SAFEGUARDED BENEFITS

Question 1

SAFEGUARDED BENEFITS

Answer 1

Not Money Purchase
Or Cash Balance Benefits

Defined Benefits
Guaranteed Minimum Pensions
Guaranteed Annuity Rates

Question 2

SAFEGUARDED BENEFITS

Guaranteed Annuity Rates

Answer 2

GUARANTEED ANNUITY RATES - GARS

The promise to convert a fund into a promised minimum rate of income usually at a particular age.
Commonly found in RACs (Sect 226)the predecessors to Personal Pension Plans

and also in some older EPPs generally set as one man schemes to provide higher level of benefits

Not necessary to produce APTA or TVC
May only be taken at 60 or 65
Death Benefits May be restrictive

Most common reasons for transfer are to obtain benefits at an earlier age and lack of Death Benefits

Question 3

GMP within a Section 32

Answer 3

A Section 32 will hold safeguarded benefits if there is any GMP. It is a DC scheme so apart from S32 provision the benefits will be depend on size of pot

1. A section 32 guarantees as a minimum the GMP will be paid.
2. This guarantee must be provided even if fund growth has been poor
3. If funds insufficient then member cannot take benefits early nor can they transfer them.

Set up before A Day as occupational schemes so may have more than 25% entitlement to cash lost on transfer
Unless Block transfer unlikely as set up individually