Mum can't get her full pension pot even though she hasn't taken anything

Losttheplot_2

Been following this since the thread started and have joined as feel I must point some things out...
Firstly I have been a lurker to gain more info regarding pensions and have learned a lot thank you...
I am not an IFA and have nothing to gain from anyway this situation pans out so that's cleared up.

Barclays 1964 UKRF if that's the scheme OP mother was a member of (and that does seem likely due to the dates given) was a non contributory scheme so talk about payments and contributions is wrong (albiet was part of staff package).

This fund was closed as of 31/03/2010 and all current employees who were members at that time became deffered members with full statements given to every member which included deffered benefits clearly showing GMP, Normal Pension, SPD and NRD which by the way was 60, this was widely known at the time as the staff were furious and the consultation period lasted at least 9 months or more during which time the OP would have had loads on information sent to her and also seminars in the worklace, one thing that was conceded by Barclays was to give all affected staff a one off 6% of gross salary payment in December 2009.

What makes no sense to me is at that time OP mother would have been about 64 ish and would have been informed 4 years earlier about her pension benefits which so who did she get advice from at that time ?? Also pensions in payment increase by various % on different parts of the pension by cpi/rpi so a valuable protection against inflation.
I am really no expert but there is more to this story than we are being told.
A side issue from 1/4/2010 Staff could contribute to DC scheme if eligible with Barclays contributing as well.

xylophone

but all in the sort of way that our questioner clearly seems to be getting discouraged by. We can do better to explain what is required and why and what options there are than that. It's not so much changing the options as how we present them, since we do seem to have a case here where a transfer out makes sense.

See post 54 - not discouraging?

dunstonh

The original pot (although it is classed as not a pot due to the type of pension it is) was £180k and Barclays said she can have 25% tax free out and then receive £5k a year, so around 4% roughly. She would need to live over 30 years of it growing at a bad rate (has had heart attack and other serious health issue) to get all the money out because the pot still grows when only £5k a year comes out. Annuities are great for IFAs and for insurance companies

Barclays is not an annuity. If she was to utilise an annuity, the rate could be higher relative to the transfer value of the pension but pension may have GMP to consider and the amount paid by Barclays would likely be far better value than the annuity.

Please explain how annuities are great for IFAs compared to any other option?

That £135k would not be frozen over 12 years, the pot would be invested and investments grow. It would not be unheard of for an investment of £135k to more than double in 12 years and this is why the annuity companies have ripped people off for years with terrible returns. Please stop trying to convince me to convince to my mother that an annuity is a good investment because most people agree with me that it is not.

It would be unheard of a drawdown fund paying in excess of 5% a year to more than double in 12 years.

Nobody is trying to say an annuity is a good option for your mother. However, the occupational pension is almost certainly a better option for your mother. Health may potentially be a justification. However, having a secure guaranteed income for life may be a healthier position for her rather than you having to explain how you have lost 50% of her pension.

As you seem to be making decisions on the basis of Daily Mail style ranting and making unfair allegations about other posters then shoudl we perhaps consider why you are so desperate to do this? The only person who its probably going to benefit from her transferring out is you. Are you perhaps thinking more about your inheritance rather than what is best for your mother?

xylophone

What makes no sense to me is at that time OP mother would have been about 64 ish and would have been informed 4 years earlier about her pension benefits which so who did she get advice from at that time

See post 18, 20, 22..... there seems to be a lot of confusion and misunderstanding .... additionally, error seems to have crept in with mother's state pension (post 35....)

And the OP's mother should clarify whether the CETV is £150,000 (post 43) or £180,000 (post 48) - I don't quite follow the reference to

the original pot

particularly as there isn't a pot, as has been explained to the OP.

BobQ

dunstonh wrote: »

As you seem to be making decisions on the basis of Daily Mail style ranting and making unfair allegations about other posters then shoudl we perhaps consider why you are so desperate to do this? The only person who its probably going to benefit from her transferring out is you. Are you perhaps thinking more about your inheritance rather than what is best for your mother?

A valid question that has been in my mind too. You like to give people the benefit of the doubt, but when someone is so obsessive it does make you wonder.

