The Pension Review - help please

JAG61

I have received a response to my letter regarding the details of the calculation it is as follows and unfortunately the 65 NRA was a typo and the calculation still stands as NRA 60 was actually used.

"To calculate the value of your excess pension we have used actual revaluation rates up to and including 1 April 2003 (calculation date). I can confirm that these rates are sourced using the actual annual Retail Price Index (RPI) increases over the period from the date you left the Rolls Royce Pension Fund to the date of our calculation and is limited to a maximum increase
of 5% per annum.The limit is imposed both in accordance with statutory legislation and in accordance with rules defined by the trustees of the Rolls Royce Pension Fund. RPI tables can be found on the UK government’s office of national statistics website .

From 1 April 2003 an assumed RPI rate of 2.75% has been used. This assumed rate is provided periodically by our regulator for use in calculating future redress. For your information our regulator as at 1 April 2003 was the Financial Services Authority (FSA).
The source of this assumption along with other calculation assumptions was provided by the FSA in their pension review bulletin 24. This can be found using the following internet link.
.........PRB24.pdf

In our previous letter we referred to your normal retirement age (NRA) in the scheme as being age 65, unfortunately this was incorrect. The NRA for a female leaving the Rolls Royce
Pension Fund on 11 June 1988 is age 60. I can confirm that all pension amounts previously quoted have increases applied to age 60. I apologise for any confusion this typing error may
have caused.

You have asked some questions regarding the cash equivalent value.Calculations to determine the annuity rate, which converts the pension increased to your NRA, is performed behind the scenes by the calculation software we use. This system has
been approved by the Government Actuarial Department and is provided to us by a specialist third party provider. I am therefore unable to provide precise details around this.

However, I can confirm that the following are used to calculate the annuity rate. PA90 mortality tables, your age at pension commencement date, the assumed interest rate in
payment plus adjustments according to the attaching ancillary benefits chosen, for example increases in payment, guarantee periods and attaching spouses pensions. For further
information also refer to FSA bulletin 24 mentioned above.

Your pension at the scheme’s NRA has been calculated to be £6,543.92. The overall annuity rate used to convert this to a capitalised value at NRA is 14.375. This means that before a
discount is applied the unadjusted value at NRA is £94,068.85.
The period between 1 April 2003 and the scheme’s NRA (2 December 2021) is 18 years and 244 days. Based on the interest rate in deferment (See FSA bulletin) of 7.3% per annum, plus
a small adjustment to allow for the probability of mortality during this period, the discount factor applied is 0.2593. This results in the capitalised value at 1 April 2003 being £24,392."

I am wondering if the people who have the guarantee added to their policy will have the same calculation when it matures or if they will have up to date assumptions which are better or worse

magpiecottage

DaveMcG wrote: »

the "guarantee" would indeed have been an error as the practice at that time was to calculate the loss and apply it to the pension fund.

No - most firms used the calculation and enhancement route but Prudential had two differences.

The first was that it was never regulated by the Personal Investment Authority (which instigated the Pension Review), preferring instead to be directly authorised by the Securities and Investments Board (which morphed into the FSA and now the FCA).

It was nevertheless required to carry out the review by the SIB but insisted it had not missold anything until late in the day when it decided it had (I would hazard a guess that the SIB "decided" for it but cannot prove that).

Too late to carry out the many calculations needed (and with almost everybody capable of doing the calculations having long since been snapped up elsewhere) it was left with little option but to issue guarantees in order to meet the deadline.

JAG61

I was about to sign the acceptance offer but prior to doing so I checked over all the figures and paperwork and found that the detailed breakdown for the capitalized value at 1 April 2003
was 24,392GBP and was 2,284GBP greater than the original calculation. That revalued to today's figures would be a lot of money.


I have written to the Pru with this information asking for a new figure based on the above. They will get back to me.

I have also asked if there was anything in the review about setting Retirement dates on the Personal pension to the Rolls Royce NRA date of 2/12/2021 as the Non Protected rights date is 1/4/2022 - picked by the Salesman and Former Protected rights 2/12/2026 ammended by the pru from original date 2/12/2021.

I would have received my Rolls Royce pension on 2/12/2021 and I have pointed this out.

11 weeks ago I wrote to the Prudential Customer Services about these date amendments and they ignored every query and letter. So I raised a complaint. Today I received a copy of last years statement!!!

I have been reading that we can now move out of these Pensions on transfers into other products is this a good idea?

I could transfer this on a QROPS to New Zealand but will get hit on 60% of the Total transfer sum at top tax rate - and the money to pay this bill you have to find yourself, it can not come from the transfer. I may one day also return to the UK so would like to keep it here.

Can I transfer it into another UK product as I am overseas?

DaveMcG

magpiecottage wrote: »

No - most firms used the calculation and enhancement route but Prudential had two differences.

The first was that it was never regulated by the Personal Investment Authority (which instigated the Pension Review), preferring instead to be directly authorised by the Securities and Investments Board (which morphed into the FSA and now the FCA).

It was nevertheless required to carry out the review by the SIB but insisted it had not missold anything until late in the day when it decided it had (I would hazard a guess that the SIB "decided" for it but cannot prove that).

Too late to carry out the many calculations needed (and with almost everybody capable of doing the calculations having long since been snapped up elsewhere) it was left with little option but to issue guarantees in order to meet the deadline.

That isn't correct, Pru didn't use guarantees in Phase 2 of the review (younger transfers and opt-outs) and when JAG21's offer was issued. Hence my words "at that time".

DaveMcG

I have been reading that we can now move out of these Pensions on transfers into other products is this a good idea?

Once you get the redress finalised, it might be worth putting up another post giving your circumstances. Pru might have some sort of flexible drawdown option available after April as well.

Also looking at your 27/12 post, it does seem like they have followed the correct procedure, so there really isn't much more that can be done. As I said earlier the ombudsman won't entertain a complaint because of time barring and the correct process being followed.

JAG61

I will be happy if they bring the redress inline with the detailed calculation and revalue it - sounds really picky but I need to get what I can.

I will take your advise and do another post regarding what I should do next.

Thanking you once again for your help.

worn_out

JAG61. do you have a link to the pension review bulletin no 24 ? have done a search but can't find a link ..

thanks

DaveMcG

worn_out wrote: »

JAG61. do you have a link to the pension review bulletin no 24 ? have done a search but can't find a link ..

thanks

http://www.fsa.gov.uk/static/pubs/pensions/prb24.pdf

JAG61

Thanks for posting link to Bulletin 24 DaveMcG

Sorry I was unable to include links in my postings Wornout.

worn_out

Okay,thanks. Am trying to see if my company pension t/f to a S32 was the GMP element only, which according to TPAS is what the S32 was designed for, and hopefully the excess I had remained within my old company scheme. While I wait for responses from the pension administrators (the DB scheme is now closed but being managed by Capita) I want to try and calculate how the trasnfer value emade in 1988 equates to the benefits I had already accrued in my old co. scheme, now I know what the co, scheme would have paid me for staying in. It seems they have lost all the papers from 1988 so it's proving rather difficult. in fact i'm struggling to make progress..I need the formula used in 1988 when the actuary valued my pension for t/f purposes..unless there is a rule of thumb..just to get a ball park figure to compare