Underfunded S32 - any ideas?
Thedagger
Member
I have a client with a Pru S32, they wont permit a transfer out as they say the fund currently doesn't support the GMP, I know this is standard practice. However, this lady is now 70 and Pru haven't been paying her the GMP from the contract obligation date of her 60th birthday either.
Any ideas/advice please
Comments
2. Start getting it paid - the cost of any shortfall sits with Pru.
I'd ask for a written explanation.
I've dealt with a couple of GMP cases over the last few years and they have been treated the same way - with Aviva and Clerical Medical (Scot Wids).
When the client reaches GMP age they should receive the retirement paperwork - the same as with a personal pension. They will then need to sign and return them before the provider can start paying out benefits (mainly because they need to know the bank account to pay the benefits to).
If the paperwork is not returned they will defer the pension. The deferred GMP benefits are increased in a similar way (or possibly exactly the same way) to the state pension and there is a specific formula to calculate it. I can't put my hands on the formula at the moment but it is something like a 7th of 1% for every x weeks that the pension has been deferred).
With the Aviva section 32 the client returned the paperwork after the GMP date and there was a delay of a couple of months in setting up the income payments. In this case Aviva backdated the monthly payments and paid interest for the delayed payment.
I would ask Pru to tell you how the GMP benefits are increased in deferment - and also get them to confirm what the GMP income would have been at age 60, what the GMP income is now so that you can check the figures.
That formula @Kate_W is 1/7th of 1% for each one week deferred beyond GMP age. It's 1+n/700 for each complete week, where n is the number of complete weeks. Post '88 GMP also gets the inflation to 3% increases.
The day is coming where that information will never need to leave my head again! Maybe it's today