures below not guaranteed and may change 
The amount of £27806 can be used in one of the following ways 
A-Buy an Annuity 
B-Cash Lump sum -25% tax free
C-Open Market. Open market value estimated at £36013 This is based on Prudential paying a Tax free lump sum of £16097 and the GMP being provided by the reciving insurer. Please note in this scenario Prudential will not pay shortfall in cost of providing GMP
D-Move into Drawdown
E-Transfer out .AS your GMP has been secured you could look to transfer out the fund after GMP

Mystified by the OMO option unless they mean that there is an additional amount of GMP attached purely to the redress policy?

Croeso69

xylophone said:

Fund available after GMP
figures below not guaranteed and may change 
The amount of £27806 can be used in one of the following ways 
A-Buy an Annuity 
B-Cash Lump sum -25% tax free
C-Open Market. Open market value estimated at £36013 This is based on Prudential paying a Tax free lump sum of £16097 and the GMP being provided by the reciving insurer. Please note in this scenario Prudential will not pay shortfall in cost of providing GMP
D-Move into Drawdown
E-Transfer out .AS your GMP has been secured you could look to transfer out the fund after GMP

Mystified by the OMO option unless they mean that there is an additional amount of GMP attached purely to the redress policy?

Redress is extra cash added to a pension as compensation to correct any misselling or other cockups. Cant see there being any GMP attached to that.

I think the OMO refers to the total benefits because £36,013 + £16,097 = £52,110 which is both benefits combined. Unlikely to be accepted by another insurer given the cost of GMP is nearer £70,000.

xylophone

Redress is extra cash added to a pension as compensation 

Yes, I understood that.

But  the extract above is clearly headed

Fund available after GMP.    Prudential must honour the GMP under the terms of the original policy - the redress policy provides additional benefits which can be taken as below

A-Buy an Annuity 
B-Cash Lump sum -25% tax free

D-Move into Drawdown

E-Transfer out .AS your GMP has been secured you could look to transfer out the fund after GMP.

How can C (the OMO) possibly be included in the list of  the  choices available after GMP?

In fact, the OP would need his head examined to go the OMO route when he can have his guaranteed GMP from the Pru and choose from A,B.D or E?

dunstonh

OMO is a theoretical possibility.  There will be some cases where it is possible.  So, the generic options list has to include it.

thebullsback

I did make contact with prudential and ask for information on option C- and they are sending me details out on it.
From memory they said it Legal and General would take over the GMP and they would then deal with the £16097 as per pensions Freedom rules .They also mentioned that Prudential do not do Annuity's now and Legal  and General have took this side of things on for them. Also any costs due to L and G would be met by Prudential.
Are there any Questions I should be asking The Prudential or L and G ?

thebullsback

It has always been my intention to take the GMP part of this pension it is only the Redress part I wish to take .At first i thought I take the redress of £27806  as a lump sum but my calculations say I would lose £3350 in Tax ( my income is £8400 pa )I do have a Sipp with AJ Bell that I would be interested in transferring  Redress pot into if Possible .Would this be possible without use of IFA ?
 

xylophone

The "redress policy" would nor appear to have any safeguarded benefits and even if it had is valued at under £30,000.
You have been told by Prudential that it may be transferred out after securing the GMP - check with your SIPP provider about a transfer?

thebullsback

contacted the Pru and asked about transfer to Sipp and they said no problem .Strange thing though is I have to deal with Legal And General ?
another question. I retired early in Sept 2020 so obviously paid tax on salary £20500 Gross. If I transfer full £27806 into Sipp will i qualify for any addition tax from Government?
my only income (apart from Savings) is £6094 pa NHS pension then when I claim Pru GMP part this adds another £2313.