Losttheplot_2

Xylophone,
I agree a lot of confusion from the OP and all I am trying to do is point out that it does not appear to be what it is, for example post 28 has she wasted 9 years contributions, when it was a non contributory scheme that finished 5 years ago!The whole thing makes no sense and if anyone was in need of proper IFA advice then please OP take it, as anyone who does not understand the difference between a db and a dc pension does need some support and help, I am not trying to be hurtful but truthful , as it appears in the past with your mums NI contributions not being registered correctly as per one of your previous posts there does seem to be a clear lack of clarity on the whole pension system.

agarnett

I am new to this thread, but I do know that Losttheplot is correct about the so-called Barclays 1964 Pension Scheme. It was and remains an exceptionally good scheme in which to be a deferred member - generally speaking.

What I do not agree with Losttheplot about is that the OP's comments make no sense. Sure the OP's question about 9 years wasted contributions shows the OP does not know everything about the Barclays arrangements, but then no one contributing to this thread has put their hand up and said they do either. And the question about the NI contributions not being registered correctly was most likely to be a government c¤ck up. I expect the Barclays 1964 scheme was definitely contracted out. E.g. in the late 80s/early 90s, the government did in fact make mistakes and had to play catch up on passing contributions to pension providers which it had forgotten to do properly. Maybe the OP's Mum's NI problems were to do with being contract staff at one point - forgive me - I haven't gone hunting for the posts about that.

Goodness knows how the SERPS and S2P reductions to State pensions and State Pension Deduction rules (apparently reducing DB pensions!) are going to actually impact on DB pensioners, but it looks to be an unqualified mess. No wonder most of us think we might be better off with the cash somewhere we can see it from now on!

Risk #1 to the OP's Mum's "pot" is that it looks like most of the quote £180K is a discretionary offer which will have a normal CETV deadline (3 months take it or leave it?) but may also be a one-off offer because she is over scheme normal retirement age. I was surprised to see the suggestion that a CETV in such circumstances may not be a right under the scheme rules. But maybe that's a fact. And maybe that discretionary offer or anything like it is indeed one not likely to be repeated.

Risk #2 might be that it has also been pointed out that the CETV might not be exactly altruistic - the Barclays UKRF administrators are Towers Watson who are also actuaries who seem to make money by showing employers like Barclays novel methods of cutting corners in scheme valuations and thereby saving Barclays contributions to valuation shortfalls and hence shareholders money. But scheme valuations aren't the only valuations TW do. So it might be a miserly CETV. But on the other hand, if the OP's Mum is frail, perhaps the medical evidence Barclays insisted on collecting might mean they believe it is actually generous!

I have little doubt that the scheme contains very interesting inflation protections of the defined benefits. If Risk #1 above does not actually exist and the Cash Equivalent Transfer Value is considered as a "pot" then it is probably still growing nicely. That could have been reason enough to continue deferring beyond NRA whilst options were being considered. Getting 4 or 5 more years service in on the 1964 scheme post NRA (not 9 as others have implied) was also a benefit. My understanding is that since 2010 no previous member has accrued service entitlement under the 1964 scheme. Instead, all 1964 scheme staff were offered the DC "Afterwork" Scheme going forward. I believe that if members own contributions were maximised into Afterwork, the total contributions were worth something around 20 some odd % of salary. I would imagine that the OP's Mum might easily have accrued an Afterwork Account value of £20,000 to £30,000 in four years or so since she enrolled in it if she did so and maximised her own contributions to qualifying for Barclays maximum matched contributions.

I believe the DC Afterwork scheme is confusingly accounted as part of Barclays UKRF. So the transfer value offered may include the 1964 scheme and the Afterwork scheme.

And if the OP has gone from knowing nothing to knowing enough to be dangerous in the last 9 months then so has half the flippin' audience to this forum, I am sure! So what ?

Since when has it been correct for advisers to ridicule consumers for imperfect knowledge? It is surely far more correct for consumers to be cynical and to ridicule self-styled advisors and experts who by their very links with a disastrously discredited industry are fair game? If you want to stand out from the rotten crowd in that lot, then you have to be very knowledgeable, very skilled, totally committed to researching individual cases completely and then particularly eloquent indeed in order to get the best advice across - I don't see too many on MSE who have completely footed that bill lately, so you can't blame the OP for his or her cynicism.

