Old Work pension with a GMP element due to opting out of Serps - is this then a DB?

123Lottie

Hi, i have an old Johnson & Johnson Pension, which i am looking to transfer to a SIPP. It wasn't a final salary pension, definitely contributions, but when i received the transfer pack from Mercer who manage it, it says it has a GMP element in it due to opting out of serps for several years. 

I went and saw an IFA today, who said they couldn't help me as it needs specialized advice and implied as it would count as a  DB pension. I rang another company and they said just because it has GMP, it doesn't count as a defined benefits pension and made me an appointment for next week

i am so confused, any advice would be gratefully received please on what a pension having GMP in it is 

xylophone

It was possible for companies to provide a hybrid pension scheme.


https://www.pensionsage.com/pa/Hybrid-benefits.php

https://techzone.abrdn.com/public/pensions/Tech-guide-contracting-out


According to Mercer

https://v3.merceroneview.co.uk/v1/oneview-be/oneview-caas/files/Johnson & Johnson UK Group UK Retirement Plan 16 Chair Statement 2020.pdf

The Johnson and Johnson Group Retirement Plan was DC with Guaranteed Minimum Pension and Reference Scheme Test underpins.

I went and saw an IFA today, who said they couldn't help me as it needs specialized advice and implied as it would count as a  DB pension. I rang another company and they said just because it has GMP, it doesn't count as a defined benefits pension and made me an appointment for next week

Advice from a Pension Transfer Specialist could well be required. Has Mercer indicated that advice from a PTS will be required in your case?

https://www.gov.uk/government/publications/pension-benefits-with-a-guarantee-and-the-advice-requirement/pension-benefits-with-a-guarantee-and-the-advice-requirement

dunstonh

I went and saw an IFA today, who said they couldn't help me as it needs specialized advice and implied as it would count as a  DB pension. I rang another company and they said just because it has GMP, it doesn't count as a defined benefits pension and made me an appointment for next week

It is not a defined benefit pension but it requires the same pension transfer specialist requirements as a defined benefit pension. 

xylophone

Have you obtained a state pension forecast?

https://www.gov.uk/check-state-pension

123Lottie

Hi Xylophone and dunstonh. (Sorry not allowed to quote yet as I'm a newbie) Thank you so much for relying. What you've put above is exactly what is on my Scheme details from - Contracted out DC scheme with an RST underpin.  Yes, the fund is over £30k and  in the transfer pack there's a section saying :- Transfer of safeguarded benefits - Confirmation on Appropriate Independent Advice. Advisors  have to confirm that they have provided advice specific to the transfer of safeguarded benefits from the transferring scheme to the receiving scheme proposed by the member.So would this mean i need the full report required for Defined Benefits - ie min £4000 fee etc?    

I've checked state pension forecast and it shows i will be £27.40 down due to contracting out which is ok 

xylophone

I've checked state pension forecast and it shows i will be £27.40 down due to contracting out which is ok 

Have you looked into whether you could improve your position by making voluntary contributions?

https://www.gov.uk/future-pension-centre

Advisors  have to confirm that they have provided advice specific to the transfer of safeguarded benefits from the transferring scheme to the receiving scheme proposed by the member.So would this mean i need the full report required for Defined Benefits - ie min £4000 fee etc?    

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/pension-transfers-conversions/

https://www.fca.org.uk/publication/finalised-guidance/fg21-3.pdf

Ask Mercer if they require the confirmation to be given by a Pension Transfer Specialist.

https://www.handbook.fca.org.uk/handbook/glossary/G856.html

123Lottie

Hi Xylophone i definitely will look into the voluntary contributions to the state pension. 

Regarding the Pension Transfer Specialist - the requirements/qualifications that Mercer say they need in the transfer pack they have supplied me are as follows:-

If I am transferring to an arrangement that may provide flexible benefits and the full

cash equivalent transfer value of my safeguarded benefits under the transferring

scheme is more than £30,000, I understand that I must take appropriate financial

advice and that I must provide a written statement from my authorised independent

adviser confirming:

 that they have given me specific independent advice about transferring my

safeguarded benefits under the transferring scheme;

 that they have permission under part 4A of the Financial Services and Markets

Act 2000, or any other part of that act, to give financial advice as specified in

Article 53E of the Financial Services and Markets Act 2000 (Regulated Activities)

Order 2001;

 their FCA firm reference number; and

 my name and the name of the scheme in which I have safeguarded benefits and

about which they have given advice.

Would that be normal IFA permissions or Pension Transfer Specialist requirements? I can certainly ask the question. Im guessing that with the normal DB requirements it would be a Pension transfer Specialist?

Just wanted to say thank you for your help and time, i really do appreciate it. 

I very naively thought it would be easy to transfer to a SIPP!  i have a lot to learn i can see! 

xylophone

You wish to transfer safeguarded benefits valued at over £30,000 to a SIPP (which is a scheme providing flexible benefits).

See https://www.fca.org.uk/consumers/pension-transfer/advice-what-expect 

You must use a firm that is authorised by the FCA and can offer DB transfer advice. Firms who can offer this advice are on the FS Register as ‘advising on pension transfers and opt-outs’.

xylophone

https://adviserbook.co.uk/

You would tick "confirmed Independent" and Pension Transfer" when the menu comes up.

dunstonh

What you've put above is exactly what is on my Scheme details from - Contracted out DC scheme with an RST underpin. 

The final salary underpin and the GMP are the two things which trigger the pension transfer specialist.  So, both of the advisers were correct but effectively using different words to say the same thing.

.So would this mean i need the full report required for Defined Benefits - ie min £4000 fee etc?    

yes