Aegon Section 32 Buyout Policy

JB32

Hello, am looking for some advice regarding an Aegon Section 32 Buyout Policy. 

The policy has a GMP of £2,400 each year with a policy value of £22,000. The current GMP costing is £115,000. It is made up entirely with contracted out monies. 

Aegon say he cannot take tax free cash from the policy.

My friend is above state pension age and is wondering if he can transfer the policy to another provider and take TFC. Could he also take a trivial commutation if he has not already had a personal pension?

Any help would be much appreciated.

regards

Joe

Troytempest

Aegon would love him to transfer it but no one would advise this.

Aegon have to pay the £2400 each year but the fund value is no where near enough to support it - they lose and your friend wins.

JB32

Thanks Troytempest. I know, the problem is that he does not want to take an income which will cause him to move into a new tax bracket. That is why he is looking to take TFC

xylophone

My friend is above state pension age and is wondering if he can transfer the policy to another provider and take TFC. 

See

https://connect.avivab2b.co.uk/adviser/articles/tech-centre/pensions-planning/pre-retirement-accumulation/section-32-arrangements-GMPs-and-transferring/

Notepad_Phil

JB32 said:

Thanks Troytempest. I know, the problem is that he does not want to take an income which will cause him to move into a new tax bracket. That is why he is looking to take TFC

Has he worked out the sums.

Personally unless I was well over state pension age then I'd rather pay a higher rate of tax on the annual £2400 then get £5500 tax free followed by a lower rate of tax on the annual £600'ish which is the type of income that he might be able to get from the remaining pot if he went into drawdown.

Marcon

Troytempest said:

Aegon would love him to transfer it but no one would advise this.

Not if they had to pay £115,000 when the policy is only worth £22,000....and that's what they'd have to do.

JB32 said:

Thanks Troytempest. I know, the problem is that he does not want to take an income which will cause him to move into a new tax bracket. That is why he is looking to take TFC

If a couple of thousand would put him into a new tax bracket, he could always invest into a personal pension (up to £2,880 net, with the provider adding basic rate tax relief/higher rate relief if applicable claimed on his tax return, until he's 75), or make some gift aid donations.

Madrick

I have an Aegon TPS 32 buyout plan?

Is this the same thing?

I am aged 60
And the policy just says a total value of £48k
And a nominated pension date of xxx 2026 (on my 65th birthday) 


Theres no mention of an annual GMP (what does that stand for?)

Is this a little like an annuity ot a DB pension?

I had just presumed that it was a sort of DC pension and I would just use it in drawdown after I was 65

Does anyone know for sure or should I call Aegon at some point and ask for more details

xylophone

I have an Aegon TPS 32 buyout plan

Judging by below, you were a member of an occupational pension scheme which was was wound up and bought out through Aegon - see below.

Was the scheme  a contracted out salary related scheme and if so,  were you a member between 1978 and 1997?

See https://www.aegon.co.uk/support/faq/pension-technical/different-types-of-pension-schemes.html#:~:text=Buyout policies (S32)&text=A section 32 buyout policy,by occupational pension scheme trustees.

• If an occupational pension scheme winds up, each member’s benefits have to be secured outside the scheme. Members will usually be given the option to choose where their own funds are transferred to and one of the options could be a transfer to an individual buyout policy. If they don’t make a choice or if the trustees have been unable to contact a member, the trustees can arrange for a buyout policy to be issued in the member’s name. These are usually referred to as trustee-proposed buyout policies (TPS32) or group buyouts as they are set-up without the consent of the member.

Cribster

I have an Aegon TPS32 with a transfer value of £111,000 I am 67 and still working full time. Plus not drawing my state pension.
Can I do a £10,000 draw out from my pension or do I have to transfer it to another pension scheme (currently employed and contributing to an NHS pension)

xylophone

Have you read the links in the above?

And see

https://assets.publishing.service.gov.uk/media/5a80b577ed915d74e33fbf54/pension-benefits-with-a-guarantee-factsheet-jan-2016.pdf

Your policy has "safeguarded benefits"?

Have you had no contact from Aegon concerning this policy?

If you have been contacted, what options were offered?

You have chosen by default (you didn't claim it) to defer your state pension.

https://www.litrg.org.uk/pensions/state-pension/tax-state-pension/putting-deferring-claiming-state-pension

dunstonh

Cribster said:

I have an Aegon TPS32 with a transfer value of £111,000 I am 67 and still working full time. Plus not drawing my state pension.
Can I do a £10,000 draw out from my pension or do I have to transfer it to another pension scheme (currently employed and contributing to an NHS pension)

You haven't mentioned what your tax free cash entitlement is.   On S32s it can lower or higher than 25%.  I have seen over 90% TFC and nil TFC.  So, we cannot answer your question without details.

Plus, Aegon S32s do not support drawdown.   So, you would not be able to it with that plan. It would require a transfer.   And whether that is possible will depend on the things mentioned higher up on this thread.