CARE Pension enhancement

Sofia123

Hi All,

I would really appreciate some advice. I have retired from my job because of ill-health after 15 years service and 3 days ago received my pension quote after accepting ill-health retirement 2 weeks ago. My question is regarding my pension quote. In 2010, my pension was changed from a final salary to a Career average revalued earnings (CARE) scheme. I am fortunate in that my pension is enhanced to my normal retirement date which is in 20 years time, but the pension quote doesn’t seem to accommodate this enhancement. It seems to me on my pension quote that the trustees have calculated it using my pension built in the Final Salary scheme up prior to the change to CARE, and added it to the 3 years of CARE pension built up to my recent retirement date, thus given my annual pension. Does anyone know of any provision that pension schemes use to enhance CARE scheme pensions to retirement date? I have looked through the pension documentation and all I can find is that to qualify for ill-health retirement, I must have completed at least 2 years of pensionable service and have medical evidence that my ill-health prevents me from carrying out the duties of my own post, or any duties of a similar post. I meet this criteria as I have been given ill-health retirement, so this is not in dispute. Am I being short changed on this, as I know if it was still a Final Salary pension that it would be straight forward and I worked out to be quite a bit more, but my CARE salary doesn’t seem to be ‘enhanced’ as I believe a final salary pension would. I have phoned the administrators of the scheme but they baffled me completely. I intend ringing them again and delving more into the calculation, but hopefully armed with a bit more ammunition. I've also phoned the Pension Advisory service but they were a bit flumexed.

I’d appreciate any advice someone could give me.


Many thanks & Kind Regards,
Sofia.

xylophone

I intend ringing them again and delving more into the calculation, but hopefully armed with a bit more ammunition. I've also phoned the Pension Advisory service but they were a bit flumexed.

Flummoxed?:)

You might be better writing to the administrators to ask for an explanation of the calculations - you could then approach the PAS with the facts and figures properly explained and clarified?

Sofia123

Flummoxed! that's the spelling, I should have googled that first, lol.
Thanks for your reply, I will definately write to them, only I was hoping to take the initiative and tell them which way I think they should be calculating it as I can see this dragging out for ages otherwise, I know, I should learn to be a more patient lady!, thanks again. Sofia.

Andy_L

Looks to me like they've just forgotten to add the 20 years enhancement to the quote - I always assume c0ck-up over conspiracy as a first position

It is however possible that at the same time as moving to the CARE scheme they changed the ill health provisions

You could end up with:
12+20 years of FS and 3 years CARE or
12 years FS and and 3+20 years of CARE
12 years FS & 3 years CARE

or any combination thereof depending on the scheme rules

Sofia123

Very many thanks Andy,
Your suggestions sound perfectly logical and reasonable. I phoned the administrators of the pension scheme today, and as they didn't have any information on enhancing my CARE pension, they had to find out & ring me back. When they rang back, they told me there is no provision to enhance a CARE pension as what happened with Final Salary pension. This they say is because a CARE pension accrues year on year, so it would be impossible to enhance it as thay can't anticipate what my working hours would be between now and 20 years time (my NRD). There is also nothing whatsoever in the scheme rules, but that my Highest tier pension I have been awarded WILL be enhanced??? Very confused. Perhaps they are right and can't enhance a CARE pension, given that it is impossible to predice my future working hours. It seems so unfair though. :sad:

Kind Regards,
Sofia

Sofia123

Hi All,
I emailed the administrators today for the calculation used, and their reply was 'that my retirement benefits have been calculated to include allowances for those you would have earned had you remained in Pension scheme until my Normal Pension Date', they also say in the email that my pension had been calculated using my final salary up to and including 2010 (when they changed to a CARE scheme), and added to the final 12 months pensionable salary earned up to the end of October 2013. It seems that their response email indicates that the 'enhancement' is the extra 20 years. But then they go on and also say that they have no way of calculating the enhanced CARE part of my pension as CARE pension accrues year on year, so it would be impossible to enhance it as thay can't anticipate what my working hours would be between now and 20 years time (my NRD). So confusing and one very frustrated lady here. As for the actual calculation, well they are going to write to advise me of the way it was calculated which may take a few weeks?? Why can't they email me this? :mad:Aarrgg. (I really am not holding out too much hope as I think they are trying to pull a fast one). I'm not sure whether to provide them with an example on how to work it out, as although they say they have no way of calculating it, the rules of the scheme clearly state that it 'includes allowances for those you would have earned had you remained in Pension scheme until my Normal Pension Date'. Has anyone here had a CARE pension enhanced to retirement date and did they have any trouble in their pension administrators doing so? Also, any real examples used would be really helpful,

Very many thanks,
Sofia.

Andy_L

Sofia123 wrote: »

Very confused. Perhaps they are right and can't enhance a CARE pension, given that it is impossible to predice my future working hours. It seems so unfair though. :sad:

Kind Regards,
Sofia

Hmm, that would be what we technically refer to as bollox. The same argument applies to predicting future working hours & salary with a final salary pension, eg you could have gone part time for the next 20 years or had a massive pay rise in the last few years of your career

I suspect they didn't consider the effect of the change the CARE on ill health retirement and didn't come up with a policy

Andy_L

Sofia123 wrote: »

Has anyone here had a CARE pension enhanced to retirement date and did they have any trouble in their pension administrators doing so? Also, any real examples used would be really helpful,

Very many thanks,
Sofia.

These are the rules for the Civil Service CARE scheme ill health retirement

http://www.civilservice.gov.uk/wp-content/uploads/2013/03/NIHR_Dec2012.pdf

They "average the average" ie they divide the accumulated CARE pension by the number of years you've accumulated it over then multiply that £ value by the number of enhancement years to get the extra pension

Sofia123

Dear Andy,
Thank you so much for your reply. I totally agree with your technical analysis of their reply as 'bollox', lol. Also many thanks for the example you pointed to, (I couldn't find any examples anywhere) I think I will send a FOI request to the administrators regarding the actual calculation, give them 10 days to provide a revised quote (based on the example of the Civil Service enhancement), I understand that there would be many differences in the way CARE schemes are enhanced, but at least the Civil Service one IS enhanced. If this fails, TPAS here I come.
Many thanks again.
Sofia,

Andy_L

Who do you work for? FoI only applies to public sector organisations not private companies

You should be able to get a copy of the definitive scheme rules from your employer/the scheme trustees

Sofia123

Hi Andy,
Thanks again for your reply Andy, I didn't realise FOI only applied with public sector organisations (which I did work for), so I guess my FOI request will be honoured. I don't want to wait 2 weeks for something which they seem strangely reluctant to just email me. I have a copy of the booklet of the scheme rules, but good point, I will request the full definitive rules from the Trustees as you say. The booklet from 2011 (which is after the switch to CARE occured) states that early ill-health retirement in my tier:
"includes allowances for those you would have earned had you remained in Pension scheme until my Normal Pension Date".
Yet they don't seem to acknowledge this. Something isn't quite right here. Hopefully the scheme rules will enlighten me. Perhaps there was a change in the rules on CARE pensions when they transferred, hopefully not! But this would contradict the rules in the booklet. I guess then that the definitive scheme rules would take precedence?:sad:
Thanks again,
Sofia.