help with benefit info schedule

energyman1

Good afternoon all, I wonder if someone could offer me some advice.

I am 47yrs old and requested an up to date pension statement from an old employer. I paid into final salary scheme for around 10 years and left around 9 years ago. Since then I have never had an annual statement until I requested one last month.

The statement has arrives but I am not well up on pensions and need your help.

1, on the statement there are a couple of figures I am not sure about. First of all there is a total cash equivalent amount (£103,862.16), would this be an amount I could withdraw from the age of 55? I am not considering this or certainly not all of it but I am interested to know if this is the figure or am I barking up the wrong tree?

2, the statement mentions total accrued pension £4517 per annum, rate of GMP fixed. It also gives me a min and a max as to what to expect. (min £4560, Max £16040). This seems a large variation is this usual given my official retirement date is 17yrs away?

3, lastly is there any way of calculating how much a year this pension would be worth per annum if I retired took it from 57yrs of age? I ask as I am in another final salary pension and work self employed as well. The plan would be from 57 to retire from my full time job and work part time on the self employed role for a few further years.

Thanks for your time reading this. I am a MSE member for a long time but did not want to be identified given the financial details given above.

xylophone

In a DB Scheme, the pensioner does not have an individual pot of money - this cash equivalent amount is possibly the CETV?


http://www.thepensionsregulator.gov.uk/guidance/guidance-transfer-values.aspx

If you wished to transfer out of such a scheme, you would require advice from a pension transfer specialist.

It would appear that you were in this DB Scheme between 1978 and 1997.

Your scheme was "contracted out" and therefore the scheme had to promise to pay at least the equivalent of what you would have received had you been contracted in to SERPS.

See https://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/18/what-is-a-gmp/ concerning the revaluation in deferment of the GMP.

See also https://www.barnett-waddingham.co.uk/comment-insight/blog/2012/07/24/revaluation-for-early-leavers/ for information of revaluation of excess over GMP.

As your scheme uses FR revaluation for GMP, it is possible to make a pretty accurate assessment of the value of that portion of your pension at GMP age.

As you will see from the link above, the revaluation of the excess depends on variable factors.

With regard to accessing this deferred pension, you will be able to do so at Scheme Normal Pension Age or possibly earlier on grounds of ill health or on an actuarially reduced basis with the consent of the Trustees, depending on the rules of the Scheme.

You should consult your scheme booklet/the administrator concerning how the Scheme treats requests for access before NRA.

Have you obtained a new state pension statement?

https://www.gov.uk/check-state-pension

energyman1

Hi xylophone, thnk you for your reply.

I didn't think this would be simple, I worked for the firm between 1996-2006 and yes it was a contracted out of SERPS scheme.

I was already contracted out (via CIS), prior to joining the pension scheme.

I have done a state forecast via the gov and to my surprise the years contracted out are counted on my statement (currently targeted for £150pw).

My old pension scheme quote retire at any time post 55yrs but I just wanted to work out if there would be a possibility of a lump sum given I want to reduce down to p/t self employed come 10yrs (57+ time).

hyubh

energyman1 wrote: »

there is a total cash equivalent amount (£103,862.16), would this be an amount I could withdraw from the age of 55?

No, that what would be what the scheme would currently pay if you were to transfer out to another pension scheme rigtht now.

2, the statement mentions total accrued pension £4517 per annum, rate of GMP fixed.

Excellent, something to keep increasing until your GMP age! What's your fixed GMP revaluation rate? If you don't know, when did you leave the scheme?

It also gives me a min and a max as to what to expect. (min £4560, Max £16040).

Are the benefits pure DB, or is there a DC element?

lastly is there any way of calculating how much a year this pension would be worth per annum if I retired took it from 57yrs of age?

If it's pure DB, ask for the current early retirement factors from the administrator + confirmation of your normal retirement age in the scheme.

xylophone

I was already contracted out (via CIS), prior to joining the pension scheme.

What happened to this pension? Did you transfer it into the DB Scheme which is now deferred?

energyman1

xylophone wrote: »

What happened to this pension? Did you transfer it into the DB Scheme which is now deferred?

I still get statement from CIS suggesting I will receive around £1.3k per year on retirement.

"What's your fixed GMP revaluation rate? If you don't know, when did you leave the scheme?"

I left in 2006, I can't see a rate on the form.

"Are the benefits pure DB, or is there a DC element?"

the scheme is Pure DB.

My current DB scheme will give me an OK pension (1/67th) and I am currently paying in extra AVC contributions, I just wondered how easy access to the deferred pension was.

Thank you for all your replies, it is appreciated.

number_monkey

2. Your range of different pension outcomes (min £4560, Max £16040) come from the fact that your £4517 per annum pension will increase until retirement.

A very small amount of your pension is GMP, which will increase at a fixed rate of 4.5% pa based on the date you left, but most of your pension will increase broadly in line with inflation - subject to a minimum of 0% pa and a maximum of 5% pa.

So £4,560 is your outcome if inflation over the 26 years from leaving work to retirement averages out to be 0% pa, plus your fixed GMP increases. £16,040 assumes 5%pa.

As you point out that's a big range and not particularly helpful. In today's money, your pension is probably worth in the region of £5,600 pa. It will have broadly the same buying power in 17 years time as it does today.

3. You could ask your pension scheme administrator for an early retirement estimate - early retirement terms vary greatly by scheme. I wouldn't be surprised if you were looking at a 5-6% reduction for each year you want to retire early, so maybe 40-50% reduction in pension for 8 years early.