Aegon s.32 Buyout Plan

WitsEnd101

Hi, I'm a long time lurker, first time poster. I have been enjoying this forum immensely over the last few years, especially since I saw the road to retirement end date in sight. So last week I am pleased to say I handed in my notice and triggered early retirement (ER) commencing in just over 3 months time.

I have a moderately healthy DB scheme that starts after the date of my ER. Additionally, a comparatively good SIPP, S&S ISAs and a cash buffer to help bridge the SPA and beyond. I previously consolidated all my previous workplace DC schemes into my SIPP for convenience and to reduce fees, except for one of the schemes. It's a pension that my previous employer transferred to Aegon with a s32 buyout plan, whatever that means.

This Aegon pension has an enhanced protected tax-free cash (PTFC) amount so I did not transfer it into my SIPP to ensure I retained this benefit. I have just received a pension summary from Aegon with retirement options. 1) PTFC with Annuity; 2) PTFC with drawdown; and 3) UFPLS without PTFC.

I have ruled out 3) as I want to retain the PTFC benefit, but am favouring 2) drawdown. The statement in relation to the drawdown option states "We're able to pay out the PTFC amount and apply the balance to a flexi-access drawdown plan on our digital platform. If you choose a flexi-access drawdown plan on our digital platform, once this has been set up you can transfer to another provider if you want to. We can't pay the balance directly to any other provider. Please speak to a financial advisor if you want to take this option".

The conditionality around the drawdown option is a bit ambigious to me. Do I need an FA if I stick with Aegon's digital platform or not? I spoke to Aegon on the phone a good while ago and the call handler said I need a FA for anything other than annuities. On one interpretation of the statement above I don't need an FA if I stick to the Aegon platform (I hope), but I fear its as described by the call handler, a FA is required for the drawdown even if I'm using the Aegon digital platform.

The current pot value is only just over £46k at the time of writing, so am concerned I will end up paying a chunky FA fee for what might be a relatively simple task. Assuming I need to appoint a FA to expedite the drawdown option, can anyone advise me on the cheapest way to proceed and what sort of fee I might expect to pay for this service? Many thanks.

cloud_dog

What is the value of the plan, and what is the projected or guaranteed pension?

WitsEnd101

cloud_dog said:

What is the value of the plan, and what is the projected or guaranteed pension?

Thanks for replying, it's much appreciated. The Aegon quote says:

- Fund value - £46,229

- PTFC - £19,113

- Balance to be moved to drawdown - £27,116

In the interim I have called Aegon and they confirmed that I do need a FA, whether I use their digital platform or move the balance to another provider.This is disappointing.

So I now know I have to pay for a FA to take the full PTFC. The PTFC vs the standard TFC (25%) is 19,113 - 11,557 = £7,556. The question therefore is what is the cheapest way to access this £7,556. Grateful for any suggestions.

dunstonh

The conditionality around the drawdown option is a bit ambigious to me. Do I need an FA if I stick with Aegon's digital platform or not? I spoke to Aegon on the phone a good while ago and the call handler said I need a FA for anything other than annuities. On one interpretation of the statement above I don't need an FA if I stick to the Aegon platform (I hope), but I fear its as described by the call handler, a FA is required for the drawdown even if I'm using the Aegon digital platform.

Aegon cannot give advice.   So, they just covering off that you need to speak to an adviser if you want advice.    PTFC is not a safeguarded benefit.  So, it isn't necessary to use an adviser.

You cannot say on the same product as Section 32s do not support drawdown.   So, it will need transferring to a new plan.  Sections 32s are not on any of the (three) platforms Aegon has.  They are still in the old Life & pensions part of aegon (ex Scottish Equitable).

In the interim I have called Aegon and they confirmed that I do need a FA, whether I use their digital platform or move the balance to another provider.This is disappointing.

That is not correct unless there is a safeguarded benefit.      You cannot use any of the Aegon platforms (which is no loss as they are rubbish).  But you can take the PTFC and transfer the rest without advice as long as there are no safeguarded benefits.

WitsEnd101

dunstonh said:

The conditionality around the drawdown option is a bit ambigious to me. Do I need an FA if I stick with Aegon's digital platform or not? I spoke to Aegon on the phone a good while ago and the call handler said I need a FA for anything other than annuities. On one interpretation of the statement above I don't need an FA if I stick to the Aegon platform (I hope), but I fear its as described by the call handler, a FA is required for the drawdown even if I'm using the Aegon digital platform.

