Safeguarded Benefits and Legacy Products

Question 1

Section 32 buyout

Answer 1

Used to transfer out of DB scheme but retain GMP

Mainly historical transfers to life providers into with profits plans.

GMP was guaranteed but many plans underperformed growth assumptions due to high revaluation rates.

Harder to transfer as full fund may be needed to pay GMP with no excess

Many won’t offer any PCLS

Not written in Trust so death benefits form part of estate

Death Benefits only to spouse

Question 2

Executive Pension Plan (EPP) and RAC

Answer 2

EEP is a fancy money purchase scheme

RAC - section 226

Both can have GAR rates

Question 3

GARs

Answer 3

Advice required where transfer value exceeds £30,000

If only safeguarded benefits are GARs then doesn’t require PTS

Personal recommendation required but no requirement to provide comparison set out in COBS 19.1.2R

Benefits are safeguarded even if GAR is lower than prevailing market rate

Once GAR has expired the benefits are no longer classed as safeguarded

GAR activation can be very specific - on a birthday only with a 30 day window