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    • Campervan person
    • By Campervan person 12th Jun 17, 12:27 PM
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    Campervan person
    Company pension - no confidence in the trustees or fund manager
    • #1
    • 12th Jun 17, 12:27 PM
    Company pension - no confidence in the trustees or fund manager 12th Jun 17 at 12:27 PM
    I am seeking advice as to what, if anything, I can do about a company pension where I have no confidence in the trustees or fund managers.

    This year, my pension from Kellogg Co of GB ltd, increased by less than 0.1% per annum. I have written several letters to their Fund managers (Aon Hewitt), pointing out how badly their funds have performed in comparison with others, and also asked why the trustees decided to give no increase to the pension in excess of GMP accrued before 6th April 1997. Reference the latter, they just say it’s at the “discretion” of the trustees. Not really an answer, and I guess that had the fund performed better they “may have” given an increase, although they claim that increases are not based on the performance of the fund.

    My other pension platforms have performed at an average of just under 1% per MONTH, compared with Kellogg’s pension at just 0.008% per MONTH.

    I can manage my money much better than they can, so I requested that I cash in my pension, however they say that that option is not available once I am in receipt of benefits.

    Even if legally correct, it is morally wrong that I have no control over my pension, that they could refuse a pre-97 increase for evermore and that their poor fund managers are not held to account.


    My questions are:

    Are there any possible ways to extricate myself from my Kellogg’s pension?
    Is it possible to raise a vote of no confidence in either their fund managers or trustees?
    Any other suggestions?

    Many thanks
Page 1
    • Linton
    • By Linton 12th Jun 17, 1:21 PM
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    Linton
    • #2
    • 12th Jun 17, 1:21 PM
    • #2
    • 12th Jun 17, 1:21 PM
    Lets get some facts.

    You are in receipt of a Kellogs DB pension? When did you work for Kellogs? When did you start taking the DB pension?

    You talk about "your other pension platforms" . Do you mean you have several SIPPs holding pots of money which you are self investing in funds/shares to provide a drawdown income? If not what do you mean?

    Once it's clear exactly what you are talking about hopefully someone can provide a helpful detailed answer.
    • Finst
    • By Finst 12th Jun 17, 1:37 PM
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    Finst
    • #3
    • 12th Jun 17, 1:37 PM
    • #3
    • 12th Jun 17, 1:37 PM
    A few points, in no particular order:


    Your Kellogg's pension sounds like a defined benefit pension, meaning that you've been promised a guaranteed level of pension, no matter what. This is important.


    It means that while you have no control over the investments, you are also protected from investment risk. If the investments tanked in value, you'd be protected because the company would have to top up the pension scheme.


    You can't judge an investment performance on return alone - you need to think about the risk that is being run. Your other pension savings returning 12% pa are (I would expect) invested in volatile, high risk, high return investments because the objective is to get you as much retirement savings as possible. More risk = more returns (in good / decent times)


    The Trustees' objective is different - theirs is to make sure they are able to afford the benefits that have already been promised. They are far more interested in whether the value of the assets has moved
    in line with the expected cost of providing those guaranteed benefits, than the absolute return.


    If (and only if) they have more than enough money to pay the guaranteed benefits, then they can start to grant those discretionary pension increases on pre 97 pension.


    You have very little rights to challenge the funds the trustees invest in. Those funds don't belong to you, and you are effectively asking the trustees to take higher risk, safe in the knowledge that you will get the upside through the discretionary increases, but are protected from the downside because the company will have to make good any losses. That isn't particularly fair.


    Your options are:
    - Convince the trustees to invest in more risky assets. That would need you to get the sponsoring employer to underwrite the extra investment risk (not going to happen).
    - Pursue a formal claim of mismanagement against the trustees for selecting underperforming managers (nothing you've said suggests that would be successful).
    - Run for election as one of the member nominated trustees next time they have an election.
    - Accept that the pension promise you were given is worth far more than anyone ever expected, due to improvements to life expectancy and investment returns that are far lower than they were a decade or two ago. That's true even without those discretionary increases, which you won't be getting because of those improvements to life expectancy and falling investment returns that have meant the trustees can't afford to grant extra increases (aka you can't have your cake and eat it).


    In answer to your other question, no you can't extricate yourself (unless your pension is very small)


    This reply will probably come across slightly unsympathetic and I apologise for that. Unfortunately, in my opinion, your claims of mistreatment are unreasonable and based on a misunderstanding of the situation.
    • xylophone
    • By xylophone 12th Jun 17, 1:41 PM
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    xylophone
    • #4
    • 12th Jun 17, 1:41 PM
    • #4
    • 12th Jun 17, 1:41 PM
    If you worked for Kelloggs pre 2004 then it appears that you would have been a member of their DB pension scheme.

    http://www.manchestereveningnews.co.uk/business/business-news/kelloggs-given-a-frosty-reception-1157200

    Do you have the scheme booklet?

    It should explain how your pension increases in payment.

    There are rules about increases to pre 88 GMP/post 88 GMP.

    The excess will increase in payment according to scheme rules.

    What does your booklet have to say?

    Are you in receipt of pre 2016 State Pension?

    Are you male?
    • dunstonh
    • By dunstonh 12th Jun 17, 2:25 PM
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    dunstonh
    • #5
    • 12th Jun 17, 2:25 PM
    • #5
    • 12th Jun 17, 2:25 PM
    This year, my pension from Kellogg Co of GB ltd, increased by less than 0.1% per annum. I have written several letters to their Fund managers (Aon Hewitt), pointing out how badly their funds have performed in comparison with others, and also asked why the trustees decided to give no increase to the pension in excess of GMP accrued before 6th April 1997.
    You have a defined benefit pension. The underlying performance of the invetment fund has no direct relevance to your pension income or increases.

