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Wife's M&S Pension help please

Hi, my wife has a M&S staff pension which she is considering drawing in 2014 but the pension estimates are slightly confusing.
If she takes it on 30.04.14 her choice is full pension of £4845 or lump sum of £22210 with reduced pension of £3333 pa.
Leaving it until 30.04.15 the pension reduces to £3854 or lump sum £17562 and £2635.
It also states that the pension will decrease in line with scheme rules and will be in two stages, the first at age 60 (2.5 years to go) and the second on 1.5.20. The total deduction is currently £1608 which seems a lot to us and really can't figure out why. We are also confused as to why the pension is less the longer it is left as we thought leaving a pension longer would increase the figures?
She has not been employed by M&S for approx 20 years and this is from her previous employment with them.
Hope someone can throw some light on this, thanks in advance.
:beer:

Comments

  • xylophone
    xylophone Posts: 45,426 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Does your wife have a deferred final salary pension with M&S?

    Does she have a scheme booklet appropriate to her section of the scheme which gives details of benefits for deferred pensioners?

    Was she contracted out?

    When was she employed by the company?

    If she was contracted out and has a guaranteed minimum pension is it increased in deferment by fixed or full rate?


    Does the Scheme fully (or partially) integrate with the State Pension?
  • Hi, the info I can glean from the papers I have are:
    Deferred final salary scheme
    Can't locate a booklet - she is away for a couple of days but I will call her to see if she has one.
    She was contracted out
    She left M&S on 21.10.95 after approx 23 years full/part time
    Don't understand this question - paper work states "That part of your pension which represents the Guaranteed Minimum Pension will be increased by the scheme at state retirement age by a fixed rate of 7% pa compound between the date of leaving and state retirement age.I addition the remainder will be increased by the lower of 5% pa compound, and the RPI between your date of leaving and normal retirement date."
    I think it integrates fully with the state pension - "The M&S scheme is designed to allow for the basic state pension rarned by the member during membership of the scheme. All staff have a normal retirement age of 60.

    Hope this helps, thanks.
  • xylophone
    xylophone Posts: 45,426 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    I have just found this - http://corporate.marksandspencer.com/documents/specific/howwedobusiness/our_people/conditions_employment.pdf

    See section 12 of above and look for (or obtain) the booklet entitled M&S Pensions A Guide to The Marks and Spencer Pension scheme?
  • It would appear to be best to take the pension on 30.4.14 rather than 31.4.15 as the reduction is quite a large sum.
    Would you confer?
  • xylophone
    xylophone Posts: 45,426 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    fixed rate of 7% pa

    This means that the GMP is revalued by fixed rate in deferment.
    http://www.barnett-waddingham.co.uk/news/2012/07/what-is-a-gmp/
    http://www.barnett-waddingham.co.uk/news/2012/07/revaluation-for-early-leavers/

    If the pension scheme is integrated with the State Pension Scheme
    see http://www.mycompanypension.co.uk/Integrating-With-The-State-Pension-Preserved-Members-DB

    You indicate that your wife's Scheme Pension Age is 60 - at the time when she worked for M&S and up to comparatively recently, the female GMP age exactly aligned with female state pension age but this is no longer the case.
    https://forums.moneysavingexpert.com/discussion/comment/63405010#Comment_63405010
  • xylophone
    xylophone Posts: 45,426 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    When exactly is your wife's Scheme Retirement Date?
  • Normal retirement date is 30.4.15
  • xylophone
    xylophone Posts: 45,426 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    From what I can glean from the information you have given, at your wife's SRD, she would be entitled to receive her full deferred pension which would be the GMP revalued to SRD plus the revalued excess?

    It looks as though when the rules of the scheme were written, it was decided that the pension should be adjusted to take account of the fact that the State Pension for women was payable at 60 and for men at 65 - I am assuming that this meant that if a woman took her M&S pension before age 60, she would see a reduction at age 60 to take account of receipt of the State Pension and a man would see a reduction in his scheme pension at age 65 for the same reason? This practice was known as integration/abatement and operated according to the rules of the particular scheme, see https://forums.moneysavingexpert.com/discussion/4736856

    This may explain the figures given in your first post?

    The GMP rules are likely to affect your wife when she brings her pension into payment, in so far as the Scheme has no obligation to pay inflation linked increases on that part of pension that relates to the pre 88 GMP or anything beyond 3% on the part which relates to the post 88 GMP. The excess will be inflation linked according to Scheme rules.

    The GMP is referred to as the Contracted Out Deduction on State Pension Statements - your wife will not become eligible for her state pension until 2021 so will draw it under the single tier rules see gov links in https://forums.moneysavingexpert.com/discussion/comment/63405010#Comment_63405010.

    But I am no expert and in your wife's position, I would read the Scheme booklet ( and any amendments that have been issued) and then clarify her exact position under the rules of the Scheme with the Administrators.

    It might be helpful to others ( and I would certainly find it interesting) if you came back with the results of her queries.
  • xylophone
    xylophone Posts: 45,426 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    I also note in the link in 4 above that there is mention of a bridging pension between SRD and State Retirement Age - this might also account for the further reductions that you mention.

    http://www.mycompanypension.co.uk/Early-Payment-Pensioner-Members-DB

    But only the Administrator can give your wife chapter and verse on the M&S Scheme.
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