Royal London (ex CIS) with GAR

Preacher64

As title, I have a small ex CIS pension with RL which has a GAR associated with it at age 65.

I an 58 and have been retired for 3.5 years with a DB pension which puts me in the HR tax bracket. Our IFA has advised us to increase our spending, so the RL pension is wholly unnecessary and we had thought of cashing in / flexibly accessing it and gifting to our nieces.

RL documentation states that a pension transfer specialist is not required for transfers or conversions involving a GAR. It then goes on to say that the adviser firm will need to have pension transfer permission to provide the advice.

Is anyone aware what difference the above makes to the process and is it common for IFA firms to hold pension transfer permission.

Our IFA that produced our annual report is currently on leave so I thought I would ask on here and hopefully get some information while awaiting her return.

Thanks for any feedback.

DRS1

"RL documentation states that a pension transfer specialist is not required for transfers or conversions involving a GAR. It then goes on to say that the adviser firm will need to have pension transfer permission to provide the advice."

Does it really say NOT?

How much is the GAR?

Preacher64

DRS1 said:

"RL documentation states that a pension transfer specialist is not required for transfers or conversions involving a GAR. It then goes on to say that the adviser firm will need to have pension transfer permission to provide the advice."

Does it really say NOT?

How much is the GAR?

Definitely implies it’s not a requirement.

They don’t specifically state in the annual statements what the GAR is, but the annual difference is very small and I understand from posts on here that the ex CIS GAR’s are comparatively poor.

sandsy

That sounds right. Any advice firm that advises on giving up safeguarded pension benefits (with some sort of guarantee about the rate or level of the income payable) needs the pension transfer permission. 

But a pension transfer specialist is not required for a GAR as set out in FCA rules:
https://www.handbook.fca.org.uk/handbook/COBS/19/1.html

That's because advising on giving up GARs is considered to be less complex than advising on giving up other forms of safeguarded benefits (such as defined benefit pension schemes). 

If a firm only advises on GARs, it can get a limited form of the pension transfer permission.

The legislation only requires you to take advice if the transfer value exceeds £30,000.

Preacher64

Thanks for your view, Sandsy.

it has probably been my misunderstanding but from previous threads I understood that a GAR was a safeguarded benefit and that was the end of it. A PTS was required at a significant cost and approval would be difficult to obtain.

I’m just wondering what this relaxed stance for GAR’s means in practical terms and if an IFA who carries out Retirement Planning would be likely to hold the required Pension Transfer Permission.

dunstonh

RL documentation states that a pension transfer specialist is not required for transfers or conversions involving a GAR. It then goes on to say that the adviser firm will need to have pension transfer permission to provide the advice.

Full PTS permissions are not required (although they would work).  Limited permissions, which is what most IFAs hold, are required.

Is anyone aware what difference the above makes to the process and is it common for IFA firms to hold pension transfer permission.

Limited permissions do not make the adviser a PTS.    No its not common for IFA firms to hold PTS permissions.   Although most will hold limited permissions in respect of GAR.

it has probably been my misunderstanding but from previous threads I understood that a GAR was a safeguarded benefit and that was the end of it. A PTS was required at a significant cost and approval would be difficult to obtain.

I’m just wondering what this relaxed stance for GAR’s means in practical terms and if an IFA who carries out Retirement Planning would be likely to hold the required Pension Transfer Permission.

A GAR is a safeguarded benefit.      However, do be aware that it will likely still be quite expensive.   PI insurer questions ask if the adviser firm has transferred plans with safeguarded benefits into flexible plans and then asks for the details on a case by case basis.   The question is "have you ever....."   so they cumulatively add up the PI insurers increase the annual premiums forever more.  Its both time consuming and higher risk to overrule a GAR.  Consequently its expensive.

Preacher64

Thanks for your comprehensive reply, dunstonh.

I have a telephone consultation scheduled with RL which would start the process of using the funds, minus the 25% TFLS, to generate a very small lifetime annuity, which seems to be the only option with them. The pension options documentation supplied does indicate a fixed term annuity would be an option but this was rejected during the initial call.

I’ll contact my IFA’s office beforehand to see if they can facilitate conversion to flexible drawdown and, if not, just proceed with the annuity.

All responses have been greatly appreciated.

Albermarle

I do not think you have said yet how much the pension is worth ? Is it more than £30K ?

Preacher64

It’s £55K. RL don’t give any figures, or mention the £30K threshold, in their documentation. Just that to flexibly access, transfer or wholly cash in a pension with a GAR, would require advice so I’m not entirely sure what their approach would be if it was less than £30K although I appreciate that legislation says that advice is not required.

DRS1

Preacher64 said:

Thanks for your comprehensive reply, dunstonh.

I have a telephone consultation scheduled with RL which would start the process of using the funds, minus the 25% TFLS, to generate a very small lifetime annuity, which seems to be the only option with them. The pension options documentation supplied does indicate a fixed term annuity would be an option but this was rejected during the initial call.

I’ll contact my IFA’s office beforehand to see if they can facilitate conversion to flexible drawdown and, if not, just proceed with the annuity.

All responses have been greatly appreciated.

In your first post you said the GAR is linked to age 65.  Presumably that means you lose it if you take an annuity early.  Do they treat that the same as a transfer in terms of advice needed?  I am guessing not but it does seem illogical if you lose the GAR either way.

Preacher64

Yes. Taking the pension in any form before age 65 results in the loss of the GAR.