DB Deferred Pension RPI/CPI - Maximum Pension

Nickolai

Try and keep this short. I have a deferred DB pension in a scheme which closed 13 years ago. I transferred in £6k from a private pension, which incredibly the trustees said they would give me £5200 per annum on retirement. I was only in the scheme a couple of years before it was closed down and boosted this to a final deferred pension of £5500 to increase in line with RPI/CPI depending on what the statutory requirements are at the time. I was only earning just over £11,500 a year. Crazy I know, I have a thread on here somewhere about it!

I was skipping through the original scheme introduction documents yesterday and came across the line " The maximum pension (including any AVC's) that you can receive at Normal Pension Date is 2/3 of your final pensionable salary".

Now roughly calculating the RPI/CPI increases over the last 13 years I think i'm closing in on around that 2/3 figure based on my Final Salary at date of leaving.

When it reaches that 2/3 figure is that going to be it with no more annual CPI increases? or is there more to it.

Your_Hero

Nickolai wrote: »

Try and keep this short. I have a deferred DB pension in a scheme which closed 13 years ago. I transferred in £6k from a private pension, which incredibly the trustees said they would give me £5200 per annum on retirement. I was only in the scheme a couple of years before it was closed down and boosted this to a final deferred pension of £5500 to increase in line with RPI/CPI depending on what the statutory requirements are at the time. I was only earning just over £11,500 a year. Crazy I know, I have a thread on here somewhere about it!

I was skipping through the original scheme introduction documents yesterday and came across the line " The maximum pension (including any AVC's) that you can receive at Normal Pension Date is 2/3 of your final pensionable salary".

Now roughly calculating the RPI/CPI increases over the last 13 years I think i'm closing in on around that 2/3 figure based on my Final Salary at date of leaving.

When it reaches that 2/3 figure is that going to be it with no more annual CPI increases? or is there more to it.

You have mis-read the booklet and taken it out of context.

The "maximum pension" of 2/3 is normally because your scheme is a '1/60th scheme' and 40 years is the maximum service associated with it (40/60 = 2/3).

If you left the scheme 13 years ago, then it will be deferred pension and continue to be revalued in line with inflation (or some other measure) until your retirement.

kidmugsy

Nickolai wrote: »

I have a deferred DB pension in a scheme which closed 13 years ago. I transferred in £6k from a private pension, which incredibly the trustees said they would give me £5200 per annum on retirement. I was only in the scheme a couple of years before it was closed down and boosted this to a final deferred pension of £5500 to increase in line with RPI/CPI depending on what the statutory requirements are at the time. I was only earning just over £11,500 a year.

No ruddy wonder it closed.

RichandJ

kidmugsy wrote: »

No ruddy wonder it closed.

Quite common from the eighties up to early 2000's for schemes to give a fixed PUP @ NRD. I suspect this is what the OP has, i.e. £5k is the amount that will be paid at NRD plus whatever other revalued PUP he earned by virtue of actual service.

If it is at leaving & revaluing then I totally agree with you .

SomeUser

If you transferred in funds, usually it gives you added years of service. The number of added years depends on the cost of providing benefits in the scheme.

Your salary at date of leaving is salary * no. of years service (increased to reflect the transferred in benefits) / accrual rate.


Theoretically, you could have started working at 16, accrued 40 years service at 56 which would give you 2/3 of your salary at 56. Then that would be increased (revalued) each year to your actual retirement age.

Nickolai

RichandJ wrote: »

Quite common from the eighties up to early 2000's for schemes to give a fixed PUP @ NRD. I suspect this is what the OP has, i.e. £5k is the amount that will be paid at NRD plus whatever other revalued PUP he earned by virtue of actual service.

If it is at leaving & revaluing then I totally agree with you .

The original transfer quotes the figure of £5.2k with annual increases in line with RPI/CPI.

I wrote to the current pension company (moved twice since the transfer/closure) a few months ago and they confirm the full figure of £5.5k as a final deferred pension increasing in line with whichever inflationary rate was applicable at the time. I have this confirmed in writing a couple of times so don't doubt that.

Up until about a year ago I never really paid much attention to my pensions and have posted a couple of times about my DB pension as I keep thinking it's just to be too good to be true, hence another doubt being raised in my mind with my OP. I just keep looking for the catch and so far haven't found one.

Thank you to everyone for their replies, I'll probably find something else to unnerve me in a couple of months.

RichandJ

Nickolai wrote: »

The original transfer quotes the figure of £5.2k with annual increases in line with RPI/CPI.

I wrote to the current pension company (moved twice since the transfer/closure) a few months ago and they confirm the full figure of £5.5k as a final deferred pension increasing in line with whichever inflationary rate was applicable at the time. I have this confirmed in writing a couple of times so don't doubt that.

Up until about a year ago I never really paid much attention to my pensions and have posted a couple of times about my DB pension as I keep thinking it's just to be too good to be true, hence another doubt being raised in my mind with my OP. I just keep looking for the catch and so far haven't found one.

Thank you to everyone for their replies, I'll probably find something else to unnerve me in a couple of months.

My suggestion would be to ask the admin whether or not the pension bought by the transfer in is as at date of leaving or as at normal retirement date, perhaps ask someone more senior than the one you've been corresponding with ?

I would be absolutely amazed if a TV of £6k bought a pension at date of leaving of £5k. I think what's happened is a (several) change(s) of administrator(s) & the fact that the £5k is ONLY payable from NRD has been missed/lost in the various data transfers.

Better to find out now than get a shock later.

Sorry to break this to you but pension administrators are low paid, uneducated, unthinking drones. Pension admin is always at the !!!! end of spending so they pay peanuts & get amoeba. I know, I work with them.

Check, check & check again.