I am not sure whether some commentators appreciate how well "the pot" or more properly the CETV has grown in deferment with schemes as good as this. My involvement in a similar scheme has shown some very surprising increases in CETV quotes over many previous years and some surprisingly less than expected ones too in recent years which I haven't quite got to the bottom of. But the best DB schemes have definitely been capable of much higher increases (in year on year CETV quotes) than most people would ever dream of as performance in their DC scheme or SIPP funds.

However, the government has now messed with the rules in so many different ways that I think there is a real feeling amongst us deferred DB deferred members that the good times are past, and that if we don't take full control in the current window of opportunity we might soon regret it, and not the other way around. This might be especially so when we read such things as

xylophone wrote:

The government will issue new guidance to trustees on how to use their existing powers to delay transfers from schemes if the scheme is at risk, and to reduce transfer values to reflect scheme funding level.

What it means is that deferred DB members like the OP's Mum need experts to rapidly lay out exactly what the projections and options are for staying in the Barclays 1964 scheme and what doors are opening and closing with the change of rules on 6th April 2015. Every DB scheme is different. Actually, the least likely to be expert on these particular schemes are the IFAs, unless they really are willing and skilled enough to do adequate research. We know they are willing to charge four figure fees to pay their Professional Indemnity insurers, but are they committed much beyond profit their own businesses? The real experts are the actuaries who are appointed on each scheme by the trustees - the longer term their involvement the better, and of course the finance directors who have to keep contributing to the schemes to satisfy the original employer "pension promises". But who amongst those can be trusted?

Trouble is, if the actuaries were honest and up front as opposed to being in the pockets of the employer companies, there might be "runs on the bank" on certain schemes at certain junctures. So they and their masters like to keep their calculations close to their chests. When we deferred members who have not actually reached NRA ask for a CETV quote, when we get it, it is quite likely to be the result of a calculation using a raft of assumptions selected to be "best for the scheme" and you will not actually be reminded of exactly what expensive to maintain guarantees you are giving up if you take the offer.

But what if you don't take it ? Are these old DB pensions safe from all corporate boarders and freel0aders of the future?

In the OP's mother's case there may be grounds for a real fear that the "pot" could be lost for an early death either before taking a pension with Barclays or too soon afterwards. There's not much point in splitting hairs over whether to call it a "pot" or not. The fact is that right now there is a significant CETV to be had, and unless that CETV is taken, there may be an unacceptably large risk to the size of the OP's mother's future estate if she pops off early.

But be fair - all commentators should remember that we as individuals are all entitled to our own opinion on the meaning of our own lives, and that in many cases, leaving something meaningful behind for loved ones to enjoy is important, and making sure no other *¤**¤* gets it, especially the faceless corporate that might otherwise have been on the hook for several decades of pension payment for a less impaired life, is indeed sufficiently meaningful before shuffling off for most people!

So rather than express simplistic opinions about the OP's motives (yes of course it crossed all our minds, especially with casual reading of the last page or so of the thread, but we cynics really don't necessarily improve the world when we fail to engage gear before engaging mouth!), perhaps we should think beyond the worst. If we don't know enough about the Barclays 1964 scheme to answer some of these questions more accurately then maybe the more resourceful among us ought to go and try to find out.

Risk #3 or is it really Risk #1?
What I am not so sure about is what happens to a deferred pension like this should the member die
(a) before taking retirement (DC schemes and contributory schemes generally would return contributions with interest?) but this scheme was always non-contributory I think
(b) too soon after starting to take retirement benefits

So in the absence of an assured death benefit, isn't there a real risk to the "pot" which ought to be covered by any sensible family?


My only other comment is the suggestion that possibly the union might help the OP's Mum with advice ? With luck she is a member of the Barclays section of Unite and they might specifically be able to guide her as part of the union service!

audi321

Right, I've been watching this thread with interest and not contributed as yet......but here goes.

