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  • FIRST POST
    • Ann.
    • By Ann. 9th Aug 18, 11:35 AM
    • 2Posts
    • 0Thanks
    Ann.
    Section 32 pension fund
    • #1
    • 9th Aug 18, 11:35 AM
    Section 32 pension fund 9th Aug 18 at 11:35 AM
    I have recently received a quote for my pension from Aviva which was an old company pension. I had my 60th birthday in July 2018.

    The quote says that I can get either 36.79 per month(441.48 per year) with 3% yearly increase on 240.24.
    No other options.
    No tax free lump sum.

    As I have other pensions in place(current employer and private plan with Old Mutual). I requested a transfer of the Aviva pension into my Old Mutual pension, as my financial adviser suggested.
    I also went on to the chat site of Pensionwise who said that I would be able to do this.

    Aviva have said that they will not be able to transfer the pension as it is a section 32 and there is a guaranteed minimum pension.
    As the guaranteed element is so small compared with the other pensions that I already have, I feel that this is unreasonable as the amount quoted will last until into my 90,s ,which is much higher than the average life expectancy, even with no growth in the fund.

    Can Aviva insist on this? And if not how can I get them to release the fund?
    Ann
Page 1
    • woolly_wombat
    • By woolly_wombat 9th Aug 18, 11:50 AM
    • 585 Posts
    • 384 Thanks
    woolly_wombat
    • #2
    • 9th Aug 18, 11:50 AM
    • #2
    • 9th Aug 18, 11:50 AM
    http://www.aviva-for-advisers.co.uk/adviser/site/public/tech-centre/tech-article-detail/section-32-arrangements-gmps-and-transferring

    Have a good read and see which scenario applies in your case.
    • dunstonh
    • By dunstonh 9th Aug 18, 11:58 AM
    • 95,408 Posts
    • 63,057 Thanks
    dunstonh
    • #3
    • 9th Aug 18, 11:58 AM
    • #3
    • 9th Aug 18, 11:58 AM
    I requested a transfer of the Aviva pension into my Old Mutual pension, as my financial adviser suggested.
    This has me on guard.

    If an adviser is recommending it then the adviser controls the transfer and with a section 32 buy out bond with GMP, Aviva would need the adviser to sign the advice given declaration.

    if the adviser is getting you to do it without advice then its either because it is not good advice to do it and the adviser doesnt want the bad advice on their hands or the adviser does not hold the regulatory permissions and is getting you to do it because they cant (which means they are not in a position to "suggest" anything)
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Ann.
    • By Ann. 9th Aug 18, 6:56 PM
    • 2 Posts
    • 0 Thanks
    Ann.
    • #4
    • 9th Aug 18, 6:56 PM
    • #4
    • 9th Aug 18, 6:56 PM
    Thank you. struggling to digest the fist answer. the second answer regarding the adviser, the response from Aviva was to the adviser saying they cannot transfer. The fund is worth 14000 and they say it is not enough to transfer.
    • dunstonh
    • By dunstonh 10th Aug 18, 12:35 AM
    • 95,408 Posts
    • 63,057 Thanks
    dunstonh
    • #5
    • 10th Aug 18, 12:35 AM
    • #5
    • 10th Aug 18, 12:35 AM
    Thank you. struggling to digest the fist answer.
    Section 32 buy out bonds with GMP require a specialist type of adviser. They have to hold an extra qualification and have the regulatory permissions (at firm level). With an advised case, the adviser would provide you advice and then complete the discharge forms and application and issue you with a written report. The adviser does all the work on an advised case.

    Providers are checking the firm's regulatory permissions on cases like these and where the firm does not hold the permissions, they will not accept a transfer through that adviser.

    The fund is worth 14000 and they say it is not enough to transfer.
    The receiving scheme would almost certainly reject it if they were being asked to honour the GMP. (this is where the transfer value would be insufficient to meet the GMP). However, if the receiving scheme it not being asked to accept the GMP and it is being lost on transfer, then it should not be a problem (although that would require the higher permissions as mentioned above).

    I cannot see why Aviva would block the transfer unless its a permissions issue. The size of the fund value is not an issue for Aviva if the GMP is being given up. Can you go back to the adviser and get them to find out the reason it has been blocked.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • xylophone
    • By xylophone 10th Aug 18, 10:19 AM
    • 26,910 Posts
    • 16,057 Thanks
    xylophone
    • #6
    • 10th Aug 18, 10:19 AM
    • #6
    • 10th Aug 18, 10:19 AM
    I have recently received a quote for my pension from Aviva which was an old company pension. I had my 60th birthday in July 2018.
    You are female?

    Age 60 is GMP age for a female. It is 65 for a male.

    You had a company pension from an employment between 1978 and 1997.

    The pension scheme was contracted out and therefore had to guarantee to provide you with a pension at least as great as would have been provided by the State Earnings Related Pension Scheme.

    When the pension came into payment, the scheme would have had to index link the post 88 GMP in payment up to 3%.

    The pension was transferred out of the Scheme (as a monetary value) into a S32 policy on the basis that the policy provider had to honour the GMP as above, regardless of how the investments within the policy performed.

    There has been low growth on the policy and the CETV (14,000) is not sufficient to support the GMP - nevertheless Aviva has to provide it because it guaranteed to do so when it accepted the transfer.

    http://www.thisismoney.co.uk/money/pensions/article-3680749/I-want-pension-freedom-trapped-section-32-buyout-plan.html

    Your policy is of a much lower value than that covered in the above article but the principle remains the same.

    Nevertheless, if you had remained in the DB occupational scheme and wanted to transfer out, if the value of the benefits had been under 30,000, you would not have required the advice of a Pension Transfer Specialist. You would still have been "giving up" the indexing guarantee on the post 88 GMP. had the value been greater, you would have required PTS advice but even had this been negative, it would have been possible to transfer out if a receiving scheme had been prepared to accept the pension.

    Therefore there seems to be a certain inequality in treatment?

    You need to discuss the matter again with your adviser.
    Last edited by xylophone; 10-08-2018 at 10:29 AM. Reason: add
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