Pension transfer value???

agarnett

Yes very well put bigadaj ... those of us with direct experiences of more downfalls of private sector DB schemes of which we've been members than of DB schemes which have survived to our retirements are living testimony to those "real events" you mention!

jamesd wrote:

agarnett, please cut out the scaremongering like suggesting that a change to career average might be done. That will not affect past benefits for a deferred member of a scheme so it would continue to be based on their leaving salary.

jamesd, I wrote two lines about possible dilution which questioned whether career average had beset the scheme since ess0two joined the scheme, not since he left it. That was merely your choice of irked interpretation at 0 dark thirty this morning!


Please do read first, and hold your fire until later I have a reputation here on MSE for being edgy, but I do write what I write with good intentions for a general audience.

I did not actually say a career average change could now happen to ess0two in deferment (since leaving the scheme), did I? Rather I implied it could easily have happened during the period the OP was employed - him having been employed by the scheme in question for much longer than he has been in deferment so far

As a generality, an adverse change to CARE could easily have occurred in 20 years ending 2007 to someone who had joined a DB scheme in their 20s, and before they had left the scheme in 2007. That is what I meant should be checked.

As it turns out, the OP's scheme still looks quite special if it is governed by that 2008 rulebook that GunJack unearthed ... http://www.icipensionfund.org.uk/documents/icipf_member_handbook.pdf. We haven't yet been told if that is the right scheme.

All DB scheme members not already enjoying their pension entitlements should worry about the many different and extremely complex risks that could beset their schemes, and that especially applies to deferred members who are often kept in the dark like proverbial mushrooms. There are so many (risks).

Dilution or conversion to a career average scheme, as you say, is only (so far!) something that can occur to an active member's entitlement, but it could easily have happened to someone who during his 20 years service (i.e. whilst an active member) and who has only relatively recently (9 years ago) become a deferred member like the ess0two.

On the subject of whether there might be no death in deferment cover which was another warning I touched upon, if the ICI scheme to which ess0two belongs is indeed the one GunJack unearthed, it looks like it has a very good widows' and childrens' pre-retirement death benefit for deferred members (http://www.icipensionfund.org.uk/documents/icipf_member_handbook.pdf"]page 20). If there is no partner and qualifying child, then it might still beg the question of whether life insurance cover is needed to protect the cash equivalent value from now on. I don't think many schemes offer much in the way of death benefits for deferred members who have not yet retired, so the ICI example may be pretty much as good as it gets in the private sector.

As jamesd says, there is a heck of a lot more specific investigation needed into ess0two's specific arrangement within the particular scheme before anyone can start suggesting trying to transfer out into say a SIPP and discuss relative pros and cons of commencing any kind of drawdown at any age earlier than the scheme normal retirement date.

jamesd

agarnett wrote: »

I wrote two lines about possible dilution ... Please do read first

ess0two wrote: »

Can anyone answer what's puzzling me,its states 'total pension at date pensionable service ended £9,156.30.

agarnett wrote: »

by the time you left, it may have been changed to a lesser value "career average" scheme

agarnett wrote: »

Has the pension already been diluted since you joined the scheme e.g. from final salary based to CARE based?

Lets pretend that it changed to a career average scheme before departure and that part of your two posts happened. What effect will it have on the value given at the time of leaving? Or the value today or in the future? None. It's simply not relevant even if it happened because it makes no difference to the situation. All the mentions did is add something that might seem worrying but in fact has no effect at all on the situation.

One post mentioning something that makes no difference and I probably wouldn't have mentioned it - I didn't decide to until I read you doing it again in the later post.

ess0two

Interesting replies, my head is in knots......


I'm 45 at the mo, so looking to 'do' something with this Pension in 10 - 15 yrs time, drawdown??


When I left originally left in 2007 I was given a transfer value of £75k looking at previous paperwork etc.


If I request a transfer figure each year and its rising,can I assume this is a good thing??


I have 2 further pensions also,8 yrs deferred with Shell in a DB scheme, and have just started paying into a DC scheme,10% company,7% own contribution with Friends life.


My aims is to retire sometime between 55 - 60 if I get that far??

agarnett

ess0two wrote: »

Interesting replies, my head is in knots......

I don't blame you, and jamesd may blame me! My intentions are merely to alert you to the sorts of things that early in my career I thought were unthinkable - i.e. DB pensions that would be reneged upon or indeed, themselves tied in knots so you may not be able to release/transfer their "worth" as a Cash Equivalent Transfer Value anywhere near as easily as you may have thought 20 years ago, 9 years ago, 1 year ago, or even now.

jamesd has scolded me for mentioning the general case about career averaged dilutions to existing schemes for active members. Basically he's says it's irrelevant as it is water under the bridge so a waste of intellect even recalling whether it did or did not happen in any particular case like yours.

Unlike me, jamesd is a wise sage on so many things in this forum. I do however think perhaps as bigadaj was urging, that we have to look beyond current scheme rules and beyond the things that have already been done to schemes which are undoable. We should question them as "events" which may partially predict whether further adverse events are more or less likely in the future.

We are beginning to read a lot about the relative strength of the scheme sponsoring employer "covenant" to scheme members. However, PPF have not published any kind of watch list even though they have the data and I think, their own scoring for weak employers. Some of those employers are household namesand perhaps bigger names than BHS.

Private sector DB scheme liabilities on employers have been allowed to become progressively more and more burdensome upon the sponsoring employer over perhaps the past 15 years or so.

