Alliance & Leicester Pension - in safe hands ?

Starship9

Hello,

My wife did 10 years with the Girobank, later taken over the A & Leicester and has a pension scheme with them (10 years full time reckonable service) that has now transferred over to Santander (Mercer is the Administrator) for "safe keeping". My wife has not worked since having children so there have been no further contributions to the scheme since 1991.

I've 2 questions on the administration of the scheme:

1. My wife does not get an annual statement from Mercer unless we ask for it - I thought that she should be getting one "automatically" but I could be wrong in that ?.

2. Over the past 15 months the 2 statements sent (at our prompting) show that the lump sum and pension predicted have dropped by around 3%. Is this likely to be a general trend or just a blip for a year or so due to the market conditions ?.

I suppose I'm just wondering if there are known "issues" with the administration of these particular schemes or is this just the "way things are" with private sector pensions as the current time.

Thanks in advance

John

dunstonh

1. My wife does not get an annual statement from Mercer unless we ask for it - I thought that she should be getting one "automatically" but I could be wrong in that ?.

There is no requirement for an annual statement on final salary schemes which are no longer accruing years of service. There is little point for it. Money purchase schemes get annual statements.

2. Over the past 15 months the 2 statements sent (at our prompting) show that the lump sum and pension predicted have dropped by around 3%. Is this likely to be a general trend or just a blip for a year or so due to the market conditions ?.

Is she in a money purchase scheme or defined benefit scheme? It sounds like defined benefit from what you say. In which case market conditions are not directly an impact on her pension.

The difference is probably down to assumptions in inflation in that period being different to that which was seen in reality. They probably used a 2.5-3% assumption for indexation but in reality it probably got near zero over that period.

I suppose I'm just wondering if there are known "issues" with the administration of these particular schemes or is this just the "way things are" with private sector pensions as the current time.

There is no such thing as a "private sector pension" as such. That phrase could cover dozens of different types of pensions and each scheme itself would then have variances on the generic. For example, a defined benefit scheme has virtually nothing in common with a defined contribution scheme. yet both could fall under the phrase of "private sector pension".

Starship9

Thanks for that, dunstonh, that's reassuring, I think.

John

Loughton_Monkey

It's a good idea to keep asking for these valuations - albeit that they don't change anything.

If it is a 'Final Salary' scheme, then in theory the benefits are 'fixed' but the statements can only assume RPI until retirement. So in a year or two, when actual RPI is known for the recent past, and assumptions for the future possibly change, it is obvious that the projected benefits will fluctuate slightly.

It is, however, the lump sum that can fluctuate even more. This is because 'behind' the projeted benefits is a nominal pension fund value. This is the bit upon which she can elect to take 25% as a lump sum. In my case, for example, just a year or two before retirement, they started reflecting a much larger longevity - which requires a massively increased 'fund' to support the same benefits. Hence, in that year, my projected pension was little changed, but my lump sum was about 20% up.