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Transfer choices from GE Life

GE Life

Section 32 Transfer Plan

Type: S32 pension transfer plan

Minimum premium: Lump sum 3,000. 50,000 for deferred drawdown

Minimum-maximum ages: 18-74

Fund links: Choice of 26 unit-linked funds from GE Life and 15 externally managed funds from Fidelity, Invesco Perpetual, Liontrust and Newton

Options: Deferred drawdown

Charges: Annual 0.2-1.8%% for transfer values over up to 100,000, 0.1-1.7% for transfer values over 100,000, fund links annual 0.36%-1.65%

Allocation rates: 94%-100%

Commission: Initial up to 6%, fund-based renewal up to 1%

Tel: 0800 1691111

GE Life has revamped its Section 32 transfer plan by adding a deferred drawdown option.

Origen Financial Services technical manager Bob Perkins points out that there is a market for S32 plans prior to April 6, 2006. He explains: “This market arises where individuals in existing S32 plans and old charge occupational money purchase schemes might have an entitlement to a tax-free cash sum in excess of 25 per cent of their fund value, but where the protection options are either inappropriate or unavailable.”

Perkins highlights the deferred drawdown option as the main feature of this product. He says: “While the minimum transfer value is 3,000 it will come as no surprise that the minimum fund size for drawdown is 50,000.”

Perkins mentions that on opting for drawdown, the plan holder does not have to transfer, so this can be catered for within the plan preserving the “pre A-day” tax-free cash. He adds: “There is no additional charge for commencing the drawdown but there is no further commission payable on that event either.”

Considering the potential downsides of the product Perkins says: “There is not much to dislike. However, the lack of a self investment option or opportunities to invest on a broader basis is disappointing.”

Perkins also notes that the plan has exit penalties that apply to units encashed before the first policy anniversary, although they do not apply on death. He explains: “For individuals who transfer into the plan and then take income drawdown within the first policy year, the exit charge will apply and may result in a reduction in the plan holders tax-free cash sum.”

In Perkins view, an area that advisers will need to consider carefully is how they will be remunerated for any advice given in relation to income drawdown where that event occurs in the future.

Perkins thinks the main competitors will change as products are introduced and refined. He says: “At present, Clerical Medical, Skandia and in particular, Winterthur with its self invested option, will all present GE with some worthy competition.”

BROKER RATINGS

Suitability to market: Good
Flexibility: Average
Charges: Average
Adviser remuneration: Good

Overall 6/10


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