Is my pension forecast correct?

lizziemay

Hi, I hope someone can help us, Is there an institution that will look at pension forecasts to check whether the figures add up, My husband is 59 and has paid into a final salary pension and a private pension for 39 years. I understand that the final salary pension should be equal to 1 /60th of his final years salary x the number of years worked. The figures don't seem to add up, they have worked it out on his final salary, but then deducted one and a half times the yearly basic state pension. Is this allowed?
They have also added in his private pension figures (Brass) and still the yearly pension is less than one third of his final salary.
We would be really grateful for any advice as we are beginning to panic! :eek:

Piratipper

lizziemay wrote: »

I understand that the final salary pension should be equal to 1 /60th of his final years salary x the number of years worked.

This is basically true, but a bit of an oversimplification. Some pensions calculations are hideously complicated! Early / Late retirement, revaluation between the years you left and retirement date, whether the pension is contracted-out, changes in accrual rates during service, any transfers in, what periods of regulations the service spanned, whether it is final salary / average salary / average of last few years salary... these are just some of the factors that can make a difference!

lizziemay wrote: »

but then deducted one and a half times the yearly basic state pension. Is this allowed?
.

Yep if it's in the scheme rules. You should be able to request a copy of the scheme booklet to verify this. It's a bit sneaky and not so common these days, they are counting your state pension towards the value of your guaranteed final salary benefits.

lizziemay wrote: »

They have also added in his private pension figures (Brass) and still the yearly pension is less than one third of his final salary.

I think you mean Additional Voluntary Contributions (AVC's)????



I would ask for a breakdown of the calculation & a copy of the scheme booklet. They should be able to provide this.

xylophone

Your husband is with the Railway Pension Scheme?
As well as his FS salary he contributed to the AVC scheme (Brass)?

See https://forums.moneysavingexpert.com/discussion/4085527 post 11
Also https://www.railwayspensions.co.uk/ (site down until tomorrow apparently).
Are you able to post the calculations?

lizziemay

Piratipper wrote: »

This is basically true, but a bit of an oversimplification. Some pensions calculations are hideously complicated! Early / Late retirement, revaluation between the years you left and retirement date, whether the pension is contracted-out, changes in accrual rates during service, any transfers in, what periods of regulations the service spanned, whether it is final salary / average salary / average of last few years salary... these are just some of the factors that can make a difference!


Yep if it's in the scheme rules. You should be able to request a copy of the scheme booklet to verify this. It's a bit sneaky and not so common these days, they are counting your state pension towards the value of your guaranteed final salary benefits.


I think you mean Additional Voluntary Contributions (AVC's)????



I would ask for a breakdown of the calculation & a copy of the scheme booklet. They should be able to provide this.

Thanks, yes it is really complicated! We can't make any sense of it! I will request the booklet and the breakdown. We have kept all the yearly forecasts, but I can't seem to find the original booklet. It's very disheartening as we were told what a good scheme it was.

xylophone

Once you can access the site (tomorrow?) you might find the booklet you need.

Gromitt

lizziemay wrote: »

It's very disheartening as we were told what a good scheme it was.

I was told similar for my pension when I took it out. I decided to pay in the minimum amount to get the maximum out of the company. It turns out that was the best idea, as others who have paid in significantly more (via voluntary contributions) have worked out they basically got an equivalent of 2% return on what they have paid in (due to management charges, etc). Meanwhile, my additional contributions have been earning me more than double that in the savings accounts and investments that I decided to put them in.

lizziemay

xylophone wrote: »

Your husband is with the Railway Pension Scheme?
As well as his FS salary he contributed to the AVC scheme (Brass)?

See https://forums.moneysavingexpert.com/discussion/4085527 post 11
Also https://www.railwayspensions.co.uk/ (site down until tomorrow apparently).
Are you able to post the calculations?

Yes it is the Railways Pension scheme, and Brass
Total pensionable earnings: £28,884
Normal scheme contribution: £53.86
Brass contribution £44.00
Employers matching contribution: £10.00

Current total Brass funds: £56756.79

Basic scheme benefits before options: Lump sum £22587.91
Yearly pension: £8356.54
Plus Brass benefits

Options available at 60:
reduced lump sum: £56756.80
yearly pension: £10238.87 (including Brass funds)

It's as clear as mud!!! Hope you can help!

lizziemay

Gromitt wrote: »

I was told similar for my pension when I took it out. I decided to pay in the minimum amount to get the maximum out of the company. It turns out that was the best idea, as others who have paid in significantly more (via voluntary contributions) have worked out they basically got an equivalent of 2% return on what they have paid in (due to management charges, etc). Meanwhile, my additional contributions have been earning me more than double that in the savings accounts and investments that I decided to put them in.

I wish we had known! I will pass on the message to our kids!

lizziemay

Sorry, one more question, the maximum lump sum was capped in 2006 at 25% of the pension pot. But his maximum lump sum hasn't increased since then, even though his pension pot has. The advisor from the scheme couldn't explain why, should it have gone up?

xylophone

Is the figure for 'reduced lump sum" correct? (post 7) It seems to be the same as the BRASS pot?

lizziemay

xylophone wrote: »

Is the figure for 'reduced lump sum" correct? (post 7) It seems to be the same as the BRASS pot?

Yes it is it differs by a penny!?