Posted by Jeremy Burgum on 02 January 2001 at 14:14:14:
In Reply to: Guaranteed Annuity Rates for AVCs posted by N.E.One on 25 December 2000 at 13:30:12:
I asked the IBM Pension depratment about GARs as I had not seen anything about them in the IBM Pension Handbook. This is the reply:
"GARs are rates that are written into the policy that we have with Equitable Life.
In simple terms, this means that, on your retirement Equitable Life guarantee
that the funds you have invested with them can be conveted into an annuity
with Equitable Life on the terms laid down in the policy.
In practice, however, we have never purchased annuities with Equitable Life but,
instead, have transferred the funds into the main IBM Pension Plan and provided a
pension/annuity using our rates which are set out in the pension handbook. To
date we have found that our own rates are more favourable than Equitable Life's
and, therefore, the GAR has not come into play. You will appreciate, however, that
our own rates are not themselves guaranteed and may be changed by the Trustee
from time to time, on the advice of the Scheme Actuary. Therefore, we do have to
check the pension that we would provide using our rates versus the GARs in the
Equitable Policy to ensure that the member is getting the better annuity."