M&S Pension Scheme

Blanc

Linton wrote: »

The pension is pretty good - to buy an equivalent index linked annuity from an insurance company could cost more than £0.25M. Suggest you dont take it early and do put money into the new scheme to get the extra employer contribution. If you contribute more than 3% will M&S contribute more?

I believe they will contribute 6%.
It has yet to be confirmed but if I contribute 6% they will contribute 12% , awaiting my proposal pack for more information.

AnotherJoe

bigadaj wrote: »

I agree with your assessment of how cope is included and stated, but it is useful information if explained and understood properly.

Trouble is, I think that for every one person that understands it, there will be ten who are expecting an actual payout from government called COPE of the amount stated. I dont see the point of stating it when its going to confuse, and worse, mislead, most people.

Blanc

AnotherJoe wrote: »

The COPE figure is highly misleading. You will not get this as an itemised figure. Do you have a pension from elsewhere ? If not, the the COPE is notionally included within the M&S pension, otherwise within the other pension, but you will not be getting a separate sum from anyone called COPE of £30.14. Forget it. And don't call yourself stupid, the way COPE is stated is IMNSHO an outrageously confusing and misleading term that should be omitted from these forecasts and it's no wonder that this confuses.

No I don't have a pension elsewhere, just M&S, thanks for help, still confusing to me.

bigadaj

kidmugsy wrote: »

It's a joke; a reply to Thrugelmir's motto. Sorry for the confusion.

Maybe it shows how China has changed, the old proverb replaced by organised might, there are some record of Chinese mining and construction projects literally trucking explosives into tunnels and setting them off like a small nuclear bomb. Not subtle but fairly effective.

bigadaj

AnotherJoe wrote: »

Trouble is, I think that for every one person that understands it, there will be ten who are expecting an actual payout from government called COPE of the amount stated. I dont see the point of stating it when its going to confuse, and worse, mislead, most people.

Yes, so an additional line stating that the cope is an assumed amount which won't be paid by the state but is included within any contracted out pension pot or pension that will be received.

It should be straightforward just to add an extra line to do that which questions why it hasn't been done. It could be sloppy and just missed out, but it does make you wonder if there is a political element to make people think they will get more than they will from the state, and as with all things political is for the short term, as the politicians won't be around in the years and decades to come when relating hits.

xylophone

No it isnt.

The basic + GRAD + SERPS + S2P on the forecast already takes account of the COD (or it should do).

The Rebate Derived Amount and the "COPE" dont come into it but the COPE / Rebate Derived Amount will be a similar amount to the COD but they have no place in the old rules calculation.

Exact calculation at post 127 here:

https://forums.moneysavingexpert.com/discussion/5367287

Otherwise ( but these figures are now outdated- the figure for BSP should be £119.35, the Single Tier pension figure £155.65, the amount by which the pension can be increased should be £4.45 etc)



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

Using existing rules as if this person had reached State Pension age at the point of single-tier implementation in 2016 the current scheme valuation would be:
Basic State Pension £107
Gross SERPS £ 38
Minus Contracted Out Deduction -£38
“Gross” S2P2
£ 37
Minus S2P “contracted out deduction” -£26
Total Amount £118

Single-Tier Valuation
Single-tier pension (35 qualifying years) £144
Minus Rebate-Derived Amount -£ 74
Total Amount £ 70
Foundation Amount = £118

So in this case the current scheme valuation is the higher of the two valuations and
becomes the Foundation Amount - this person receives a pension payable from
the State of £118 and a further £74 paid by their workplace pension scheme. They can build a further 6 qualifying years (through contributions or credits) until they
reach State Pension age. If they do this they could increase their pension by £24.66 (6x £4.11) and could retire on a single-tier pension of £142.66."

And for full information about the COPE

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/512799/your-state-pension-statement-explained-dwp042.pdf

"The Contracted Out Pension Equivalent (COPE)
We will not know the exact amount your scheme will pay you as
a result of contracting out, as it will depend on the actual rules of
your private scheme. However, we have included an estimate of this
amount on page 1 of your statement and it is called the Contracted
Out Pension Equivalent (COPE). This estimate is based on the
information we have from your NI contribution record.
If, any time before 6 April 1997, you were a member of a workplace
scheme(s) where the amount of pension you get is based on your
earnings (often called Defined Benefit, Final Salary or Career Average
Salary schemes) and you subsequently left the scheme(s) before 6
April 2016, your Contracted Out Pension Equivalent (COPE) amount
takes into account how your scheme(s) revalued your preserved
pension benefits (called the Guaranteed Minimum Pension or GMP)
each year until the new State Pension started on 6 April 2016.
If you were a member of two or more contracted out schemes, the
Contracted Out Pension Equivalent (COPE) amount shown is based
on all of your schemes and therefore covers all of the years you were
contracted out.
Most people with many years on their NI record will find, when the
State Pension paid by government is added to their COPE amount, this
will be at least the full amount of the new State Pension by the time
they reach State Pension age (the full amount in 2016/17 is £155.65 a
week)."

And much more.....all you wanted to know about the new state pension but were afraid to ask.....

