Frozen Pension Advise- Pre 1988 GMP Dynamic

sapphire_uk

Hi

Can anybody give me any advise for a friend.

He had a company pension which started in 1978 - 1988 which was frozen when the company went into liquidation.

The pension was with the works company and Provident Mutual.

No statements or letters have been sent to him for years. He had to use the Internet to trace this pension.

Provident Mutual was taken over by Norwich Union.

The pension is a Pre 1988 GMP Dynamic.

Having paid into this pension for all those years he contacted Norwich Union and they had to go into there archives to find the pension.

He recently received a reply from Norwich union. Stating that he is not entitled to any benefits.

He is age 50, but to our understanding we thought that a lump sum of 25% was entitled to be claimed?

They state that any pension paid must be equal to the GMP that would be payable from his 65th birthday. But they say that its not had time to grow sufficiently to provide that level of pension now. But its guaranteed to do that by his 65th Birthday.

We don't know what to do, we have no understanding of the laws and regulations involved in pensions.

Would really appreciate any advise

dunstonh

Sounds like he has a section 32 buy out bond. The only way to get a pension commencement lump sum out of it at this time is to transfer it to a personal pension. However, there is a very very very very good chance that the GMP and Guaranteed annuity rates on this pension are valuable and best left until selected retirement age (65).

sapphire_uk

thanx for reply.

We are not sure what a section 32 buy out bond is?

It also would be interesting to find out more about this pension in case it is very valuable.

He was hoping for a cash lump sum, however i told him about your reply and needs really to know more about this type of pension.

Have you any website that could possible explain more about the pension.

Kind Regards :-)

dunstonh

We are not sure what a section 32 buy out bond is?

Its a type of pension that tends to have different rules to personal pensions. Its a plan that takes transfers from occupational schemes and very often has guarantees built into it which would not be available on personal pensions.

Have you any website that could possible explain more about the pension.

Wouldnt do much good as S32s have the terms set on an individual basis so it would require the policy details to look at. Generically, you could look up section 32 buy out bond on google but it wont be specific enough to his case.

He was hoping for a cash lump sum

He can still get it with a pension transfer but he needs to be aware of what he will be losing. Typically the figures being lost can run into thousands of pounds. So, it isnt something that should be done without knowing the facts.

EdInvestor

Ask Norwich Union the following info:

1.When does the pension pay out (age)?
2.How much will it pay out when it matures at this point ?(ie what is the Guaranteed Minimum Pension (GMP)
3.How much is the fund worth now (transfer value)?

Come back and give us the figures and we can explain what you should do.It's very likely as mentioned that it should be left alone, as you would lose a lot by taking it early. In some cases that isn't so, but you need to check the figures.

wannabestayathomemum

I used to deal with pension schemes that were being wound up following a company becoming insolvent so have a little knowledge as to what happens. From what the original post says It sounds as though once the pension was wound up there were insufficient funds left to cover the pensions of the scheme members. This can happen as when an Independent Trustee is appointed to wind up the scheme their costs are taken directly from the pension scheme funds.

I know several insurance companies had "guarantees" built into their schemes that meant that they would agree to at least pay the Guaranteed Minimum Pensions that people had built up as a result of being contracted out of SERPS. What may have happened in this case is that once the pension scheme had been fully wound up the small GMP pensions were secured with the cheapest provider and they have taken over responsibility for paying the GMP pensions when the person reaches state pension age.