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  • FIRST POST
    • singhini
    • By singhini 5th Oct 17, 8:17 PM
    • 186Posts
    • 104Thanks
    singhini
    Pension company not telling me what my pots worth
    • #1
    • 5th Oct 17, 8:17 PM
    Pension company not telling me what my pots worth 5th Oct 17 at 8:17 PM
    ive got a pension pot from a previous employer and I was wondering what the pot might be worth so I rang the number on some old paperwork.
    I was told that they cant tell me over the phone but they will write to me with the information.


    Three weeks passed and I received nothing so I rang them yesterday to ask where is the paperwork (I was told that they were calculating what the pots worth and will email me the info tomorrow). Well tomorrow is now today and I still haven't got the information


    Q1 - Is it normal practice to "work out what the pots worth"? (I thought they would know this information on a daily basis).


    Q2 - Also all my other pension providers write to me on an annual basis to tell me this information yet this pension provider doesn't send me anything, I have to ring up and request a valuation (is this normal, I thought all pensions providers had to send annual statements)?


    Any thoughts
Page 1
    • PeacefulWaters
    • By PeacefulWaters 5th Oct 17, 8:31 PM
    • 6,980 Posts
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    PeacefulWaters
    • #2
    • 5th Oct 17, 8:31 PM
    • #2
    • 5th Oct 17, 8:31 PM
    Is it a defined benefit pension?
    • Terron
    • By Terron 5th Oct 17, 8:33 PM
    • 80 Posts
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    Terron
    • #3
    • 5th Oct 17, 8:33 PM
    • #3
    • 5th Oct 17, 8:33 PM
    I had pension providers for company schemes not update me afer I stop working for them, until I requested an update.
    • ischofie1
    • By ischofie1 5th Oct 17, 8:33 PM
    • 180 Posts
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    ischofie1
    • #4
    • 5th Oct 17, 8:33 PM
    • #4
    • 5th Oct 17, 8:33 PM
    It sounds like this previous pension is a DB type.
    You would not receive annual statements on this and they would need time to calculate its transfer value.
    • xylophone
    • By xylophone 5th Oct 17, 8:35 PM
    • 23,121 Posts
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    xylophone
    • #5
    • 5th Oct 17, 8:35 PM
    • #5
    • 5th Oct 17, 8:35 PM
    Is this pension a deferred Defined Benefit Pension?

    If so, you might not necessarily receive annual statements.

    In one scheme I knew, the deferred pensioner would simply be given a statement on leaving, told to update the Trustees with any change of address and to claim the pension at Scheme Normal Pension Age.
    • dunstonh
    • By dunstonh 5th Oct 17, 8:40 PM
    • 89,852 Posts
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    dunstonh
    • #6
    • 5th Oct 17, 8:40 PM
    • #6
    • 5th Oct 17, 8:40 PM
    ive got a pension pot from a previous employer and I was wondering what the pot might be worth so I rang the number on some old paperwork.
    I was told that they cant tell me over the phone but they will write to me with the information.
    If it is a defined benefit scheme, there is no pot. No need to give statements.
    If it is a defned contribution scheme, there is a pot and you get statements on a 6 or 12 monthly basis. Valuations should be easy to get.

    I suspect, like the others above, that its a DB scheme and you are mixing things up a bit.
    • singhini
    • By singhini 5th Oct 17, 9:13 PM
    • 186 Posts
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    singhini
    • #7
    • 5th Oct 17, 9:13 PM
    • #7
    • 5th Oct 17, 9:13 PM
    Hi everyone and thanks for all the replies.


    apologies for my ignorance but if DB means final salary pension then yes that's what it is.


    ive just spent the last half hour looking at all my paperwork and I must have called them back in 2015 aswell as they have sent me out the info (obviously its now 2 years out of date). The 2015 info suggests the "transfer value" is £80,000 and based on this my annual pension will be about £3,500 when I turn 65


    I worked at this place for about 7 years and even though its a final salary pension the £3,500 is rubbish (I would rather leave it with them until I'm 54 and transfer it into a cash SIPP and when I turn 55 and retire start to take the money as cash withdrawals: taking £11,500 each year out thus avoiding income tax and spending all the money over 7 ish years)
    Everyone keeps saying final salary pensions are brilliant - well my one isn't its a bag of old nails boo hiss


    So to take onboard peoples advice I should wait to allow them time to calculate the figures and its normal to have to ring up periodically for the info with a DB style of pension
    • singhini
    • By singhini 5th Oct 17, 9:23 PM
    • 186 Posts
    • 104 Thanks
    singhini
    • #8
    • 5th Oct 17, 9:23 PM
    • #8
    • 5th Oct 17, 9:23 PM
    Hold on; ive just had a thought: if its a final salary pension then the pot wont go up or down (the £80,000 pot will always be £80,000) and I will only ever get an annual pension of £3,500


    So I might aswell take the money now and stick it in my SIPP (atleast I will have ownership of the money)
    • xylophone
    • By xylophone 5th Oct 17, 9:25 PM
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    xylophone
    • #9
    • 5th Oct 17, 9:25 PM
    • #9
    • 5th Oct 17, 9:25 PM
    Are you sure that you understand how your DB pension works?

