miscalculated pension

jamesd

PensionTech wrote: »

It seems much more likely to me that they got your full pension wrong

What persuaded me that it wasn't an error in the pension original amount was this wording: "the annual pension due after taking a £30,000 pension commencement lump sum should be". I read that as not an assertion that the original pension was wrong but that the commutation was wrong.

It could be either or even more than one cause. Either way what's really needed is a correct set of choices and a chance to pick again based on correct numbers.

jamesd

minimoney1 wrote: »

I am not yet retired (state retirement age for me (female) = 63 and a half; current job retirement age at my discretion) and I do plan to defer my state pension while I am still working.

If you do want higher income, the "£16,955.72 commuted to £11,783.92, reduction of £5,171.80 for a lump sum of £78,559.50 is a commutation rate of 15.19:1" calculation would make taking the whole £16,955.72 a better deal than taking the lump sum and using that to fund deferring the state pension.

This is because the higher pension corresponds to about a 6.6% increase in income for each Pound not taken and for a person reaching state pension age after 6 April 2016 deferring gets 5.8%. I'm assuming that both are inflation linked and that the linking is at about the same rate, both around CPI. They might not be. It's an area where a more detailed comparison should really be carried out based on the real inflation protection and benefits provided. I didn't attempt to do that because at the moment the bigger picture is the main numbers and this is more detailed checking work that doesn't matter until the right numbers are known.

So if those numbers are right and you do want a lump sum, the best value way to get it is to take the higher work pension without commutation and take the state pension and just put the state pension money into savings and/or investments until you get to the lump sum value that you want.

Of course the numbers may well not be right, so all you and we can do at the moment is wait for proper numbers to use to base a decision on.

Please do let us know how it goes and if you want any thoughts on the numbers they get back to you with I'm sure one or more of us will be able to let you know what looks like best value for your money and preferences for income vs lump sum.

minimoney1

Yes, thank you all again for this very useful advice. I shall have to wait and see what the Fund says in reply to my letter. If they miscalculated from the start then of course there will be nothing I can do. But I am certainly better informed than I was this time yesterday. So it's wait and see. I'll let you know.....

brewerdave

I find it quite depressing reading this thread - these mistakes appear to be all too common.Surely the pensions administrators have software to calculate the sums due?
My pension providers have made two mistakes over the past 6 years -firstly,I selected an option from the initial letter I received and completed the paperwork, only to receive an email 2 weeks before the first payment was due with recalculated figures which actually changed my choice of option.:mad:
Fast forward two years, and I received an unexpectedly large monthly amount with absolutely no explanation:eek: -when I followed up they said that they had made another error initially and had paid me a back payment; I asked for a written explanation,which,when received , made no sense !!
I now have so little faith in their machinations that I have kept a sum in an ISA earmarked for the day when they come back again claiming another mistake which means I have been overpaid for x years !!:(

xylophone

I now have so little faith in their machinations that I have kept a sum in an ISA earmarked for the day when they come back again claiming another mistake which means I have been overpaid for x years !!

Well, if you never hear any more about it, your heirs will be laughing....;)

Unless of course, they decide there's yet another error after you're gone...:eek:

gadgetmind

I've had pension companies foul up transfer vales twice. The worst was St James' Place, who argued with me (at length) that their numbers were right, and refused to budge. However, as I seemed to have 20+ different plans with them, all invested in different things, it was all a big muddle. (All from before I went 100% DIY.) About five years later, they send me a letter saying their found a mistake, had tried to send extra to new pension company but they wouldn't accept it, so they'd included a cheque and had even paid my tax bill. £700, tax free, thanks guys!

brewerdave

xylophone wrote: »

Unless of course, they decide there's yet another error after you're gone...:eek:

...wonder where pension administrators come in the priority list for settlement of debts after death ?? Hopefully, a LONG way down !!:rotfl:
Serious point, the back dated extra pension was well over £3k and the annual uplift was nearly £2k - all with no explanation til I chased them!!

xylophone

all with no explanation til I chased them!!

This is poor administration.

In your place, as in the case of the OP, I would have insisted on full details of how the original pension was calculated ( and checked the scheme booklet and scheme rules for myself) and of the commutation factors applied.

If the "explanatory" letter were totally incomprehensible, I would have written again for clarification of the points I didn't understand.