Essentially I think it started when schemes got used to the idea from somewhere that they could afford "employer's pension scheme contribution holidays" for significant periods when pension actuaries had declared that schemes were "in surplus". Then it became difficult to persuade them that tides had turned and they needed to start contributing big time again.

Many companies have since then "got away with" delayed publication of revaluations of their pension liabilities sadly it seems aided by trustees who may too frequently be exposed to a serious conflict of interest - their latest mode of defence to such allegations is that the law has not sufficiently caused them to be notified of employer weaknesses, and that directors of sponsoring companies have kept quiet (quite legally) about their true ability to continue to support pension schemes until it is too late.

Fact is, a lot of the big schemes appoint trustees who are officers of the sponsoring employer, and who clearly have inside information on employer weaknesses. So are we perhaps saying that trustees appointed by the employer arrive complete with a chinese wall in their heads? I have read that trustees of pension schemes are effectively the biggest creditors for some companies, yet the levels of what's owed seem so conveniently to be hidden in the long grass where the pension funding negotiations seem too often to be played.


ess0two, is that set of rules GunJack found on t'internet indeed your scheme? If so, it might be very interesting to throw out a general question about how strong a scheme (how strong the employer covenant) and how valuable the benefits are in relative terms compared to the other 5,000 remaining private sector DB schemes out there.

I'm 45 at the mo, so looking to 'do' something with this Pension in 10 - 15 yrs time, drawdown??

Very big question. If yours is truly a strong scheme with and equally strong 15 year outlook and contains the very best benefits, then some might say it is a no brainer - leave it where it is.

But is it? How is the same scheme looking for those of your old peers who remained active with the same employer (if indeed that was possible). Is that scheme swamped now by deferred members and does it perhaps have very few active members who are the only ones we might expect with a finger on the employer pulse?

When I left originally left in 2007 I was given a transfer value of £75k looking at previous paperwork etc.

If I request a transfer figure each year and its rising,can I assume this is a good thing??

Yep, I have a spreadsheet plotting all my previous CETV quotes, broken down into the GMP parts and the "excess part". I stand to be corrected but yes I would say it was a reasonable if rudimentary barometer - if it keeps rising steadily that generally means fine weather ahead!

However, you perhaps (like me in my forties) did not have the foresight to obtain and plot the values every year. Had you done so, you might have expected a very large rise in CETV over the past two or three years due to the plummeting of gilt yields, even though gilt yields may have recovered a bit recently? Others know far more than I to comment on this stuff.

Last year's stark rises in many CETV quotes was not expected by mere punters, and seen as a bit of a bonanza by some who were in more healthily funded schemes at organisations such as Barclays who did not it seems hold back on putting more support money into their old DB schemes even though they had closed them to new regular employer/employee contributions in 2011 I think.


Other employers and schemes have played a more shadowy game with their members. A few may enhanced CETV quotes in order to tempt members to transfer out and so the employer cuts their losses (having started to view their DB scheme not as a recruiting sergeant but as an 'orrible black hole for billions in profits to disappear into! Trustees have always claimed that whatever they have done is for the greatest good for the greatest number of their members but sometimes it is hard to tell.

More perhaps have been shopping around for new administrators and new actuaries who have less onerous ideas to tout, and many have bought into what I think were originally Goldman Sachs ideas about how to "de-risk" the longevity (risk) in schemes.

Some might say now, that if gilt yields have risen a bit, CETV's could now go down without that indicating any unstable weather ahead ... I am not so sure ... mine went up another 5.5% in the year to end March 2016, and I think mine maybe one of the untold wobbly FTSE100 ones :eek:

I have 2 further pensions also,8 yrs deferred with Shell in a DB scheme,

One might expect that to be one of the better ones you can safely leave to simmer on the back burner and to slow cook something delicious at the end, but who knows anymore?...

...and have just started paying into a DC scheme,10% company,7% own contribution with Friends life.

And therein lies a story about how the gross contributions to your latest pension are probably peanuts compared to what are still being contributed by ICI and Shell behind the scenes to maintain your old DB promises in any kind of lasting shape ...

My aims is to retire sometime between 55 - 60 if I get that far??

Well you are perfectly entitled to ask why not? You are in far better shape than most at the possible halfway point in your maximum expected employed life

quotememiserable

ess0two wrote: »

I'm 45 at the mo, so looking to 'do' something with this Pension in 10 - 15 yrs time, drawdown??

Drawdown is for defined contribution pensions. You're in the wonderful postion of having a final salary pension, which means you'll be paid a steady pension indexed and until you die however long that is. There's a tiny chance you could improve on this by taking the transfer and doing it some other way, but a huge chance you'd be worse off, plus you'd be swapping certainty for uncertainty.
The best clue to the value of what you have is this:
Member contributions £5,754
Transfer Value £153,000
That's £26 for every £1 you put in.

Stick with what you have.

kidmugsy

ess0two wrote: »

If I request a transfer figure each year and its rising,can I assume this is a good thing??

It's partly a reminder that you have failed to die in the year, so that the probability of their having to pay you your pension has increased. It also reflects the year's inflation. I dare say that it also reflects the fact that declining interest rates have increased the present value of the scheme's liabilities, such as your very own pension.

There are probably other considerations unknown to me. I do know that if the trustees are sufficiently worried about the scheme's finances they are entitled to reduce the transfer values they offer.