I am an IFA (although not a PTS). I am a deferred member of this 1964 scheme (effectively I came out in 2010 when they closed the scheme to existing staff) and everyone went into a new DC scheme called 'Afterwork' which isn't too bad either (but that's another topic)

Therefore, I would class myself as pretty knowledgable regards this scheme.

Since 2010 I have written almost annually for a CETV for my 1964 pension (I had 24 years service and a final salary of £38,000).

In 2011 it was £187k
In 2012 it was £322k
In 2013 it was £357k
It is now £498k!

I have run virtually every combination of calculation possible (as you can imagine with my job!). This scheme has GMP revaluation at 65 (but only at NAE) and a State Pension Reduction at 67 (for me), the non GMP part is indexed at RPI.

It has now become TOTALLY FEASIBLE for me to transfer out. At almost £500k I could almost leave it in a cash based fund (which I wouldn't) and go into drawdown at 60 drawing the same income as I would from the scheme and even at Cash Based returns the fund would last until I am age 86.

Given that
a) I want to retire at 55,
b) I wouldn't leave it at cash based return rates
c) The way in which the actuaries calculate the amount of CETV is based on 15 year gilt yields which is at an all time low (it could go lower I know)
d) I want a lump sum (which admittedly the scheme does allow with commutation for income)
e) It's possible that they will ban transfer out's of DB schemes totally in the June Pension review (they've already done this for local authority schemes like NHS, Teachers, Police, etc), in fear of a mass exodus from everyone and thus vastly reducing Gilt holdings (which Pension funds hold A LOT of)!
f) I want the ability to vary my income (i.e. more when younger and less when over 80)

I've decided to 'get out' now. However, there are VERY few companies which will accept final salary transfer outs in fear of being sued later on down the line. Hargreaves Lansdown will take it but want an AMC of £1400 and are insisting I receive advice from someone impartial (which wouldn't be a problem but I'd rather not bother given my job!) and they also want a fairly strongly worded letter signing which relinquishes them from any future suing.

I've rang most of the other SIPP providers and at last (thanks to someone on here) found that Standard Life will (until 6th April 2015) will accept it. With low'ish fees and reasonable choice of investments. So I'm going down this route asap.

I know this isn't helping the original poster's mum (she needs to speak with a PTS IFA asap) as one thing I don't know is the impact of deferring the pension until 69 (she won't be building up any extra years since 2010) and also the impact of the ill health, but if she wants to PM me I will try and help as much as possible.

jem16

audi321 wrote: »

I am an IFA (although not a PTS). I am a deferred member of this 1964 scheme (effectively I came out in 2010 when they closed the scheme to existing staff) and everyone went into a new DC scheme called 'Afterwork' which isn't too bad either (but that's another topic)

Therefore, I would class myself as pretty knowledgable regards this scheme.

Out of interest, as an IFA, would you be advising the OP's mother to go down the drawdown route or the enhanced annuity route?

With your job you obviously know what you are doing and drawdown would be very suitable for you.

However here we have an OP with 10/11 months investment experience who apparently has made 32% in that time and assumes (from the sound of it) that this will happen every year and it's easy to do. I would hazard a guess that the OP has never experienced any sort of stockmarket downturn and doesn't realise that the 32% profit in one year could soon turn into a 60% loss in another year.

We also have the OP's mother (whose pension pot it is) and father in bad health who have been offered a 7.5% annuity (the terms of which have never been clarified here despite numerous requests - is it joint/single, level or index-linked) which is just totally dismissed. The OP's mother (nor father) does not have the experience to manage a drawdown pot and could possibly run out of money.

The transfer value also seems to go between £180k and then £150k and as yet has not been clarified which it is.

What would you, as an IFA, do if these people came to you for advice?

hyubh

It's possible that they will ban transfer out's of DB schemes totally in the June Pension review (they've already done this for local authority schemes like NHS, Teachers, Police, etc)

Your phrase 'local authority schemes like NHS, Teachers, Police,' makes no sense whatsoever - 'local authority schemes' (i.e., the LGPS) are exempt from the upcoming ban since they're 'funded' as a private sector DB scheme is. For sure a ban may come to be put in place for DB schemes in general, in which case 'local authority schemes' would fall into line, however that is neither government nor opposition policy at present.