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Old Feb 1st 2017, 8:33 am   #1
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Default Getting close to retirement UK Pesions, what to do?

I have just received a letter from 1 of the 3 UK pension schemes. It matures in March (Benefit date age 60). The other two are 5 years away (i.e. mature when I'm 65).

The one in question is a little different. When I left the company I had financial advice given to transfer from the Company Scheme (when PEP's were the rage). It actually became 2 policies in 2001 as a result of the "Financial Services Authority's Review of Personal Pension Business".

More recently I think when Norwich became Aviva statements(sic) didn't divulge any useful information about the worth of my policies and having the two confused matters. Anyway I basically need to make a decision about what to do (I thought previous gumpf related to the 2nd redress policy). Letters say go to www.pensionwise.gov.uk, go there and not much help in regards to overseas. Searching online basically results in companies trying to get you to transfer with them via QROPS. I'm loathe to go to any Financial services without knowing and understanding a lot (still waiting a hour later for a download of "A guide to QROPS", guess they might have used that as a scam to get your phone #.

A rough overview of the financial situation is. I'm not working but my Wife is. I have a little under $300k in Super slowly rising (in Diversified Fixed Interest). The pension in question has a transfer amount of close to 44K UK. The GMP is stated as
Quote:
190.32 increased by 7.5% compound for each complete year from 6th April 1990 to the 6th April immediately preceding the attainment by the insured of the State Pensionable Age of 65 ore the Insured's death whichever is the earlier and increasing annually from the State Pensionable Age in respect of that part earned from 6th April 1988 at a compound rate of 3%.
If that comes into play at all. (I have a letter from April 2007 stating a GMP of 1791).

For one of the Other pensions I have a certificate of deferred pension benefit that mentions a GMP of 14.80 a week (from 1997). The other has a GMP of 731.12 (projected to 6097) and excess of 2283.53 (projected to 8525.47) totals being 3014.65 (projected 14622.47) dated 1st April 1996.

What I think I'd like to do is get what I can into my Super as I see that as a family investment. My wife is 17 years younger than me and is currently working full time and is likely to remain doing so and we are relatively comfortable living (no mortgage). However I would like to pay as little tax is as possible either end.

A factor that may also come into play is that my mother passed away last year and there could be some inheritance.

I also have concerns for others in a similar predicament, especially considering that I'm normally pretty clued up on these sort of things.

Came here and handled residency on my own, even catching them out trying to whack the two year wait on me (I had a son).

When the Child Support legislation, especially the formula, changed in 2008 I had written an online CS Calculator that even today is used by some in the CSA in preference to the limited and more awkward official online calculator.

I was a Tax-Help volunteer for a year (liked helping but not some of the things that went on e.g. the ATO tendency to consider everyone a criminal).

I've done my own tax, my wife's and my son's every year (mine since coming here in 98). I even did 5 years of late returns for my Wife. But this pension stuff I find daunting.
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Old Feb 9th 2017, 1:34 am   #2
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Default Re: Getting close to retirement UK Pesions, what to do?

So, you want to know if you should transfer one of your 3 uk pensions to your Oz fund? Short answer is that you need some financial advice - its complicated and your decision will depend on your circumstances.

Firstly you have to deal with two separate tax systems that handle pensions completely differently. You do not want a tax bill in two countries. For example QROPS has changed - this is the list of those the HRMC approve.
https://www.gov.uk/government/public...ions#australia
If your fund in Oz is not on this list you are unlikely to be able to do a direct transfer without incurring tax.
You can take a lump sum out your UK fund, but you would pay tax on that in Oz
You need to think about whether you want the money here, when its in AUD, or in the UK paying you a specific sum, subject to currency fluctuations and income tax.
You may have more options now you are 60, but this is a minefield and you need a specialist.

They should be able to explain to you clearly what your options are. I'm afraid its not going to be free.
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Old Feb 9th 2017, 2:58 am   #3
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Default Re: Getting close to retirement UK Pesions, what to do?

Scotty1, I've spent most of my time since originally posting looking into this. The first fund is what they call a S32, buyout policy or a Defined Contribution.

