Equalisation of Pension scheme

jamespap123

Hi I have a quick question which I hope someone could answer.

In my scheme females have a NRA (normal retirement age) of 55 and males of 60.

As im sure your aware the introduction of equalisation has had a huge effect on most schemes, in particular those who didn’t take action quickly! I am glad to say that my scheme did in fact take swift action (all so im told) thus having a relatively small barber window of 6 months. As in most cases after equalisation the retirement ages were rescaled to the male retirement age of 60.

My question is this, if I (being female) joined the scheme before equalisation date but left after equalisation does that mean I have a retirement age of 60 or 55?

Many thanks

Andy_L

possibly both :-) Service before the date will have a NRA of 55. Service after that date will either:
Have a NRA of 60 or
Have an NRA of 55
it depends on how they changed the scheme rules

Debt_Free_Chick

jamespap123 wrote: »

My question is this, if I (being female) joined the scheme before equalisation date but left after equalisation does that mean I have a retirement age of 60 or 55?

Many thanks

As you had earned a pension payable at age 55, for service before ED, then you have the right to take that pension at age 55 on the original terms. If you did retire at age 55, you would have the pension for service before ED payable with no penalty plus a reduced pension for service after ED.

If you retired at 60, you should have an enhanced pension payable for service before ED and a further amount added for service after ED.

You can only have one NRA and it's now age 60, but you've retained the right to take the pension you earned before ED on the original terms. So, although you might retire "early" at age 55, the pension earned before ED would be payable as though you had retired at (the old) NRA.

Simples

Don't ask me about any GMP though!!!! :eek:

jamespap123

Thanks Guys,

It’s nice to have it laid out in plain English! So now I need to decide whether I want my Post ED pension to be reduced i.e. retire at 55 or have my Pre ED pension increased (I believe the rate is 8% pa) i.e. retire at 60. Hmmmm


:beer:

MrChips

You seem to have got the idea

Just one word of warning, in general there is no obligation on the scheme to increase your NRA 55 benefits if you take them after this age. I know a few Schemes which had NRA60 for females and NRA65 for males and which will reduce NRA65 benefits if these are taken at 60, but which won't increase NRA60 benefits if these are taken at age 65. Not saying your scheme won't do this, but it is worth checking before you get too excited!

jamespap123

I see.

So my understanding is this, assuming that the scheme will increase if I retire at 60 and at the late retirement factor of 8% (but as Mr Chipp says I will find out if this is the case):

If I retire at 55 then the pension earned before ED will revalued in the normal sense up to 55 years of age.
For the amounts earned after ED, will they be revalued up to the new NRA (60) and be subject to the actuarial reduction of 6%pa (this is the "penalty" of taking early retirement in my scheme) for 5 years (60-55). OR will it be revalued up to age 55 and then actuarially reduced for 5 years??

However,

If I retire at 60 the pension earned after ED will be revalued as per normal up to the age of 60.
Yet will the pension earned before ED be revalued up to 55 in the normal sense and then be increased by the late retirement factor of 8% for 5 years OR will it be revalued up to 60 in the normal sense and then be further increased by the 8% late retirement factor?

Does this make sense?

If someone can clear this up for me that would be much appreciated.

Thanks:D

MrChips

jamespap123 wrote: »

I see.

So my understanding is this, assuming that the scheme will increase if I retire at 60 and at the late retirement factor of 8% (but as Mr Chipp says I will find out if this is the case):

If I retire at 55 then the pension earned before ED will revalued in the normal sense up to 55 years of age.
For the amounts earned after ED, will they be revalued up to the new NRA (60) and be subject to the actuarial reduction of 6%pa (this is the "penalty" of taking early retirement in my scheme) for 5 years (60-55). OR will it be revalued up to age 55 and then actuarially reduced for 5 years??

This is generally correct. Regarding your last point, it could work either way depending on how the early retirement factors are defined. 6% pa would be quite harsh if revaluation to 60 isn't included, but also quite generous if revaluation is included! You will need to ask the pensions administrators for your scheme.

jamespap123 wrote: »

However,

If I retire at 60 the pension earned after ED will be revalued as per normal up to the age of 60.
Yet will the pension earned before ED be revalued up to 55 in the normal sense and then be increased by the late retirement factor of 8% for 5 years OR will it be revalued up to 60 in the normal sense and then be further increased by the 8% late retirement factor?

Does this make sense?

If someone can clear this up for me that would be much appreciated.

Thanks:D

You are correct about the pension earned after ED. Re the pension earned before ED I'm not actually sure how it will be treated! I think it will depend on the convention adopted by your scheme (although others more knowledgeable in this area may be able to clarify). My instinct would be that because, technically, you only have one NRA (which is 60) it would be revalued to 60 with no LRF applied. Again I suggest you enquire with the pensions administrators.

jamespap123

Okay so off to the Scheme administrators!

Thanks