    My other pension platforms have performed at an average of just under 1% per MONTH, compared with Kellogg’s pension at just 0.008% per MONTH.
    I doubt that there is any defined benefit pension that has increased the income by 12% over the year. i suspect you are mixing up defined contribution plans with defined benefit.

    Even if legally correct, it is morally wrong that I have no control over my pension, that they could refuse a pre-97 increase for evermore and that their poor fund managers are not held to account.
    Before you start quoting law and morals, it would make sense to understand what you have first. Otherwise you just end up with egg on your face and making yourself look silly. And no-one enjoys that.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • Campervan person
    • By Campervan person 12th Jun 17, 3:34 PM
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    Campervan person
    • #6
    • 12th Jun 17, 3:34 PM
    • #6
    • 12th Jun 17, 3:34 PM
    Thanks for the responses.

    Pensions are a minefield. To answer some of the questions above, I'm female and worked for Kellogg's between 1988 and 1998.

    I retired 2 years ago, and had several pensions from different employments. I decided to take the Kellogg's pension as they had a good track record (ha!ha!), and put all the other pensions into 1 platform, low-medium risk with Old Mutual. It increased at just over 10% pa. Recently I moved house and released some equity to top up my pension. I switched from Old Mutual to Scottish Widows, again, low-medium risk, and although I've only had this 6 months, it's averaged 1.26% per month. Other money I put into a safe Pru platform averaging 0.3% per month. All significantly better than 0.008% a month.

    Hindsight is a wonderful thing. If I knew then what I know now, I'd have cashed in the Kellogg pension also.
    • dunstonh
    • By dunstonh 12th Jun 17, 3:55 PM
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    dunstonh
    • #7
    • 12th Jun 17, 3:55 PM
    • #7
    • 12th Jun 17, 3:55 PM
    and put all the other pensions into 1 platform, low-medium risk with Old Mutual.
    A good platform with a wide investment choice.

    I switched from Old Mutual to Scottish Widows,
    Oh well. Never mind. Usually its people moving it from SW rather than to SW.

    Other money I put into a safe Pru platform averaging 0.3% per month. All significantly better than 0.008% a month.
    is someone advising you all this or are you doing it DIY? There is no reason to hold multiple platforms just to change your risk levels.

    Stop thinking about this 0.008% a month as it totally irrelevent.


    If I knew then what I know now, I'd have cashed in the Kellogg pension also.
    The Kelloggs pension was better than the other pensions. It will have wiped the floor with the alternatives.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • coyrls
    • By coyrls 12th Jun 17, 4:11 PM
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    coyrls
    • #8
    • 12th Jun 17, 4:11 PM
    • #8
    • 12th Jun 17, 4:11 PM
    It’s an interesting notion that you expect your payments under a DB pension to be increased according to the performance of your investments. I presume in years where your investments lost money you would expect your DB pension payments to be reduced?
    • Linton
    • By Linton 12th Jun 17, 5:05 PM
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    Linton
    • #9
    • 12th Jun 17, 5:05 PM
    • #9
    • 12th Jun 17, 5:05 PM
    How much a DB pension pays is fixed by the scheme rules. I am guessing some of what follows because I dont know your scheme rules so someone correct me if I am wrong.....

    Before 1997 private sector DB schemes did not have to provide inflation linked pensions so from your work record you only had about 1 year under 1997 rules. That is about 10% of your time with Kellogs. Last year depending on the date when these things are measured CPI inflation could well have been around 1%. So you could expect to receive around 0.1% rise, which is what you got. It had nothing to do with the scheme investments, it was what the scheme rules required. And it's not 0.008% a month, it's an annual year on year rise of 0.1%

    Although the scheme may be allowed to give you a rise beyond the legal requirement the role of the scheme investment is not to give you rises on a whim but to ensure that the pensions for which the scheme is responsible can continue to be paid for the many decades until all the scheme members have died.

    On your last question, no you cant cash in a pension in payment.
    Last edited by Linton; 12-06-2017 at 5:14 PM.
    • bostonerimus
    • By bostonerimus 12th Jun 17, 5:38 PM
    • 497 Posts
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    bostonerimus
    I'm in agreement with the other posters (makes a pleasant change). You need to understand the exact nature of your pensions. It sounds as if you have a defined benefit pension with Kellogs and the important thing there is the level of the benefit, any cost of living increase, and the life time income guarantee. You other pensions sound like defined contribution pensions. They can be invested in a number of ways from annuities that will guaranteed a life time income like a DB pension to stocks and shares that will go up and down in value so it makes taking an income trickier. Do some reading and research.
    Misanthrope in search of similar for mutual loathing
    • bostonerimus
    • By bostonerimus 12th Jun 17, 5:48 PM
    • 497 Posts
    • 246 Thanks
    bostonerimus

    I doubt that there is any defined benefit pension that has increased the income by 12% over the year. i suspect you are mixing up defined contribution plans with defined benefit.
    Originally posted by dunstonh
    If a DB plan like that existed it would only survive for a couple of years. A DB plan might have an annual cost of living increase, but many don't anymore. I'd ask the OP to check if the DB plan income is inflation linked in any way.
    Misanthrope in search of similar for mutual loathing
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