Furthermore, it is one that has a Benefit Date at Age 60. I'm currently putting together a letter to Aviva insisting that they honour the contract to pay "an immediate pension equal to GMP and a widows pension equal to the widows GMP (50% GMP)".

They may contest this saying there are insufficient funds and then argue that the technical document says they don't have to pay out from age 60 that the interpretation is that they only have to pay it from 65 (this hasn't been given as an option so getting that would be a partial win as such).

The Pensions Ombudsman has upheld a complaint (PO-2269) for the Insured, that has a very much similar if not identical plan, and that person got backdated payments with simple interest and awarded 250UKP damages. That was back in 2014. There are various rumours one that Pensions Ombudsman will not look at similar cases, another that Aviva are contacting customers telling them that payment will be made at Age 60. However, the Financial Ombudsman has mainly not upheld others (but different providers). It is also the Financial Ombudsman who ruled according to the technical document clause.

A further complication is that mine has an Endorsement attached for redress of bad advice. That would in effect nullify it as a redress to myself if it were used as part of the Capital Sum to purchase the annuities (i.e. the provide would benefit).

The letter currently ends with (I'm still working on this and this is in fact from the first draft I'm now on a second) :-

Quote:
Pursuant to the above I insist that:

1. The aforementioned annuities as per the original plan are enacted according to the original plan and therefore that I will receive the benefits from the agreed upon and contractual Benefit Date of The Benefit date and

2. I am given the options for plan PLAN2 and that this is treated with great urgency and

3. That the retirement date is not altered in any way without my consent.
I've also been warned that QROPS can be or often are scams (for various reasons i think they are off the table e.g. I don't want the stress worrying if I'm being scammed).

Low and behold both companies that I downloaded a guide from cold called me. The second started running when I mentioned the S32 age problem and that it was likely impossible to transfer. I did chase after though making him listen The other one has forwarded Authority forms but I'm going to, probably at some time, let them know that transfer is to risky and not as viable an option.

Currently my Advice would be to go to the Pensions, Annuities & Retirement Planning Section of the MoneySavingExperts forum which can help you to ascertain what's going on. However, don't exepct a quick start guide you may well be waylaid e.g. (first posted, I was asked this, I was asked that, answered questions = response everything is in the PO decision. However after asking a few other questions and not really getting specifics made some headway and found out other things and although not in a position to do much of the financial stuff, I dow have a bteer understanding especially regarding S32's. However I suspect that if I were to be paid a $1 for every-time I've read the plan, I wouldn't be here whingeing but in some far-away destination holidaying ).

In running around I also found out that I would probably get a State Pension from the UK and that by paying 7K I could get it increased to max $25 a week more = 10+ years to start benefiting financially not taking in account income from interest. I though because I brought out of SERPS (or bought into it sheesh all I knew is that my NI stamps were less) that I'd get nothing. So that's a little bit of a sweetener. To find this out I enrolled/registered on the Uk Govmnt Gateway (needed/used NI # and ID e.g. passport. oh and Phone number for PIN verification (used mobile so get SMS)) and then go to here https://www.gov.uk/check-state-pension. So that will be 7k extra per year from age 67.

Oh re tax, little income at present (1k ish AUD) 10940 max tax free lump sum, perhaps 1k from pension if it pays out at 60 little to no tax (I think low income earner comes in if there is, not check that though it I pay any tax then 18k at least to spend this year). Compared to an expectation of nothing a few weeks ago then not bad at all.
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Old Feb 9th 2017, 8:19 pm   #4
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Default Re: Getting close to retirement UK Pesions, what to do?

Please ask your pension scheme what happens to your funds when you die. When my other half asked that question we were stunned with the response, I would get a trivial amount for two years and then the rest was swallowed up by the insurance company and the government. That fact alone justified transferring the fund to an Australian AMP fund through QROPS a couple of years ago. She had to pay a chunk of tax but at least the money is effectively hers now and not just a stake in life's lottery. Not all pensions are the same, so check to see what you have.
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Old Feb 9th 2017, 10:07 pm   #5
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Default Re: Getting close to retirement UK Pesions, what to do?

