Early retirement pension reduced

The_Scruff

I have a deferred pension in a final salary scheme. Written into the terms of the scheme is the right to early retirement at age 60 with a 10% reduction in pension.

In 2000 the pension scheme was merged into that of the parent company as a separate section. There was no choice over this.

I have just applied for early retirement and find that the terms were changed in 2006 to have a 25% reduction at age 60.

Needless to say, I am not too happy about this. Has anyone any thoughts or experience of this happening?

dunstonh

Has anyone any thoughts or experience of this happening?

It would have been approved by the trustees and is not uncommon. Especially where the employer and/or scheme may have been hit by early retirement too frequently.

Unclepetey

10% reduction is/was extremely generous and 25% (assuming the normal retirement date is 65) is much more market-standard - i.e. 5% per annum for each year before 65.

Also, check that you have the "right" to retire early at 60. You are likely to require the consent of the trustees of the scheme.

The_Scruff

Unclepetey wrote: »

10% reduction is/was extremely generous and 25% (assuming the normal retirement date is 65) is much more market-standard - i.e. 5% per annum for each year before 65.

Also, check that you have the "right" to retire early at 60. You are likely to require the consent of the trustees of the scheme.

Yes, I have the right to retire from 55 onwards if I give 6 month notice (50-54 needs consent).

You are right that the 10% is generous but it was one of the key features of the scheme. The aim was to make it equal for men and women without disadvantaging either.

Both the early retirement and the percentage reductions were written into the original pension agreement.

greco_2

dunstonh wrote: »

It would have been approved by the trustees and is not uncommon. Especially where the employer and/or scheme may have been hit by early retirement too frequently.

What surprises me is that The Scruff was unaware of the change. Do the Trustees have such wide powers that they can approve such a radical change without reference to the beneficiaries or is it likely that The Scruff was informed but didn't take it in?

The_Scruff

greco wrote: »

What surprises me is that The Scruff was unaware of the change. Do the Trustees have such wide powers that they can approve such a radical change without reference to the beneficiaries or is it likely that The Scruff was informed but didn't take it in?

The change was made in 2006, as far as I am aware I have all the letters I received although there is always the possibility I have lost one. I have downloaded all the notices from the company's website and this is the only one I have missing.

Letters I received around this time were:
1 - March 2004, All early retirements suspended.
2 - March 2004, Early retirements for the scheme I am in resumed. They should not have been suspended as it was in the original terms (this is what gives me hope).
3 - 2006 Early retirements allowed. This letter refers to an "active members announcement which will be sent to active members (my emphasis) in due course".

I suppose that at this stage I am trying if it's worth fighting the case or if I am onto a loser from the start.

Edit: I have verbal confirmation that the notification of the changes was not sent to deferred members as they (the trustees?) believed there was no legal need to do so (???).

dunstonh

You can always appeal to the trustees to see if they will make an exception in your case. Sometimes where health is an issue then they will consider it (even if its not full ill health) or where the employer is willing to cover it if they want to reduce staff numbers.

However, it appears from that time line of letters that they have had problems with early retirement so they may not be willing to allow it.

EdInvestor

These people may be able to offer good (free,independent) advice:

http://www.pensionsadvisoryservice.org.uk/

dunstonh

These people may be able to offer good (free,independent) advice:

albeit generic. Which probably wont be much use in a case where specifics are required.