S32 Forced Transfer

wary

I have a legacy S32 policy for which I recently reached my NRD.  It represents the GMP element (pre & post 06/04/1988) from my ex-employer FSS, and this is all that I’ll receive.  I’m not that pension savvy although I am aware that it is important that I preserve these benefits, especially as the fund value is such that other options are limited.

My S32 provider has informed me that as they no longer provide annuities, I have to find myself a different provider.  However, they do have a selected annuity provider, with whom they have some “agreement” to honour the GMP on their behalf.

It seems that it is not a case of a third party taking over their S32 policies, or providing annuity policies on their behalf.  Rather, it seems to be a transfer out, and I’ll have to do the legwork, obtain a quote, pay for IFA fees if necessary, explicitly request that they transfer me out … and accept any inherent risk that I may be worse off as a result.  Indeed, they’ve issued various generic warnings that I could lose my pension guarantees by transferring, whilst forcing me to do so.

Ordinarily, when someone takes their benefits as annual income from their S32 provider, is it first converted to an annuity product?  Or does it remain as a S32 product?

The S32 policy means that they provide me with certain guarantees.  Can they legally/contractually force me to transfer out in this way, even if there is a third party that they recommend who will supposedly honour these guarantees?  Or are they obliged to provide a policy themselves, even though they claim that they no longer do annuities?

I haven’t discussed this with their selected annuity provider as yet.  However, is there anything in particular that I should check to ensure that I won’t be worse off?  Presumably, if they acknowledge that they’ll honour the GMP in my plan, it follows that this will include all indexing (3% on post-88) and all death benefits (50%)?

Should I take my S32 provider’s written assurances about honouring my GMP as sufficient for me to have some comeback should this prove not to be so, providing I do indeed transfer to their selected provider?

Thanks

dunstonh

My S32 provider has informed me that as they no longer provide annuities, I have to find myself a different provider.  However, they do have a selected annuity provider, with whom they have some “agreement” to honour the GMP on their behalf.

It is quite normal now for the provider not to offer an in-house option.   Typically, where there is GMP, you would use their linked provider.

It seems that it is not a case of a third party taking over their S32 policies, or providing annuity policies on their behalf.  Rather, it seems to be a transfer out, and I’ll have to do the legwork, obtain a quote, pay for IFA fees if necessary, explicitly request that they transfer me out … and accept any inherent risk that I may be worse off as a result.  Indeed, they’ve issued various generic warnings that I could lose my pension guarantees by transferring, whilst forcing me to do so.

The normal scenario is that the S32 provider will use a third party annuity provider and you only need an IFA if you don't want that option.    You don't do the legwork.

The annuity provider won't take over the S32.  They will accept the funds from the S32 provider who will increase them to make up the annuity to the required level.

Ordinarily, when someone takes their benefits as annual income from their S32 provider, is it first converted to an annuity product?  Or does it remain as a S32 product?

You are buying an annuity. 

The S32 policy means that they provide me with certain guarantees.  Can they legally/contractually force me to transfer out in this way, even if there is a third party that they recommend who will supposedly honour these guarantees?  Or are they obliged to provide a policy themselves, even though they claim that they no longer do annuities?

There is no legal requirement that forces them to have to offer the annuity.  

Presumably, if they acknowledge that they’ll honour the GMP in my plan, it follows that this will include all indexing (3% on post-88) and all death benefits (50%)?

The provider increases the transfer value to allow the same level of benefits to be paid via the annuity provider.

Should I take my S32 provider’s written assurances about honouring my GMP as sufficient for me to have some comeback should this prove not to be so, providing I do indeed transfer to their selected provider?

It is a routine transaction.   Nothing to be concerned about.

wary

That's great!  Thanks DunstonH for your comprehensive response.  That's provided the clarification that I was after.