CETV - Concern re different multiples for Pre-97 and Post-97 non-GMP deferred pension

hyubh

arogers222 wrote: »

Sorry if I am missing something obvious, but the bit I am puzzled about is the reason(s) why the CETV valuation basis should differ for two parts of a pension which are valued using identical adjustment factors for early retirement calculations (as detailed in Post #4.)

Hmm, but early retirement factors isn't something we (xylophone, seabee42, zagflies and myself) are emphasising. I noticed you haven't actually quoted what the increases due in payment are - what are they...?

arogers222

zagfles wrote: »

I think you're confusing the increases in deferment with increases in payment. The post 97 and pre-97 excess over GMP will likely be increased the same during deferment, but not necessarily the same once in payment. Have you checked the scheme rules for the increases when in payment?

Good point.


I have checked the scheme rules and they do not distinguish between post 97 and pre-97 excess over GMP portions both during deferment and once in payment. i.e. both are awarded identical increases throughout.


I have been asked to start the IDRP process if I am not happy but the IDRP process takes months and likely to finish after the CETV guarantee period expires.


Accepting the transfer requires me signing a form "..discharging the Trustees and former employer of all liabilities to provide benefits to me in respect of the transfer value".


Not sure what would happen if I raised an IDRP and subsequently accepted the transfer i.e. would the transfer acceptance automatically result in the IDRP being closed?


If the IDRP process should still continue (after a transfer) and if subsequently it did emerge there was an error, I do hope I would be entitled to paid any shortfall, notwithstanding the discharge signed at the transfer.


I would welcome any suggestions on the action I should take so that I could go ahead with the transfer and still be able to investigate this discrepancy and be compensated if an error was made.

arogers222

hyubh wrote: »

Hmm, but early retirement factors isn't something we (xylophone, seabee42, zagflies and myself) are emphasising. I noticed you haven't actually quoted what the increases due in payment are - what are they...?

Increases due in payment (for parts '2' & '3') are in line with the RPI subject to a maximum of 5%.

zagfles

arogers222 wrote: »

Good point.


I have checked the scheme rules and they do not distinguish between post 97 and pre-97 excess over GMP portions both during deferment and once in payment. i.e. both are awarded identical increases throughout.

Is this the trust deed & rules you're checking, or is it a plan booklet? If it's just a booklet then ask for the trust deeds/rules as the booklet is just a guide.

Could it be that the pre-97 increases are discretionary, ie the trustees could stop them if they wanted? Post 97 they have to increase by law. The CETV will likely be based on what the scheme has to provide not including anything discretionary.

arogers222

zagfles wrote: »

Is this the trust deed & rules you're checking, or is it a plan booklet? If it's just a booklet then ask for the trust deeds/rules as the booklet is just a guide.

Could it be that the pre-97 increases are discretionary, ie the trustees could stop them if they wanted? Post 97 they have to increase by law. The CETV will likely be based on what the scheme has to provide not including anything discretionary.

I have checked the Fund "Trust Deed and Rules". (A 120 pages document! I was provided the 'baseline' document and 12 subsequent 'Deeds of Variation' up to the current date.)

A single Rule in the Trust Deed titled "Increase of Pensions" covers both the parts. (The Rule specifying the increasing does not distinguish between the two parts. The scope of this rule only excludes the GMP portion).

This Rule explicitly states that it applies to both pensions in payment and in deferment, so during deferment too, both parts increase in line with RPI subject to a max of 5%.

zagfles

It might be worth ringing the TPAS to discuss, they are very knowledgable about things like this and if you don't get satisfactory answers through the IDRP you'll likely need to go through them anyway before going to the ombudsman.

http://www.pensionsadvisoryservice.org.uk

arogers222

zagfles wrote: »

It might be worth ringing the TPAS to discuss, they are very knowledgable about things like this and if you don't get satisfactory answers through the IDRP you'll likely need to go through them anyway before going to the ombudsman.
...

Thanks for your helpful suggestion.

I phoned up TPAS and was asked to send them the supporting documents. I was told that based on the current backlog it would be 2-3 weeks before I could expect to receive just the initial acknowledgement of receipt! Following that, based on the workload, it could be a number of weeks before a volunteer would be assigned to look into it - TPAS couldn't tell me how long this would be. They are unable to advice me now on the suggested next steps to take and said that I would have to wait until I have the TPAS volunteer assigned to to my case.

Given that the CETV guarantee would expire in early April, I cant rely on timely advice from TPAS and so need to seek advice elsewhere.

Whilst TPAS did mention that if I paid for external advice it was unlikely I would be reimbursed by the Ombudsman, if necessary I think it would be prudent to risk a reasonable sum given the amount at stake. I just don't know who to approach. Any suggested names would be welcome.

Going through other posts on this forum, I have come across mention of a possible "conditional discharge" being given when the transfer forms are signed so that an ongoing issue could still be pursued. Any idea is the trustees are expected to accept this "conditional discharge" when there is ongoing dispute at the time of the transfer?

Or is it the case that even though I sign the normal discharge form (Post #13), I can still pursue an ongoing IDRP after the transfer and escalate to the Ombudsman if necessary?

I don't want to delay the transfer until the issue is resolved as that would have other consequences.

I would welcome any suggestions on the action I should take so that I could go ahead with the transfer and still be able to investigate this discrepancy and be compensated if an error was made.

xylophone

Erm, and other schemes will call it something else, like 'post-97 excess', or not make the distinction in the first place, if the increases due don't differ. Labelling is not particularly important in itself, the benefit denoted by the labelling is.

I did say "for example" in case the term might assist the OP.

xylophone

I have looked at the information given by the OP again and am wondering whether I am misunderstanding/missing something obvious.

At the forefront of my puzzlement is why the OP is so concerned about pension arrangements in place before he even joined the scheme which itself was in May 1998.

It is clear that he fears that he is in some way disadvantaged by the calculation of his CETV (all post 97) against that of the "excess" of a person who joined the scheme before 1997.

It still seems to me that as one is an "excess" and the other a "whole", the multiples may well be different.

He could put a precise question to the administrator of the scheme ie "Why is the multiple for pre 97 excess over GMP different from that for post 97 contracted out rights?".



If he is still dissatisfied,he could consult (and it won't be cheap), a pensions actuary.

Another thought, in the first post, the OP mentions an "immediate retirement quote" and in post 18 a "transfer".

If he is transferring out of a DB Scheme, is he not already taking advice from an IFA? or is he transferring to another DB Scheme?

arogers222

xylophone wrote: »

I have looked at the information given by the OP again and am wondering whether I am misunderstanding/missing something obvious.

At the forefront of my puzzlement is why the OP is so concerned about pension arrangements in place before he even joined the scheme which itself was in May 1998.

I joined in May 1988. My sincere apologies for the typo.

I am seeking advice from an IFA on a proposed DB transfer to a SIPP. The IFA is proceeding on the assumption that the CETV is correct and is not authorised to advice on the issue in question raised here. (I am conscious that a DB transfer to a SIPP is not normally recommended, however I do believe there is a strong justification to consider this having regard to my personal circumstances.)

The immediate retirement quote was obtained as requested by the IFA to help with the DB transfer analysis (TVAS etc.)

I did raise the suggested question with the scheme administrator but she was unwilling to help say that they are not required in law to explain any differences or how things are worked out and the only course of action I have is to raise an IDRP.