Reassure & L&G

Wigglevoom

Hello everyone.   I’m at that age where the Pensions are creeping up on me.  

I have a GMP, originally with L&G, they offloaded to Reassure, I see this has been discussed on here.  My GMP although not huge, 12 years of my early career, comes with some index linked increases, the plan is fully funded with a surplus.  £5k yr +3% annual increases, but a £44k surplus.  The fund is currently £136k.  

Reassure pushed me toward L&G, who gave me a  Quote, they seem to have backtracked on their quote, they said £5k annually with 3% and £38 tax free, all charges are included. Today I find they have reduced the Tax free portion to £28k, they say market fluctuations?   This was from 7/12 till today.  Reassure also want a slice, £4k early out fee, fair enough, I’m 62, but I’ve been repeatedly told the plan is fully funded.  I’ve cancelled my arrangement with L&G and on hold awaiting advice.  

gm0

There is a right to transfer DC pensions on the face of older pensions legislation.  So although there can be obstacles and form filling. 

You do not have to stay with Reassure. Or buy your annuity with them involved via referral to L&G or otherwise. Nor do you need to limit yourself to L&G.  I am not saying that they are a bad company to use.  But there is certainly no guarantee this is the best offer you could get.

When you talk to Reassure about accessing the existing pension in situ - they will only talk to you about the scheme options in your existing product and those rules.  And not - at all - about other things you could do elsewhere.  Not being funny.  But those are the rules they have to follow.  Unhelpful as they may seem.

The terms for accessing your pension ahead of "normal" retirement age will include a lower annuity rate for more years starting earlier.  As is normal.

Your Reassure product may have some kind of fee - this aspect requires you or your adviser to look at your scheme booklet and terms carefully.  This fee may be avoidable via transfer out - instead of taking the pension in situ and paying it.  Though another DC product will have its own charges.  And cashback offers.  

Transfer is a different type of transaction (with different admin) to pension access. And you existing product will have whatever old structure has been passed down the years.

Gather info and consider talking to an IFA (who can do whole of market annuity quotes for you) and talk to you about the different annuity options that might suit you best.  Minimum guarantee periods, types of indexation, spouse benefit % all that stuff.  I do drawdown so annuities is not my specialist subject.

Of course your GMP terms could be enough to make it unwise to leave.  Or once factored into transfer value. Less so.  Sums needed based on whole of market knowledge on rates.  Not my thing.

elouise01582

GMP is classed as a safeguarded benefit so if you do anything other than take the GMP income and the transfer value is more than £30,000 you will need to take financial advice. The GMP may increase at 3% per annum if post 1988 but it is NOT index-linked. Not sure why Reassure are charging you an exit fee as I thought they cannot usually apply more than 1% of the value of your funds.  Possibly they can get round this if you are taking benefits early.  Whilst a £10K reduction in the tax-free cash is not impossible it does sound high.  Ask for an explanation and you could consider waiting to see if the value recovers - but it may not - depends where you are invested.  Of course if that £4,000 fee is coming out of your tax-free cash then the reduction in that is really only £6,000.  Makes more sense then but I would still ask why the fee is so high - and why it wasn't mentioned on that previous L & G quotation as well.

sandsy

Are you male? Is this a Section 32 arrangement invested in with profits? If so, the fee could be a market value adjustment.

Wigglevoom

Thanks everyone, very helpful. Yes, with profits section 32, I am male, and your point re market value adjustment is the issue. I’m a bit annoyed the way this has been handled. No correspondence despite my attempts to get an update, Reassure eventually sent an email, we need to talk to you, we have been trying to get in touch etc.   when I called they hit me with the good news, that the quote and options I’d been given weren’t being honoured and the numbers will now be very different.  What’s the point of these quotes?   As you can see I’m an amateur, trying to negotiate the pension minefield.  Got a call with L & G today, I hope.  

dunstonh

I have commented on the other thread, and for the benefit of other posters, I suspect it comes from the drop in L&G annuity rates that happened after Christmas.

pre Xmas L&G rates were very high and were sufficient to meet the GMP.   However, L&G rates fell off a cliff (probably as their servicing has also fallen off a cliff and they needed to reduce incoming business).   So, whilst they could meet the GMP before, they cannot meet it with the new rates and therefore the TFC is reduced to allow the GMP to be met.

Just a guess but it would tie in with what has happened.