Quote:
Originally Posted by spuddyo View Post
Please ask your pension scheme what happens to your funds when you die. When my other half asked that question we were stunned with the response, I would get a trivial amount for two years and then the rest was swallowed up by the insurance company and the government. That fact alone justified transferring the fund to an Australian AMP fund through QROPS a couple of years ago. She had to pay a chunk of tax but at least the money is effectively hers now and not just a stake in life's lottery. Not all pensions are the same, so check to see what you have.
For the buyout/s32/Defined Contribution scheme it's a personal pension (i.e. you bought out of the scheme, generally because you became a deferred member with reduced benefits, generally because you left the company for which the scheme was run for).

The buyout had to cover the SERPS aspect so GMP's (Guaranteed Minimum Pension) were basically carried over. They also had to increase annually and specific rates were set for pre April 6th (I think)1988 it was 8.5%, then 7.5%.

The buyout was into an investment fund and then at a date, the Benefit Date, the fund would be used to buy lifetime pensions based on the GMP which was set in stone.

In some respects they were too good to be true and the funds at the Benefit Date could be insufficient to buy the annuities. However, unless the contracts provided for this, the provider is liable for the purchase. Hence why, in such cases, they will try to wriggle out (it appears in mine they are just trying to get away with not even considering it as an option and by the looks of it to even wriggle out of the 100% ROCK SOLID guarantee that the lifetime pensions will be purchased at State Pension Age (which I think would be as per when the buyout took place i.e. 65 rather than 67 as it would be now)).
This is just my interpretation, based very much on what I have found out since originally posting.

My Wife, from this one, gets 50% of the pension I get for life or until remarriage or cohabitation (and this includes provision for annual increases based on RPI up to a max of 8.5% but at least 3%).

However, this is relatively minor aspect in regard to the bigger picture. I've got a reasonable amount in super. The Wife currently is still contributing to super so is catching up. Wife is some 17 years younger than myself. So we basically have a 17 year buffer where anything I get can be saved/invested.

The other 2 UK schemes I'm not at all sure about other than that both have something saying that age difference equates to reduced benefits 10 and 15 years. I've initiated getting information from both.

I'm not overly confident that the provider would, re above (and actual events), would necessarily provide reliable information.
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Old Apr 4th 2017, 4:57 pm   #6
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Default Re: Getting close to retirement UK Pesions, what to do?

An update.

I complained to Aviva and basically got no-response. I then complained to the Pension's Ombudsman. Within a few days, Aviva responded with quotations.

The pension will be paid from age 60 at the GMP as of 60, increasing at 7.5% each year until 65 when it matches the GMP at age 65 as per the policy. Wife's pension on my death included.

It was confirmed that the funds were insufficient to cover the purchase of the annuities, as suspected.

The redress amount, the endorsement, has been made distinct from the original policy. I have options, one being a tax-free cash sum, the other to purchase annuities.

The matter is still with the Pensions Ombudsman as there are additional complaints (basically not responding to the complaint, not meeting assurances and not providing adequate information).

There is one new issue in that the quotations splits the contributions into two components a pre-1988 post 1988 component and then apply 0% yearly increase to the pre-1988 part and 3% to the post-1988 part. Which appears to contradict the policy which states

Quote:
Provision may be made for all or any pensions purchased under this Condition to increase at a percentage rate not exceeding in total 8.5% compound from each anniversary of the Benefit Date or the Substitute Benefit date provided that no pension may exceed whichever is appropriate of the Maximum Pension, Maximum Widow’s Pension or Maximum Dependent’s Pension increased by the accumulated increase in the Retail Price Index published in the calendar month preceding the month in which the Benefit Date or Substitute Benefit Date occurred or by 3% compound per annum whichever is the greater less in the case of a pension payable to the Insured the pension equivalent of any cash sum taken at the Benefit date or Substitute Benefit Date.
So, as I see it, both parts should increase yearly at 3%-8.5%. This is apparently something to do with the UK government stopping paying a portion of the pre-1988 and so the providers are saying they do not need to pay an increase on the pre-1988 part (from what I've heard, although I'm not at all sure about the intricacies/accuracy).
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