Help Please To Understand Pension

SnowMan

sandram wrote: »

There is nothing like that on the original paperwork on leaving the scheme in 1996. This is where the figures I have previously given have come from.

In 2007 I was sent a statement of benefits which state; pension earned at date of leaving £1962.10. including an amount in respect of GMP of £694.20 a year. Of this amount your GMP accrued after 1988 is £574.08 a year.

It then states these are likely to be reduced to PPF levels as it was in a PPF assessment period.

Thank you for your patience, I hope this helps.

Thanks that does help.

So increasing the deferred pension at leaving from leaving (August 1996) to administration date (January 2005) gives

Pre 88 GMP = 120.12 x 1.07 ^ 7 = 921.85
Post 88 GMP = 574.08 x 1.07 ^ 7 = 192.89
Excess over GMP = 1,267.90 x 1.2497* = 1,584.49

So total pension revalued to January 2005 = 2,699.23 (= 921.85 + 192.89 + 1,584.49)

Scaled back to 90% of figure through the PPF gives

0.9 x 2,699.23 = 2,429

This should in turn have increased between January 2005 and February 2008 by RPI or 5% if less, possibly 2.7%, 3.6% and 3.9%.

So estimated pension at 60 = £2,685 (=2,429 x 1.027 x 1.036 x 1.039)

But that is quite a bit higher than your figure of £2,382pa

So there must be something else going on. Perhaps the whole of your deferred pension wasn't payable at age 60 without reduction in the first place?

Anyone else got any ideas or see an error in the calculations/logic?


*
(1.2497 = 1.031 x 1.028 x 1.017 x 1.017 x 1.033 x 1.011 x 1.032 x 1.036 where these are the RPI or 5% increases)

sandram

That sounds very complicated, I could never have worked that out! So am I getting more than you would have expected?

SnowMan

sandram wrote: »

That sounds very complicated, I could never have worked that out! So am I getting more than you would have expected?

No less (i've corrected a typo above). You are getting £2,382 pa

But my sum suggests that you should have been getting £2,685 pa.


(However your initial figures before the company went under don't sound right. The maximum possible increase would have been £1,572 compared with your figure of £3,084

GMP at 60 = 694.20 x 1.07 ^ 10 = 1,365.60
Excess at age 60 (max 5% pa increase) = 1,267.90 x 1.05 ^ 11 = 2,168.54

(maximum) estimated pension at 60 = 3,543.14 (= 1,365.60 + 2,168.54)
Increase to age 60 = 1,572.04 (= 3,543.14 - 1,962.10).)

SnowMan

You could try contacting the PPF to see if they can provide you with their figures.

It looks like the details on the right hand side of that linked page are the ones to use.

sandram

Would the figure of £2685 include the approx. minus 10% for the PPF?

SnowMan

sandram wrote: »

Would the figure of £2685 include the approx. minus 10% for the PPF?

Yes.

I've already allowed for the 10% reduction in reaching that £2,685 figure (i.e. 2,685 is 2,983 reduced by 10%)

sandram

I will give the PPF a call.

Thank you for all of your help and your patience, even though I do not understand all the calculations it is good to see that the discrepancy is nowhere near as large as it first appeared!

sandram

Just an extra question should I also call the company that first paid this pension to me, as the amount didn't change when the PPF took over. It has remained static since my first payment in 2008.

SnowMan

sandram wrote: »

I will give the PPF a call.

Thank you for all of your help and your patience, even though I do not understand all the calculations it is good to see that the discrepancy is nowhere near as large as it first appeared!

You are very welcome. Just to explain the steps of the calculation in words.

STEP 1: Take your pension at leaving of £1,962.10pa

STEP 2: Split it into GMP and the balance in excess of GMP.

STEP 3: Increase the GMP between leaving and January 2005 (at 7% pa)

STEP 4: increase the balance in excess of GMP between leaving and January 2005 (minimum of 5% pa or RPI).

STEP 5: Add the two figures in steps 3 and 4 to get your total revalued pension at January 2005 (answer £2,699.23 pa)

STEP 6: Reduce by 10% because of the PPF (answer £2,429.31).

STEP 7: Increase the pension in step 6 from January 2005 to age 60 i.e. Febraury 2008 (answer : £2,685)

STEP 8: compare what we estimate you should be getting from step 7 (£2,685pa) with what you are actually getting from age 60 of £2,382 pa

hugheskevi

Are we sure the scheme uses fixed rate GMP revaluation (rather than s148 increases, for example)?