Winding Up

Zelazny

casey_junior wrote: »

Way, way off, Kev, £1972.29 I've heard today.
Starvation Once Again.

Can I just ask: what was your date of leaving? Looking at the above, it may have been anywhere between Oct 89 to May 2000. Assuming May 2000 (the worst case) and that there is no GMP (again, worst case) and that the scheme only offered the bare minimum revaluation (again worst case), I'd expect the revaluation to be something like 35.6%, so your initial £1,544 would become £2,093.66. 90% of this is £1,884.30, so the amount you quote is not entirely unreasonable.

casey_junior

Zelazny wrote: »

Can I just ask: what was your date of leaving? Looking at the above, it may have been anywhere between Oct 89 to May 2000. Assuming May 2000 (the worst case) and that there is no GMP (again, worst case) and that the scheme only offered the bare minimum revaluation (again worst case), I'd expect the revaluation to be something like 35.6%, so your initial £1,544 would become £2,093.66. 90% of this is £1,884.30, so the amount you quote is not entirely unreasonable.

Thanks for that Zelazny, I had it figured out at 1896, so not much difference there. I'd be interested to know why there are worst case scenarios, I'd have thought that all would be treated the same.
Btw the date of leaving was May 2000.
Also, lest I forget, in the Preserved Benefit Statement, there was a Basic Cash Sum Preserved in the scheme at date of leaving (in addition to pension)
of £2072, what was that about? Is it a lump sum?

Zelazny

casey_junior wrote: »

Thanks for that Zelazny, I had it figured out at 1896, so not much difference there. I'd be interested to know why there are worst case scenarios, I'd have thought that all would be treated the same.
Btw the date of leaving was May 2000.
Also, lest I forget, in the Preserved Benefit Statement, there was a Basic Cash Sum Preserved in the scheme at date of leaving (in addition to pension)
of £2072, what was that about? Is it a lump sum?

It's not exactly that different people are treated differently, but each of those things I mention makes a difference to the benefit. The three worst cases that I mentioned are so for the following reasons

Date of leaving is an issue because if you left earlier, then your benefits would receive some revaluation between the date of leaving and May 2000. The 35.6% that I quoted was for May 2000 to now, so if you actually left in 1999 for example, the revaluation would be higher.

If the benefits include some level of Guaranteed Minimum Pension, then that is revalued at a fixed rate based on your date of exit. For a date of leaving of May 2000, this would be 6.25% per year (considerably higher than the statutory rate applied to the rest of RPI capped at 5%).

Scheme revaluation has to be at least as much as the statutory revaluation that I calculated the benefits based on. That said, some schemes offer more. There's nothing to stop a scheme paying as much as they like (although I think there can be issues if the amount paid is higher than 5%, in that it is treated as additional contributions, or somesuch). Some (few) schemes do offer a fixed 5% per year of revaluation.

The basic cash sum preserved in the scheme sounds like something you can safely ignore. Before the A day changes, each scheme would work out the cash sum payable (by commutation of pension), and they often used different methods of calculating it. Nowadays, just about every scheme has adopted the A day provisions that say you can have 25% of the value of the benefits as cash (ish, calcs are complicated) including the PPF and FAS, afaik. The only time you'd want to pay attention to this is if it were more than 25% of the value of the benefits, in which case you'd probably retain the right to the higher amount (increased in deferment), but ~£2k against a pension of ~£1.5k at leaving is not really close to 25%.

casey_junior

Thanks again, all I can add is that there is a GMP of c£550, this is presumably why the pension quoted is £1972 as against £1884.
Cheers.

Zelazny

Yepp - the GMP element would increase at 6.25% per year until the scheme started the FAS proceedings. From that point, it would increase in line with RPI. Back of envelope calculations suggests that the changeover would have been about 3 years ago.

casey_junior

Trying to get info from Fas is like pulling teeth, so I'll ask here,
I was in a scheme from 1988 to 2001when it folded and now Fas has it. they tell me that only the portion of my pension accrued after 6 April 1997 is elegible for increase in line with inflation to a max of 2.5%, What is the reasoning behind this?

And also they make no mention of lump sum payment, what are the criteria for getting this from an Fas pension?

hugheskevi

I was in a scheme from 1988 to 2001when it folded and now Fas has it. they tell me that only the portion of my pension accrued after 6 April 1997 is elegible for increase in line with inflation to a max of 2.5%, What is the reasoning behind this?

Statutory indexation was introduced for accruals of Defined Benefit pension after April 1997.

Prior to 1997 there was no statutory indexation for Defined Benefit pension schemes - they could offer indexation if they wished, but there was no obligation.

FAS (and the PPF) would therefore potentially be offering more indexation than had been offered by the scheme which wound-up if they offered more than the statutory minimum indexation.

And also they make no mention of lump sum payment, what are the criteria for getting this from an Fas pension?

My knowledge of this is slightly hazy, and one or two of the finer details might be a bit off, but the basics of it as I understand it are...

It depends whether your scheme purchases annuities from an insurer, or whether they are sending their assets to the PPF.

If the scheme purchased annuities, you will get any lump sum from the insurer as part of whatever was purchased for you. In this case, FAS simply gives you a top-up and there is no lump sum.

If the scheme sends its remaining assets to the PPF then you your payment will be assessed to see how much of it is asset backed - ie, it is split into an amount derived from the assets and an amount that tops up up to 90%.

As long as at least 25% of the total payment is asset backed then you can take 25% of the total FAS Assistance (or however much is asset backed if it lower than 25%) as a lump sum.

PS - I got the amount so badly wrong earlier in the thread as I completely mis-read the dates in your original post. Which were on re-reading are really quite clear, so no excuse