Pension help for a dummy

iammumtoone

I am trying to get my information together. I am struggling to make sense of the figures.

Black rock (defined contribution) - current fund value £2440 est yearly payment £141 - I paid into this for a year.
AXA (defined benefit) - current fund value £2813 unable to tell me yearly payment - I paid in to for 6 years

Same employer so employer conts were the same percentage. Blackrock was last so my wage would have been more which would account for some difference but would it make up that much of a difference? Funds values are similar for paying one year or six years! I was always under the impression that final value pension schemes were better but this doesn't seem to be the case.

Lost mercer one seems like it might be a problem. I spoke to them they are unable to give information over the phone which is understandable I need to email. I asked what they could provide, they are unable to tell me my policy number, or any other information as pension is no longer paid into. They will supply a copy of the original deferred benefit statement but are unable to update the figures/value until I am 55 (i am confused by this as AXA which is also a deferred benefit scheme were able to tell me current fund value)

When I originally took out my final salary pension I was under the impression that at the end of the term I would get my final salary as a pension (based on a percentage of final year salary dependent on how many years I had worked for the company) I must have misinterpreted this as I am not being told a definite figure rather one which is not guaranteed.

hyubh

iammumtoone wrote: »

Black rock (defined contribution) - current fund value £2440 est yearly payment £141 - I paid into this for a year.
AXA (defined benefit) - current fund value £2813 unable to tell me yearly payment - I paid in to for 6 years

There is no 'fund value' for a defined benefit (DB) pension. I would imagine £2813 is the 'yearly payment', and is subject to statutory revaluation (i.e. some inflation proofing) until normal retirement age.

Same employer so employer conts were the same percentage.

DB doesn't work like that.

Blackrock was last so my wage would have been more which would account for some difference but would it make up that much of a difference?

It's the opposite - the DB pension on the figures you've provided will be much more valuable than the DC one, even pro-rata.

Lost mercer one seems like it might be a problem. I spoke to them they are unable to give information over the phone which is understandable I need to email. I asked what they could provide, they are unable to tell me my policy number, or any other information as pension is no longer paid into.

DB pensions don't really have 'policy numbers' - National Insurance numbers are the primary identifiers.

They will supply a copy of the original deferred benefit statement but are unable to update the figures/value until I am 55

A bit rubbish, but we can figure it out here if you provide (a) the pension on leaving - if any was earned before 1997, split out 'GMP' from 'excess' (b) your date of leaving (c) anything about 'revaluation' rates found in the statement.

When I originally took out my final salary pension I was under the impression that at the end of the term I would get my final salary as a pension (based on a percentage of final year salary dependent on how many years I had worked for the company)

That's basically how it works, yes.

iammumtoone

Thank you for your detailed reply

hyubh wrote: »

There is no 'fund value' for a defined benefit (DB) pension. I would imagine £2813 is the 'yearly payment', and is subject to statutory revaluation (i.e. some inflation proofing) until normal retirement age.

Thats what I first assumed when I found a figure on the original paperwork but they confused me on the phone, I will try to call again to clarify and come back once I receive the up to date statement they are sending

hyubh wrote: »

DB pensions don't really have 'policy numbers' - National Insurance numbers are the primary identifiers.

thank you if would have been helpful if they had explained that to me (my AXA one does have a policy number hence why I thought this would to)

hyubh wrote: »

A bit rubbish, but we can figure it out here if you provide (a) the pension on leaving - if any was earned before 1997, split out 'GMP' from 'excess' (b) your date of leaving (c) anything about 'revaluation' rates found in the statement.

Out of all the companies I spoke to Mercer were the least helpful. I asked about my options what to do as I have lost all paperwork and the reply was "you can transfer it if you want to" I don't know much about pensions but always thought final salary were the best which you have confirmed. She didn't give me advise (I know this isn't allowed) as she said it was up to me but I thought it was bad form to mention it as a possibility, when I doubt this would ever be recommended.

hyubh

iammumtoone wrote: »

Out of all the companies I spoke to Mercer were the least helpful. I asked about my options what to do as I have lost all paperwork and the reply was "you can transfer it if you want to"

Well, the options are going to be:

• Leave it where it is until your normal retirement age in the scheme
• Transfer out, typically to a DC scheme you currently contribute to
• Leave it where it is, but draw the pension early (probably from age 55, but the scheme might have a minimum retirement age higher than that)
• Leave it where it is, and wait until after your normal retirement age in the scheme to draw it.

If you took the third option, there would usually be an early retirement reduction applied to reflect the likely longer time the pension will be paying out. Early retirement reductions are periodically reviewed, so anything the administrator could quote now would only be an approximation, unless you already met the minimum retirement age. Ditto the forth option - sometimes delaying a DB pension earns you a late retirement increase, this time to reflect the likely shorter period of the pension being paid out, and if so, late retirement factors would also be subject to periodic reviews.

I don't know much about pensions but always thought final salary were the best which you have confirmed.

Does depend on the terms, however typically old DB pensions are better partly because (in hindsight) they were under-costed at the time.

She didn't give me advise (I know this isn't allowed) as she said it was up to me but I thought it was bad form to mention it as a possibility, when I doubt this would ever be recommended.

Surely it would be bad form not to provide basic information on all the available options, when your options were what you explicitly asked for...

That said, legally you have a right to one free 'cash equivalent transfer value' (CETV) quotation a year, up to a year before the scheme's normal retirement age. This will provide a rough equivalent to the 'fund value' quoted by a DC scheme.

atush

iammumtoone wrote: »

I have found one of my recent pension statements

Blackrock forecast payment of £141 per year :eek: :rotfl:

I need to ring them to find out how may years contributions I paid for that amount and keep searching for other pension pots.

I worked at the same place for 16 years but in that time I think the pension was changed/moved a couple of times although Blackrock is the only one that sends me a statement every year. I am ashamed to admit I don't really know who holds my pensions, its not an excuse but I suffer from MH issues that means I do bury my head in the sand with things I don't understand, then I start to get stressed when I try to sort it so leave it, but this time I must resolve and find out exactly where I stand. Glad I started this thread as it will help with that.

Dont ask about the income you can expect- they will quote you annuity rates and you might not buy one.

Find out how many 1000's each of your pensions is worth today. Tell ech or just the total.

In your current scheme, if you pay more in will our employer do so too? How much is in that pension pot? What are the charges? You may wnt to pay mre into it, or into a personal pension is the charges ar lower.