    When exactly did you work for this company?

    What is shown on your statement of deferred benefits on leaving?

    What is normal scheme pension age?

    How is the pension revaluing in deferment?

    How does it escalate in payment?

    Have you obtained a new state pension statement?
    • singhini
    • By singhini 5th Oct 17, 9:31 PM
    • 186 Posts
    • 104 Thanks
    singhini
    Are you sure that you understand how your DB pension works?

    When exactly did you work for this company?

    What is shown on your statement of deferred benefits on leaving?

    What is normal scheme pension age?

    How is the pension revaluing in deferment?

    How does it escalate in payment?

    Have you obtained a new state pension statement?
    Originally posted by xylophone
    Thanks for your post - no I don't have a clue about pensions and I cant answer any of your (very good ) questions (but I will get onto it first thing in the morning and look into them).


    Note to myself: I hate pensions, I don't understand them, the government changes the law constantly, and I'm probably not going to live that long anyway (I just do pensions since my employer makes contributions and I am allowed to put my money in tax free) otherwise I would not do them
    • Terron
    • By Terron 5th Oct 17, 9:34 PM
    • 80 Posts
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    Terron
    My finalsalary pension is will about 4k a year when I am 60. That is from 5 years work where my final salary was 26k. 5 years of 1/40th of my final salary per year, adjusted for inflation.
    Note that the pension itself would be inflation linked.

    It may be a bag of nails but it is at least a bag of shiny new nails thanks to the inflation linking.
    • Terron
    • By Terron 5th Oct 17, 9:40 PM
    • 80 Posts
    • 86 Thanks
    Terron
    Hold on; ive just had a thought: if its a final salary pension then the pot wont go up or down (the £80,000 pot will always be £80,000) and I will only ever get an annual pension of £3,500
    Originally posted by singhini
    There is no pot. What there s is a transfer value which is the amount they will pay you to take the obligation of paying the pension of their hands. That will be a bit less than they expect it to cost them, and may go up or down.

    Further the pension is probably indexed linked, but you should check your scheme details to make sure.
    • AlanP
    • By AlanP 5th Oct 17, 9:40 PM
    • 938 Posts
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    AlanP
    The transfer value is based on a complicated calculation of what they think they need to invest now to pay you £3.5k a year from Age 65 until you die and maybe a 50% spouses pension after that.

    Typically that will be based on a large proportion of that £80k being invested in low yielding Gilts or similar bonds as they can't take the risk that equity markets will be significantly down at the point they need to be paying out so go for a high proportion of "low risk" investments.

    Obviously they are doing this in aggregate for all their members not for each individual one and will know the age, demographics, prospective amounts they need in cash per month / year, inflation estimates and so on.

    Transfer values have been at at historic highs recently as Gilt Yields are very low (ties in with interest rates) so your £80k will move around. Your £3.5k a year, index linked probably, for life won't vary much from estimate to estimate.
    • bompey
    • By bompey 5th Oct 17, 10:11 PM
    • 1 Posts
    • 12 Thanks
    bompey

    I worked at this place for about 7 years and even though its a final salary pension the £3,500 is rubbish (I would rather leave it with them until I'm 54 and transfer it into a cash SIPP and when I turn 55 and retire start to take the money as cash withdrawals: taking £11,500 each year out thus avoiding income tax and spending all the money over 7 ish years)
    Everyone keeps saying final salary pensions are brilliant - well my one isn't its a bag of old nails boo hiss
    Originally posted by singhini
    So for a 7 year stint you get a pension of £3500 which is probably index linked. Given we all work for let's say 40 years if you had had another 6 jobs with the same pension you would be looking at £25k pension plus another £8k state pension. That's not horrendous and if there's 2 of you not bad at all.
    • bigadaj
    • By bigadaj 6th Oct 17, 12:21 PM
    • 10,321 Posts
    • 6,619 Thanks
    bigadaj
    Maybe it's not surprising but it is still moderately shocking that so many people don't see what a db pension is worth.

    If the OP gets a cetv now, then the pension value will probably have increased to certainly above £100k and possibly pushing £150k. Since when is this a trivial amount of money to anyone in a normal job?

    It does make you wonder why they are still protected in the public sector as the ignorance of value is no better, I know much is to do with deferred liability and arguably reducing future benefits payments but I just imagine the delight in many faces if they are given a minor salary increase and a basic DC scheme, with the employer having saved tens if not hundreds of thousands per employee.
    • PeacefulWaters
    • By PeacefulWaters 6th Oct 17, 1:23 PM
    • 6,980 Posts
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    PeacefulWaters
    I worked at this place for about 7 years and even though its a final salary pension the £3,500 is rubbish
    Hang on, they are effectively saying they'll give you £3,500 a year, plus indexing, plus spousal benefits for seven years work. And pay it for the rest of your life after age 65. Wow.