Aegon cannot give advice.   So, they just covering off that you need to speak to an adviser if you want advice.    PTFC is not a safeguarded benefit.  So, it isn't necessary to use an adviser.

You cannot say on the same product as Section 32s do not support drawdown.   So, it will need transferring to a new plan.  Sections 32s are not on any of the (three) platforms Aegon has.  They are still in the old Life & pensions part of aegon (ex Scottish Equitable).

In the interim I have called Aegon and they confirmed that I do need a FA, whether I use their digital platform or move the balance to another provider.This is disappointing.

That is not correct unless there is a safeguarded benefit.      You cannot use any of the Aegon platforms (which is no loss as they are rubbish).  But you can take the PTFC and transfer the rest without advice as long as there are no safeguarded benefits.

Thanks, that's incredibly helpful. I must admit I thought that the enhanced PTFC would constitute a safeguarded benefit i.e 41% instead of 25% but I probably have misunderstood this.

During my call to the Aegon call handler they said that I could transfer the pension to my SIPP provider no problem. In doing so I would lose the enhanced portion of the PTFC. I would love to tranfer to my SIPP without advice. Again grateful for any suggestions on how to achieve this goal.

xylophone

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

Scheme specific protected tax-free lump sums

Members who had a right to more than 25% tax-free cash on 6 April 2006 may still have their tax- free cash entitlement protected. However, as this relates to a lump sum rather than a secure retirement income, it does not constitute a safeguarded benefit, provided that there are no other safeguarded benefits attached to the policy.

You mention a transfer to a S32 - was there any guaranteed level of income promised under the plan? See link above.

dunstonh

During my call to the Aegon call handler they said that I could transfer the pension to my SIPP provider no problem. In doing so I would lose the enhanced portion of the PTFC. I would love to tranfer to my SIPP without advice. Again grateful for any suggestions on how to achieve this goal.

You don't transfer the uncrystallised value.    You transfer the post PTFC crystallised value (flexible benefits).

I have done several of these and you just need to make sure that they know you are taking the PTFC and transferring the remainder before any transfer forms are submitted to the new provider.   The new provider needs to know it is crystallised benefits they are receiving.

WitsEnd101

Thanks xylophone. I think the link may be very helpful for my call with Aegon.

WitsEnd101

dunstonh said:

During my call to the Aegon call handler they said that I could transfer the pension to my SIPP provider no problem. In doing so I would lose the enhanced portion of the PTFC. I would love to tranfer to my SIPP without advice. Again grateful for any suggestions on how to achieve this goal.

You don't transfer the uncrystallised value.    You transfer the post PTFC crystallised value (flexible benefits).

I have done several of these and you just need to make sure that they know you are taking the PTFC and transferring the remainder before any transfer forms are submitted to the new provider.   The new provider needs to know it is crystallised benefits they are receiving.

I am a little bit confused about this but also grateful that it provides me with some hope.

So my steps are I should go back to Aegon and tell them I simply wish to take my post PTFC crystallised value? Also to clarify to them that I will be taking the PTFC before any transfer forms are sent to my SIPP provider? Anything else I should say if they tell me no?

Based on xylophone's info I probably should tell Aegon that the PTFC is not a safeguarded benefit therefore advice is not required.

WitsEnd101

dunstonh said:

During my call to the Aegon call handler they said that I could transfer the pension to my SIPP provider no problem. In doing so I would lose the enhanced portion of the PTFC. I would love to tranfer to my SIPP without advice. Again grateful for any suggestions on how to achieve this goal.

You don't transfer the uncrystallised value.    You transfer the post PTFC crystallised value (flexible benefits).

I have done several of these and you just need to make sure that they know you are taking the PTFC and transferring the remainder before any transfer forms are submitted to the new provider.   The new provider needs to know it is crystallised benefits they are receiving.

Just came off a very long and frustrating the phone with Aegon and they are adamant that I cannot access my PTFC as you described. They told me that Aegon cannot provide flexi access drawdown within the plan I have. To take the PTFC I need to start the process for a new plan within a different department. In order to set up a new plan I need an FA and therefore advice.

So I guess I am back to square one. I need to appoint a FA to expedite the drawdown option. Therefore can you or anyone suggest to me the cheapest way to proceed and what sort of fee I might expect to pay for this service? Thanks.

DRS1

Presumably there is a reason you don't want the PTFC plus annuity option - didn't they say you would not need a financial adviser for that?