DB pension and RPI effect

SandLake

I have a DB pension from a company I left in 1998. At that time I recieved a "Certificate of Benefits" which stated it would be worth £3285 from Normal Pension Age (62 - which happens in 2022). It also stated that the pension will increase from 14th June 1998 and NPA by 5% per annum or in line with RPI if less. How can I calculate what the effect of RPI will have on this pension?

kidmugsy

SandLake wrote: »

I have a DB pension from a company I left in 1998. At that time I recieved a "Certificate of Benefits" which stated it would be worth £3285 from Normal Pension Age (62 - which happens in 2022). It also stated that the pension will increase from 14th June 1998 and NPA by 5% per annum or in line with RPI if less. How can I calculate what the effect of RPI will have on this pension?

May I suggest that you correct your title to show "DB"? It increases your chances of attracting the experts.

As for the effect RPI will have: you'd need to know what RPI will do in future if you are to calculate that. Nobody knows.

coyrls

You can get an idea of the current value (not the final value) using the table here: http://www.ariesinsight.co.uk/webfront/revalue.htm

SandLake

Thanks, I thought I had answered my own question by finding a list of historical RPI rates - but there appears to be more than one

http://swanlowpark.co.uk/rpiannual.jsp

http://www.ons.gov.uk/ons/datasets-and-tables/data-selector.html?cdid=CZBH&dataset=mm23&table-id=2.2

I'll try again with coyrls link

xylophone

If this was a contracted out DB scheme, there is likely to be GMP, which is split between pre and post 1988.

Remember that this portion of your pension may be revaluing in deferment at a different rate from the excess over GMP.

When the pension comes into payment, the Scheme has no obligation to inflation link the pre 88 GMP, and the post 88 only up to 3% CPI (unless exceptionally your scheme has opted for RPI on this).

If you were contracted out, there is an effect on your new state pension.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210299/single-tier-valuation-contracting-out.pdf

SandLake

Xylophone, you could have been reading from my "Certificate of Benefits". I have entirely removed the £828.88 pa GMP from my calculations (extrapolations) - I thought it would be somewhere between £4-5K in 2022 and I am showing £4984 - happy enough with that.

It was contracted out but that is just too much detail for me, I have had an estimate for my state pension and my additional state pension will be £23pw - I think that is all I need to know unless I do more contracted in years.

Thank you all for your help with this.