TFLS and pension transfer

xylophone

Was the "employer's pension scheme" a contracted out salary related scheme?

Were you a member of any other such scheme prior to 6/4/2016?

Have you obtained a State Pension Forecast?

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

Is a COPE shown?

Have you checked the "safeguarded benefits" aspect with Aviva?

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/495377/pension-benefits-with-a-guarantee-factsheet-jan-2016.pdf

dunstonh

sheilanick said:

dunstonh said:

That confirms it then.  You have a section 32 buy out bond which has GMP.   The fund value is above £30,000.  So you would need an adviser to recommend the transfer.

The fund is now worth, including final bonus of c£80000, giving a current estimated annual income of £1760.

Is that income figure from the projections or the GMP?    Often the projections show the assumptions rather than the GMP.

It is the projection. None of the paperwork issued has any reference to GMP. 

Statements often don't contain info on the GMP but just use the default assumptions.  You need to ask the provider what the GMP is.

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State pension forecast indicates full pension. 

What exactly does the forecast say?

See

https://www.which.co.uk/money/pensions-and-retirement/state-pension/your-state-pension-forecast-explained-a24r12y9jt41

Is there an indication that you need to continue to contribute to reach your forecast?

COPE £73.92 per week

This was used once only (6/4/2016) in establishing your "starting/foundation amount" for NSP.

Two calculations were done (under old and new rules) - your starting amount was the higher of the two. 

Old Rules

NI years/30 (max) x  Full Basic + (Additional State Pension - Deduction for Contracting Out).

New Rules

(NI years/35 (max) x Full NSP ) - £73.92 (Your Contracted Out Pension Equivalent).

For full explanation of the above see 

https://www.gov.uk/government/publications/new-state-pension-if-youve-been-contracted-out-of-additional-state-pension/the-new-state-pension-transition-and-contracting-out-fact-sheet

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Male. 65 later this year

Employer Leaving Statement dated 1991:

Proposed Transfer payment        £11356
EPB Liability included in transfer.  £0
Proportion of proposed Transfer payment relating to GMP Liability £5222

OPTION: PRESERVED PENSION.

 pension £3088.90 
GMP:
Total.                        £1062.88 pa
post 6/4/88 element £231.40 pa

From the above, when you left the employer, it would seem that you were offered the option to leave your pension deferred (preserved) within the scheme?

In which case

Pension at Date of Leaving £3088.90

Of which

Pre 88 GMP £231.40

Post 88 GMP £1062.88

Excess £1794.62

If so, then  below  indicates   what likely would have been the case with regard to revaluation of GMP (Fixed Rate apparently in this scheme)/ excess

https://www.barnett-waddingham.co.uk/comment-insight/blog/revaluation-for-early-leavers/

https://techzone.abrdn.com/public/pensions/Tech-guide-guaranteed-min-pen

However, you opted to transfer your benefits out of the scheme into a policy with Friends Provident.

You need to establish whether or not the policy  was a S32 which accepted and protected the GMP liability or whether there are any other "safeguarded benefits".

The reason I raise this enquiry is because in your post

https://forums.moneysavingexpert.com/discussion/comment/79483417/#Comment_79483417

you refer to

The transfer was in 2 parts £5222 in a protected rights transfer and non protected rights £6516.

and in 

https://forums.moneysavingexpert.com/discussion/comment/79482447/#Comment_79482447

to

Friends Provident Personal Pension Plan members summary that I received when the policy was taken out. This states that I may choose to receive part of the arrangement as a TFLS. I can’t see section 32 or buy out bond anywhere. 

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


In case you are wondering, re EPB, between 1961 and 1975 the government ran a scheme called the state Graduated Retirement Benefit scheme, in addition to the basic state pension scheme. It was possible for occupational pension schemes to opt-out their members of this scheme but only on the condition that they provided an amount called an Equivalent Pension Benefit (EPB) to make up for this. On leaving employment these amounts were often held as deferred pensions.

Not all occupational schemes chose to opt out of Grad.  Relative who was in DB scheme from 1968 has some Grad pension.

dunstonh

1) Ask if the scheme has safeguarded benefits, in particular relating to GMP.

2) Request a statement to reflect the actual GMP

3) I retire in 3 months, is it reasonable to expect that Aviva should be able to produce an accurate annuity amount now?

4) I understand that under normal circumstances, I should obtain alternative annuity quotes. Does that advice apply here, given that I have health issues.

1 - correct

2 - not a statement but what the safeguarded benefits are and the amounts involved.  This would give you the GMP amount.

3 - more complicated than that.   Aviva have an in-house salesforce for annuity quotes.  an IFA is likely to be better.  However, if the GMP is high, then no annuity is going to get close to it and Aviva have to honour the GMP and they won't charge if that is the case but they do when they proceed with the open market option.   I would wait to see what the GMP is first to see whether its likely that the open market option could beat it. Rather than go through the medical questionnaires etc to do the OMO.

4 - Only if you are applying for an annuity and the rate is better than the GMP.   if the fund is insufficient to meet the GMP and is having to use up the PCLS then its likely the GMP is higher than the OMO.  

So, I would put obtaining annuity quotes to one side for the moment and focus on finding out what you have first.  If it comes back that the GMP equates to say 9% of the transfer value then no OMO is getting to close to that and there is no point going through that process.   Whereas if the GMP equates to 3% of the transfer value, then an OMO would beat it.