still trying to understand

assesser

Hi all,
I have been reviewing old paperwork from final salary pension (Chubb).statement from 2005 gives a pension 17,000 PA or 6800 cash then 16,200 PA,
The most recent statement last year gives alternatives of a scheme pension of 10,706 PA , or cash of 45,185 then 6,777 PA in residual pension scheme
Are they pushing lump sums more these days, totally confused.
Also in most recent statement there is a quote that I don't understand, it states please note this estimate is calculated that the pension in excess of the GMP has been revalued to the present date with no allowance for future revalveations , does this mean it may be less or more
Regards assesser

jamesd

It means it may be less or more but no change after allowing for inflation is more likely.

They have probably found that most people want the maximum possible tax free lump sum so are accommodating that with their examples.

Why did the pension amount with no lump sum decrease? Did you stop working for them sometime soon after 2005? That would explain the drop, the earlier one may have assumed that you would continue working for them and accumulating extra years.

assesser

Thanks for replying
I left the company in 1996,
I was also confused why amount had dropped by such a large amount

jamesd

Given that, I suggest that you ask them to explain the change from £17,000 to £10,706 without lump sum. It's probably right but asking about unexpected big changes in value is worth doing because mistakes do occasionally happen.

Maybe you have some other statements that can narrow down when the change happened? One might give a reason for the change before asking them?

xylophone

When you left Chubb in 1996 were you given a statement showing your pre 88 GMP, post 88 GMP and excess?

How does Chubb revalue the GMP (fixed rate or full rate)?

How does the excess revalue in deferment?

What is Normal Retirement Age for the scheme (60/65/other)?

Check your scheme booklet for the above.

See https://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/18/what-is-a-gmp/

https://www.barnett-waddingham.co.uk/comment-insight/blog/2012/07/24/revaluation-for-early-leavers/

assesser

Dug out leaving statement
It states GMP on leaving p.w. £16.74
£8.04 post 5/4/1988
Revaluation type fixed
Normal retirement age is 65
I do note that no mention of lump sums are mentioned in leaving statements
Any thoughts

assesser

Also it does baffle me how the relatively small amount of monies I paid in to that scheme around about £5500 over 15 years , can pay out what they say on recent statements .
Compare this to my company DC pension now , pot will be around £40,000 when I retire, this is a rough guess as I have another 9 years to go, there is no comparison.

bigadaj

assesser wrote: »

Also it does baffle me how the relatively small amount of monies I paid in to that scheme around about £5500 over 15 years , can pay out what they say on recent statements .
Compare this to my company DC pension now , pot will be around £40,000 when I retire, this is a rough guess as I have another 9 years to go, there is no comparison.

Just shows how times have changed. The money was obviously worth a lot more thirty years ago, but also schemes had no idea how we expensive their commitments and liabilities would be, which is why the vast majority of private sector defined benefit schemes have been closed.

Your current pot would buy an income of a fraction of the previous scheme, as an annuity you might be looking at a figure of say a £1000 per year.

You need to contact the scheme and ask them why the numbers have changed, it is probably because they realise how expensive their liabilities are and they've reduced things like annual increases and uplifts but it could be a genuine mistake and the difference is significant.

assesser

A bit more information if it helps
On statement when leaving it says
Pension on leaving £3422.53
Plus revaluation £13680.87
Total £17102.87
Preserved benefits
Salary when leaving £12778

sandsy

That confirms that the £17000 was always an estimate, using an assumed rate of revaluation to retirement. Actual inflation has probably been less than assumed in the revaluation rate.

The question now remains whether the £10706 is the value to date or still contains an element of projection to retirement.

assesser

Says on new statement it's value to date with no allowances for future revaluations, it says pension fund hand book that I will continue to receive a minimum of 4% per annum, due to joining proir to 1st December 1995