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  • FIRST POST
    • dutchism1958
    • By dutchism1958 15th Feb 13, 3:04 PM
    • 128Posts
    • 25Thanks
    dutchism1958
    How to calculate your deferred pension?
    • #1
    • 15th Feb 13, 3:04 PM
    How to calculate your deferred pension? 15th Feb 13 at 3:04 PM
    Dear All,

    Wonder whether anyone has a formula for calculating the value of deferred pensions.I appreciate any calculation will be "rough" because we don't know what level of inflation there will be when I retire in 2023.

    I have asked a similar question previously,but at that time i was hopeful of returning to work-unfortunately my wife will not be improving to enable me to do this.

    I have my state pension which will generate approx 5800 and possibly 7280 when the new plans come into being for flate rate pensions.I have my 30 years NI contributions.
    I also have 2 deferred final salary pensions(both closed now).

    The first pension is valued at 6600 a year.(Final pensionable salary 54,000).The pre 2009 excess pension of 4770 will rise with inflation to a max of 5% pa until my retirment age. The post 2009 excess pension of 1830 will rise at 2.5% a year.

    The 2nd pension is valued at 9757 a year,GMP 1026 & Excess over GMP 8730.(Final pensionable salary of 46,000)+ an AVC fund of 13,000.
    At 65 I have 2 options with this pension-either
    1.Estimated main plan pension of 16,500 a year + AVC of 13K or
    2.estimated reduced main pension plan of 12342 + pension commencement lump sum of 69000 + AVC of 13K.

    My GMP is revalued at a fixed rate of 4.5% A YEAR(COMPOUND)between my date of leaving in 2003 and my 65th birthday in 2023.
    My excess pension is revalued in line with scheme rules,broadly mirroring inflation up to a maximum of 5% per year.

    What would my approximate pensionable value be or how would I calculate it?.
    Any advice greatly appreciated.
    Regards
    Gary.
Page 1
    • sandsy
    • By sandsy 15th Feb 13, 4:53 PM
    • 900 Posts
    • 500 Thanks
    sandsy
    • #2
    • 15th Feb 13, 4:53 PM
    • #2
    • 15th Feb 13, 4:53 PM
    I think - but I stand to be corrected - it's a bit like this:

    GMP=GMP at leaving x (1.045)^20
    as there's 20 years between leaving the scheme and retiring

    Excess over GMP = Excess at leaving * (1+factor/100)

    The factor comes from this revaluation table update each year by the government:

    http://www.legislation.gov.uk/uksi/2012/2952/article/2/made

    So if you left in 2003, you'd use the factor 34.5%

    The post excess 2009 will be a similar calculation to the GMP, ie.

    Post excess = post excess at leaving x 1.025^(2023-year of leaving)
    • atush
    • By atush 15th Feb 13, 5:14 PM
    • 14,809 Posts
    • 8,828 Thanks
    atush
    • #3
    • 15th Feb 13, 5:14 PM
    • #3
    • 15th Feb 13, 5:14 PM
    You have 30 years of NI.

    wont' you now need 35 for the new flat rate? I thought it was going up?
    • dutchism1958
    • By dutchism1958 15th Feb 13, 6:03 PM
    • 128 Posts
    • 25 Thanks
    dutchism1958
    • #4
    • 15th Feb 13, 6:03 PM
    how to calculate deferred pensions?
    • #4
    • 15th Feb 13, 6:03 PM
    Thanks Sandsy and Atush,
    Will try the calculations you sent me.Atush, I'm with you, i thought I now had to have 35 years NI contributions,but I was told it was still 30??
    Will check with tax office on Monday.
    Thanks again.
    Gary.
    • bilbo51
    • By bilbo51 16th Feb 13, 8:48 AM
    • 510 Posts
    • 249 Thanks
    bilbo51
    • #5
    • 16th Feb 13, 8:48 AM
    • #5
    • 16th Feb 13, 8:48 AM
    Thanks Sandsy and Atush,
    Will try the calculations you sent me.Atush, I'm with you, i thought I now had to have 35 years NI contributions,but I was told it was still 30??
    Will check with tax office on Monday.
    Thanks again.
    Gary.
    Originally posted by dutchism1958
    I bet they still tell you 30 years because the legislation needed for the proposed flat rate pension arrangements has yet to be enacted. The proposal is that you would need 35 years in 2023 if that is your state pension age.
    • dutchism1958
    • By dutchism1958 16th Feb 13, 9:33 AM
    • 128 Posts
    • 25 Thanks
    dutchism1958
    • #6
    • 16th Feb 13, 9:33 AM
    • #6
    • 16th Feb 13, 9:33 AM
    Thanks Bilbo,

    I was born in May 1958 and according to new legislation I can retire in 2024 when i am 66(although I can draw my pensions when I am 65 in 2023).
    I think you are right though re the 35 years not enacted yet unfortunately
    Thanks for replying
    Gary.
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