Guaranteed Minimum Pension, GAR/safeguarded benefits - bit of a con?

Tommohawk

Ok thanks for that. Yes I'll be sure to post the outcome... although by the time that happens I'll likely be resurrecting a dead thread. 

xylophone

Ok thanks for that. Yes I'll be sure to post the outcome... although by the time that happens I'll likely be resurrecting a dead thread. 

i caught sight of this - it seems you are going to need to find a firm with full transfer permissions.


https://ifac.eu/news/view.php?news_id=106

And bear in mind that there is no guarantee that a transfer out will be recommended - see this thread

https://forums.moneysavingexpert.com/discussion/6293051/pension-has-finally-landed-as-an-insistent-client-acting-against-advice-doors-closed-03-09-2021/p1

Tommohawk

xylophone said:

Ok thanks for that. Yes I'll be sure to post the outcome... although by the time that happens I'll likely be resurrecting a dead thread. 

i caught sight of this - it seems you are going to need to find a firm with full transfer permissions.


https://ifac.eu/news/view.php?news_id=106

This highlights how the whole advice issue is so complex / expensive that some pension providers get away with folk accepting a paltry offer in the guise of a valuable guaranteed sum.

And bear in mind that there is no guarantee that a transfer out will be recommended - see this thread

https://forums.moneysavingexpert.com/discussion/6293051/pension-has-finally-landed-as-an-insistent-client-acting-against-advice-doors-closed-03-09-2021/p1

Yes, that's what happened the last time I had an "independent" IFA. I had a DB scheme again going back decades and I was offered an uplift if I transferred and took an annuity. In the end after countless hours on the phone and graphs and goodness know what, I decided against the annuity. But I was told I couldn't do as I wanted - I had to take the IFAs advice. 

That case was considerably more complex, and TBH in the end I think taking the enhanced annuity probably was to my advantage. It's complicated, don't go there.

To make matters worse had this been more straightforward it would all have been resolved by now. Instead of which I'm likely to see my pot dwindle as the US share price normalises. And yes of course it should be in safer funds by now, but Reassure and LG between them have made it impossible for me do any fund switches (which I used to be able to do at short notice prior to the Reassure debacle)

hyubh

Tommohawk said:

To make matters worse had this been more straightforward it would all have been resolved by now. Instead of which I'm likely to see my pot dwindle as the US share price normalises. And yes of course it should be in safer funds by now, but Reassure and LG between them have made it impossible for me do any fund switches (which I used to be able to do at short notice prior to the Reassure debacle)

Two things that are still not clear to me:

1. Have you definitely compared like for like, in particular compared the cost of an equivalent joint life annuity to the GMP?
2. If you have, I note you have consistently referred to 'the pot' rather than a CETV. This makes the GMP sound a DB underpin of an otherwise DC pension. But if so, 'the pot' being less than the amount needed to cover the GMP on the open market just means the underpin guarantee has bitten...
   

xylophone

definitely compared like for like, in particular compared the cost of an equivalent joint life annuity to the GMP?

See my post

https://forums.moneysavingexpert.com/discussion/comment/78601695/#Comment_78601695

You appear to be saying that you have used their calculation for the GMP and obtained an annuity quote which not only offers a joint annuity in excess of the GMP pension offered but also guarantees a straight 3% annual increase?

This does seem rather strange.

The OP replied

Absolutely. I'm not about to post my DOB etc so you can check for yourself, but the sums show that 59155 is used to fund the GMP and that same sum will get me a better annuity on the open market with the same terms including 3% pa annual increase.

hyubh

xylophone said:

definitely compared like for like, in particular compared the cost of an equivalent joint life annuity to the GMP?

See my post

https://forums.moneysavingexpert.com/discussion/comment/78601695/#Comment_78601695

You appear to be saying that you have used their calculation for the GMP and obtained an annuity quote which not only offers a joint annuity in excess of the GMP pension offered but also guarantees a straight 3% annual increase?

This does seem rather strange.

I realise you have used the joint annuity lingo in attempting to paraphrase the OP, but I haven't seen the OP explicitly confirm it.

The OP replied

Absolutely. I'm not about to post my DOB etc so you can check for yourself, but the sums show that 59155 is used to fund the GMP and that same sum will get me a better annuity on the open market with the same terms including 3% pa annual increase.

'used to fund the GMP' - so this 'pot' is a DC pension with a DB underpin? If the pot intended to fund the GMP doesn't actually fund it, well, the OP still has the GMP, as the insurer took the risk. If that is indeed the situation, it's a bit 'trying to have your cake and eat it' to then turn round and say, 'OK, the fund was not in fact sufficient, so I demand a CETV instead'.

xylophone

so this 'pot' is a DC pension with a DB underpin?

I'm not at all sure of this.

The OP refers to  GMP and S9 (2B) rights so it looks to be the case that there was a transfer to a S32 from a standard COSR DB? 

The OP seems vague about the source of the transfer

This scheme relates to contributions I made over short period decades ago, and I have no idea what the original terms were. It has been transferred from one provider to another and I have mountain of paperwork for this one scheme. According to one IFA it is apparently a section 32 buy out, though I have no idea what that means!

It also seems that there are three (?) policies  relating to this transfer, one of which appears to have  be administered by Reassure and the other(s) by L&G.

Short version of this is I have a pension with 3 components: post April 1988 GMP (3% increase), a section 92b element, and an unprotected element.

The total pension is the sum of the three components, but again I'm only interested in the significant component with GAR.

The numbers are complicated because Reassure only handle the GMP element and L and G do the other 2 elements, although both parties seem to  provide "illustrations" of the other parties elements.

By GAR he means GMP apparently (although S32 can be described as a "deferred annuity policy").

And the OP hasn't said that his policy hasn't grown enough to cover the GMP.

The only reliable current figures I can extrapolate are. L and G tell me that based on a pot of £103608 I would get a TFLS of £25902. Also that after the GMP is funded, the remainder is £44453. This implies that £59155 is required to fund the GMP element. The GMP payout would be 1513.56 pa.

They also tell me that after the TFLS is deducted from that remainder, there is £18551 to fund the Section 92 element (~£10,000) and the nonprotected element (~£8000) TBH those elements are small and not really the focus of my query. They would apparently prove 199.68 and 284.28 annually respectively.

It is somewhat confusing!

Tommohawk

 it's a bit 'trying to have your cake and eat it'

Exactly what kind of wind-up merchant are you???

Quotes directly from the paperwork:

The current value of your entire policy is £103608. 
The amount needed to support your GMP is £60120 and the amount in your pension pot to cover this is £103608
Amount left over once your guaranteed income has been secured is £43487

This is my money - all I want is my money or a proper return for it.