    £80,000 pot value.

    How much were your own contributions to achieve this "rubbish" return?
    • singhini
    • By singhini 6th Oct 17, 6:14 PM
    • 186 Posts
    • 104 Thanks
    singhini
    [QUOTE= How much were your own contributions to achieve this "rubbish" return?[/QUOTE]

    That's a fair question Peacefulwaters and the honest answer is £8,250 +£125 in DC payments (having looked over my paperwork and organising it into piles ready for me to look over this weekend I discovered that I put random payments worth £125 into a DC pension pot and it looks like this pots transfer value is £850 and will pay out an annual pension of £31)


    So looks like ive got both DB and DC pension pots


    i recognise i sound like a whinger and most of my moans come out of frustrations as i don't understand pensions.
    What's frustrating me is seeing £80,000 and then £3,500 (my brain quickly calculates that to get my £80,000 at a rate of £3,500 will take me 23 years and so I'm frustrated because i cant see me living 65+23 years). i would rather have the £80,000 transferred into a SIPP in the next few years and start to spend it over the next 7-10 years


    I will look over the paperwork and i will try my best to respond to the questions in post #9 by Xylophone
    • sandsy
    • By sandsy 6th Oct 17, 6:28 PM
    • 1,195 Posts
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    sandsy
    You don't have a pot. You have a promise to pay you a guaranteed inflation proofed income for life. The level of income (rubbish or not, depending on your perspective) was determined by the length of time you worked there and your salary at the date you left.

    It is possible to give up all your rights to this really valuable index-linked pension (often referred to as the gold standard of pensions) and take a transfer value instead. The transfer value is calculated on the basis of an equivalent value of what it would cost the scheme to provide your final salary pension. So you don't specifically gain anything through taking the CETV per se.

    The equivalent value is based on assets return the scheme expect to achieve over your likely remaining future lifetime - it's a complicated calculation and allow for the fact that your benefits increase in line with an assumed rate of future inflation. If asset returns are expected to change, or their expectations of inflation change or future life expectancies change, so can your value. If nothing changes, your value will generally go up as you get older and get nearer the payment date.

    When you transfer, you have to put it into another pension which you can't touch until you reach the minimum access age. This comes with no promises. Investments will need to be chosen and these will fluctuate in value in line with the underlying assets that the money is invested in. Overtime, it's generally hoped they would go up in value You then have the opportunity to withdraw the money in a pattern that suits you once you access the funds, rather than the defined method dictated by a DB scheme.

    However, by law, you can't do this without taking regulated financial advice since your CETV is worth more than £30k. And that will probably cost at least £2k. There are no guarantees that you'll get a green light form the adviser to transfer if their professional opinion is that it's not in your best interests. However, once you've taken the advice, you don't have to follow it, if you can find a pension provider who'll accept your money anyway.
    • Terron
    • By Terron 7th Oct 17, 10:38 AM
    • 80 Posts
    • 86 Thanks
    Terron
    What's frustrating me is seeing £80,000 and then £3,500 (my brain quickly calculates that to get my £80,000 at a rate of £3,500 will take me 23 years
    Originally posted by singhini
    But that would only be correct if it wasn't index linked. The value of that index linking depends on the exact rules, but as a first approximation it will be at least double the value of a fixed payment.
    • singhini
    • By singhini 7th Oct 17, 2:46 PM
    • 186 Posts
    • 104 Thanks
    singhini
    So having read the letter from two years ago, this is what I took from it:


    1 - As suggested, as its a DB scheme and the transfer value is over £30,000 I will need to take advise and be able to prove I have taken advise should I want to transfer the money to a DC scheme (I'm thinking i could just take free advise from people like Pension Wise, Citizens Advice or Pension Advisory Service)


    2 - The transfer value is guaranteed for 3 months from the point of them writing to me


    3 - They want original passport and birth certificates should I want t transfer the money (not photocopies)


    4 - transfer value is £80,000 which includes member contributions


    5 - there is "attaching provisions for your dependents" (I haven't got any)


    6 - its covered by the pension protection fund


    It concludes that I need to read the scheme policy booklet (which I haven't got). So I cant answer Xylophone's questions in post #9


    A completely different letter addressed to me basically tells me the fund is circa £580 million short and they intend to put £33 million into it every year until 2027 to make good the shortfull.


    I going to ring them again on Monday and ask them again where is my letter / email with an upto date transfer value (as its been 3 weeks and ive had no correspondence).


    thereafter I will leave the money alone and just before my 55th birthday I will transfer this pension (along with all the other pension pots into a single SIPP), then aged 55 I will start to withdraw circa £11,500 (or whatever the HMRC tax free allowance is when I'm 55) and live off these funds and bank savings (eventually liquidating the SIPP and using up my bank savings and eventually selling my current house and moving into a retirement flat and finally living off the proceeds of the house sale.


    I came into this world with nothing and I intend to leave it with nothing
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