Asda Pension Scheme

EternallyGrateful

My wife has recently received a state pension statement and there's a reduction for a period of being contracted out.
My wife belonged to the Asda Pension Scheme for many years. I remember that she was written to about a way that both Asda and my wife could save money. It was to do with NI contributions but I'm quite sure there was no specific reference to it being an option to "contract out". Had there been a reference to that I would have recommended to my wife that she remained contracted in.
She has now taken early retirement and is in receipt of an annuity paid for mainly by the Asda scheme.
I'm hoping that other current or former Asda employees may read this and advise me of their view on what the situation is with the scheme before I pursue it further. Thanks.

Drp8713

Persue what?

The fact the scheme was contracted out would be all over the scheme booklet, all over the paperwork on joining and all over her payslips. Im assuming the Asda scheme at the time was defined benefit? So opting out of it would have been utterly stupid.

She paid less in NI and instead paid into the Asda scheme which would provide at least equivalent benefits.

You cant have your cake and eat it.

This was perfectly normal for the era and she has less than zero to complain about.

EternallyGrateful

Dear Drp8713, you assume so much and know very little. Thanks for your response.

Goldiegirl

What you describe is completely normal.

People in good company schemes had no need to pay into SERPS/second state pension, due to the company scheme being superior to SERPS.

I'm not sure if your wife has requested a state pension projection - she should do this as soon as possible. If she wishes, she can make voluntary NI contributions (after April 2016)' to increase her state pension up to the full amount of £155 per week.

So she's in a good position - a good, probably final salary pension, and potentially the full single tier pension.

I didn't work for Asda, but I'm in a similar position. I was contracted out for many years of my working life, due to having an excellent final salary schem pension. I retired early, and will make my voluntary NI contributions, to increase my state pension.

Honestly, there is nothing to pursue.

EternallyGrateful

Goldiegirl wrote: »

What you describe is completely normal.

People in good company schemes had no need to pay into SERPS/second state pension, due to the company scheme being superior to SERPS.

I'm not sure if your wife has requested a state pension projection - she should do this as soon as possible. If she wishes, she can make voluntary NI contributions (after April 2016)' to increase her state pension up to the full amount of £155 per week.

So she's in a good position - a good, probably final salary pension, and potentially the full single tier pension.

I didn't work for Asda, but I'm in a similar position. I was contracted out for many years of my working life, due to having an excellent final salary schem pension. I retired early, and will make my voluntary NI contributions, to increase my state pension.

Honestly, there is nothing to pursue.

Thank you. When I said pursue it was merely to establish what the actual situation is. It was not a final salary scheme it was the basic shop floor scheme administered originally by Prudential and latterly by L&G. I am quite sure there was no mention specifically of my wife agreeing to be contracted out. The reduction in my wife's pension amounts to £30 per month and the saving in contribution amounted to a fraction of that. I was hoping that an Asda employee may have been able to put me straight. The initial response annoyed me because the writer assumed I was complaining and trying to get something for nothing whereas I am just seeking clarification, hopefully without having to write to L&G, Asda or the Pensions Office. I myself was contracted out so I do know the score in that regard. Again a genuine thanks.

Daniel54

EternallyGrateful wrote: »

My wife belonged to the Asda Pension Scheme for many years. I remember that she was written to about a way that both Asda and my wife could save money

Did they write to your wife about salary sacrifice,which does save NI for both the employer and the employee ?

https://everyonebenefits-asda.com/pdf/Asda%20Pension%20Saver%20Management_FINAL.PDF

dunstonh

My wife belonged to the Asda Pension Scheme for many years. I remember that she was written to about a way that both Asda and my wife could save money. It was to do with NI contributions but I'm quite sure there was no specific reference to it being an option to "contract out". Had there been a reference to that I would have recommended to my wife that she remained contracted in.

Why would you recommend that your wife be contracted out? Most contracted out people are better off or at worst about cost neutral. However, what you describe sounds more like salary sacrifice than contracting out.

She has now taken early retirement and is in receipt of an annuity paid for mainly by the Asda scheme.

That would indicate that it was money purchase pension. So, contracting out would have resulted in a larger fund value. Which in turn means larger tax free lump sum and an income with death options that did not exist with the contracted in method.

I'm hoping that other current or former Asda employees may read this and advise me of their view on what the situation is with the scheme before I pursue it further. Thanks.

There is nothing to pursue. What you describe is quite normal.

I am quite sure there was no mention specifically of my wife agreeing to be contracted out.

It would have been in the scheme booklet. However, it would normally not be an option. It would be part of the terms if it was a COMP. The L&G scheme was not contracted out. the Pru may well have been.

The initial response annoyed me because the writer assumed I was complaining and trying to get something for nothing whereas I am just seeking clarification, hopefully without having to write to L&G, Asda or the Pensions Office.

It did read as if you were looking to "pursue" some action.

EternallyGrateful

My wife originally joined the scheme in about 1998. It was a 2% contribution (could have been 3) with Asda contributing an equivalent amount. She also made an AVC up to the maximum, which I seem to remember was 15% of salary. The change I have mentioned was several years after the scheme started and only maybe 4/5 years before my wife's early retirement. My wife only worked part time so the numbers we're talking about are relatively small but the cost in terms of what's been lost seems disproportionate. Yes, I do appreciate that she should, in overall terms, have benefited but I'm not sure that the figures stack up. Also, Until relatively recent years my wife was expecting to be in receipt of a state pension earlier this year but (like thousands of others who Joan Bakewell is currently fighting on behalf of) will not get her pension until 2021. I guess £30 a month is quite trivial in comparison. Thanks for your help, I guess I just need to ask for the dates, according to the pensions department, my wife was contracted out for.

xylophone

http://www.thisismoney.co.uk/money/pensions/article-2986528/Was-contracted-second-state-pension-without-realising.html

Try the HMRC Pensions Helpline as suggested in the article?

dunstonh

Also, Until relatively recent years my wife was expecting to be in receipt of a state pension earlier this year but (like thousands of others who Joan Bakewell is currently fighting on behalf of) will not get her pension until 2021.

No female has had a recent extension to the state pension of 6 years. The 1995 change to make it age 65 was put in place 20 years ago. The speed up to 66 was a bit more harsh in timing but is a much shorter term.

Also, the contracting out benefits on the money purchase scheme allow taking prior to state pension age. So, again, there is a benefit there compared to contracted in.

When the annuity was bought with the pension, it would have been split between protected right and non-protected rights (or if it was recently purchased, then former protected rights). So, look at the old statements from Pru and see what mention of protected rights or former protected rights there is.

p00hsticks

EternallyGrateful wrote: »

The reduction in my wife's pension amounts to £30 per month and the saving in contribution amounted to a fraction of that.

Is this figure one from the state pension statement that you wife has got ?

Is it definitely per month and not per week ? (when I got my forecast all the figures were given per week, but I think the format has changed since then)

Is the deduction you quote for the pension calculation under the current rules or the new ones coming in in April ? As you may be aware, in April the pension service will calculate peoples current state pension entitlement under both current and new ruels, and the higher of the two amounts will form the 'starting amount' to take effect from April 6th 2016. I don't think you've mentioned how many NI years your wife has, but if it's at least 30 she should be starting with at least the full basic pension rate under the existing rules.