Trying to sort out my pensions - quick question

houseboatdream

Hi Guys

I don't post very often, and never on the Pensions board! but the time has come for me to grasp the nettle and try and get my head round the pensions issue.

I have been following Shiredon's posting with interest as my OH and I are planning on going to Europe, but with much less money I'm afraid. As you will see from my sig our plan is to be off travelling this time next year so I'm busy sorting out all our finances.

I have a couple of pensions and am getting forecasts for them. I've also got a foreacst from the DWP. This question is about a final salary scheme I was in from 1992 to 1999. i have just got a statement which says:

Deferred pension at date of leaving - pension value £3,589.83 per annum

Projected pension at Normal retirement date - 20 June 2024 (age 60) - £8,024.52 per annum.

OK - now this is probably a really stupid question to you guys, but how do I interpret these figures? Does it mean that in 2024 I can expect to get an annual pension of £8,024.52? How reliable is this figure?

Thanks in advance. I will probably have some more questions over the next couple of weeks as more pension statements come back.

Andy_L

It's based on some assumptions about RPI over the next 18 years as your defered pension increases by RPI every year.
It should say somewhere what they've assumed

EdInvestor

Deferred f/s pensions are revalued up by 5% annually or RPI whichever is the lower.In recent years inflation has been running at under 5%, but who knows what will happen over a 25 year period? That figure is the max you will get, in any case, you can assume the pension will maintain the purchasing power it had when you left.

houseboatdream

Hi & thanks to you both for your replies.

Pensions are a bit of a blank for me, hence trying to get my head round things now!

In the letter I had from the scheme managers the only info is the figures in my first post. They do not say what assumptions they have made.

Another pesnion I have is money purchase scheme, that one gives me a figure for the value of the "pot" of money accumulated. Should this Final salary scheme also give me such a value or doesn't it work like that? Should I be asking the scheme managers for more information?

I'm trying to work out what potential pension situation could be given the different schemes I have been in and my current pension scheme.

thanks for your help so far

EdInvestor

Another pesnion I have is money purchase scheme, that one gives me a figure for the value of the "pot" of money accumulated.

THat's correct, to see roughly how big a pension the pot would buy now, check out annuity rates here:

https://www.fsa.gov.uk/tables

Should this Final salary scheme also give me such a value or doesn't it work like that? Should I be asking the scheme managers for more information?

No it doesn't.It's based on X/60ths or X/80ths of your final salary when you left ( scheme booklet should say which). X and Y relates to number of years worked. THen it's increased for inflation. You could check the basis of the upwards revaluation with them, 5% or inflation if lower.

houseboatdream

Thanks Ed........the mist is slowing clearing!

A great help.

cheers

A_Nice_Englishman

EdInvestor wrote:

Deferred f/s pensions are revalued up by 5% annually or RPI whichever is the lower.In recent years inflation has been running at under 5%, but who knows what will happen over a 25 year period? That figure is the max you will get, in any case, you can assume the pension will maintain the purchasing power it had when you left.

Only if you assume RPI will be 5% or less and that RPI is a good measure of "purchasing power".

By the way, I'm note sure whether all final salary pensions are revalued like that.