AnotherJoe

"The Contracted Out Pension Equivalent (COPE)
We will not know the exact amount your scheme will pay you as
a result of contracting out, as it will depend on the actual rules of
your private scheme. However, we have included an estimate of this
amount on page 1 of your statement and it is called the Contracted
Out Pension Equivalent (COPE). This estimate is based on the
information we have from your NI contribution record.
======

Really,whats the point of that? (no crticism of you BTW, but government posting all this guff)

Your contracted out pension will pay out what it pays out, but putting a valuation on what it will pay out is barking because it depends what you invested in so it could vary hugely, by thousands of percent. By putting a figure on it is (a) making people think the government will pay it and (2) irrelevant because you will not get that COPE figure.Sorry, rant over.

Blanc

I got my pack yesterday.
My DB pensionable salary is £24,437.40
NRD 2021


There is 4 possibilities.


Projected pension at retirement,


Option 1, proposal does not go ahead, graph showing just under £10,000.


If proposals go ahead.


Option 2, I stop earning new benefits as a DB member from 1/4/2017. I contribute 6% of my DC pensionable salary to the DC savings plan and M&S contributes 12% of my DC pensionable salary. Estimate on graph, £8600.00 DB benefits, £1000.00 DC benefits.


Option 3, I stop earning new benefits as a DB member from 1/04/2017. I contribute 3% of my DC pensionable salary to the DC savings plan and M&S contributes 6% of my DC pensionable salary. Estimate on graph, £8800.00, £200.00 DC benefits.


Option 4, I stop earning new benefits as a DB member from 1/04/2017 and I decide I Do not want to join the DC savings plan.£8800.00 DB benefits.
Estimates are as near as can make out in graph, as not broken exactly.


Now this is what confuses me, sorry again.


It states "if I pay in 6% of my DC pensionable salary, my projected savings pot from the DC savings plan my normal NRD could be £23580.34 which I could take as cash rather than as a pension".


"If I pay in 3% of my DC pensionable salary, my projected savings pot from the DC savings plan at my normal NRD could be £11790.17, which I could take as cash rather than as a pension".


(Based on assumed investment returns and contributions).


If I agree to the proposal and provided I remain employed with M&S, they are proposing that the would pay me a cash supplement each month until 31/03/2019. This would be 6% of DC pensionable salary from 01/04/2017, reducing to 3% from 01/04/2018 until 31/03/2019.


I could use this cash to supplement to either put towards the cost of membership of the DC savings plan or take it as extra pay.


I am so sorry about this buy I find this so confusing and feel overwhelmed by it all.

Thank you in advance for taking time out to read this and would your help please.

Finst

Again, some thoughts in no particular order:

- The DB pension shouldn't change for options 2-4, but under option 2 its £8600 pa and under options 3/4 its £8800 pa. Could you have read this off the chart wrong?

- You can now take DC pension benefits as cash instead of buying an annuity (income for life). They are saying you could have a cash sum of £24k, OR a pension of £1k pa for the rest of your life (under option 1). It a personal choice, one gives more security (pension), the other gives more flexibility (cash). You don't have to decide now.

- For every £1 you put into the DC pension scheme of your own salary (up to 6%), M&S are going to put in £2. Given when you retire you can take this money as a lump sum, if you can afford it in the short term it makes sense to pay in the full 6% (free money!)

- I think you've made a very smart point in saying that you could use the cash supplement (basically compensation for closing the pension scheme) to pay the cost of joining the DC scheme. Especially as M&S will triple whatever you put in. Once the cash supplement finishes in 2019, that might be a sensible time to look at retiring?

xylophone

As M&S proposes these changes, are they not also offering to assist with independent financial advice for all those affected?

They should at the very least be offering group seminars to explain the proposals - are you a member of a union?

Are you intending to work for M&S until you are 60?

If so, and the proposals go ahead, you will become a deferred member of the DB Scheme in 2017 - the pension will revalue in deferment.

If you are continuing to work for the company then it seems to me ( but this is a personal decision which depends on your circumstances) to make sense to join the DC Scheme - the effect of the "supplement" would be to give you a "non contributory" DC pension up to age 58?

You might prefer to contribute the additional 3% yourself for the year 18-19 and then the full 6% up to age 60?

At age 60, you would draw your revalued DB pension and you would have a choice of how to take your DC pension which will be additional to your DB pension. Rather than taking a regular pension of (say) £80 a month for as long as you live, you might choose to take the DC pension as a lump sum.

M&S are suggesting that depending on how much is contributed to the DC plan, that sum could be somewhere between around £11,000 and £25,000.

If I were in that situation, and assuming that the DB pension ended up at say £10,000 a year, and that by that stage the Personal Allowance had reached say, £12,500, I think that I would prefer to transfer the DC pension to a drawdown pension, take a 25% lump sum and then drawdown as much as kept me a non tax payer up to drawing the state pension.

With regard to the state pension, you will not be contracted out from the start of this tax year, so will be working off your "rebate derived amount" and building up new state pension.

At age 60 when you retire, you would check with DWP how close you were to a full New State Pension and so whether it was worth your while to pay voluntary contributions.