Safeguarded benefits
The following are all classed as safeguarded benefits:
Defined benefit (sometimes known as final salary) pension
If you’re in one of these schemes, the money you pay in is used to provide an income that’s normally based on your length of service and salary when you retire.
Deferred Annuities where contributions buy an income
If you have one of these policies, the money you pay in buys a level of income you will receive when you retire.
Guaranteed Annuity Rate (GAR)
This means your current provider will offer you an annuity using a minimum rate when you retire. If you have a ReAssure policy with a GAR you’ll lose this if you choose a retirement option other than buying an annuity through our retirement offering.
Guaranteed Minimum Pension (GMP)
Some pension plans may include a GMP. If you have a GMP, you will have originally built up pension rights in an employer’s pension scheme. The GMP is a ‘contracted-out’ benefit which means it replaces part of your State Pension.
The GMP guarantees a minimum retirement income from age 65 for men, or 60 for women. There are set rules which cover how it must be paid and benefits for a survivor if you die.
GMP benefits cannot be taken early unless the pension pot is already large enough to cover the cost of providing the pension.
Similarly, a pension pot cannot be transferred to another provider unless the transfer value also covers the cost of providing the GMP. When GMP rights are transferred to another pension provider, they have no obligation to provide benefits on the same basis.
Advice requirements
If you are considering choosing a retirement option other than taking an annuity with your existing provider, you may have to seek professional advice from a regulated Financial Adviser, depending on the value of your safeguarded benefit. This is because you should be fully aware of what you’re giving up before you make your decision.
The current value is the amount we would pay to another provider if you wanted to give up your GAR and take your pension benefits with them. This is also the value we’d pay (minus a tax charge) if you took all your pension benefits as a lump sum.
If the current value of your policy is £30,000 or less* we strongly recommend you seek professional advice from a regulated Financial Adviser although this is not compulsory.
However, if your current value is more than £30,000*, the government requires that you must get professional advice from a regulated Financial Adviser and you won’t be able to proceed with your chosen retirement option without proof that you’ve had this advice. You can do this using our Confirmation of financial advice form, or your Financial Adviser can provide their own written statement if they prefer, as long as it includes the same information.
If your current value is currently £30,000 or less but increases to more than £30,000 when you take your chosen retirement option, you’ll be required to get advice.
*This is usually your policy value on the day that you want to take your retirement option.
Where can I get professional advice?
If you want advice about options available from all providers in the market then you will need to speak with an independent Financial Adviser (FA). If you don’t have an independent FA you can find one at moneyhelper.org.uk/choosing-a-financial-adviser. You may have to pay for this advice.
If you need to receive advice before taking your chosen retirement options, we’ll need to see evidence that you’ve done this before we can process your request. You can do this using our Confirmation of financial advice form, or your Financial Adviser’s own form that provides the same information.
