Is a decreasing PIP a concern with DB?

vikkiew

My annual pension savings value has decreased compared to last year. I understand this indicates a decrease in the value of the pension portfolio. My personal contribution has not changed so this is due to market performance and possibly employer funding less. I am not near retirement, in general do I need to be concerned with such fluctuations with a DB or is it only a concern with a DC especially nearing retirement age.

AnotherJoe

Vikki, what is "annual pension savings value" ?

EDIT; I see this is the notional figure attributed to your pension contribution for a DB pension.


It doesn't matter since all you need care about is what your DB pension will be. That isnt directly connected to what your employer pays in.

hyubh

vikkiew wrote: »

My annual pension savings value has decreased compared to last year. I understand this indicates a decrease in the value of the pension portfolio. My personal contribution has not changed so this is due to market performance and possibly employer funding less. I am not near retirement, in general do I need to be concerned with such fluctuations with a DB or is it only a concern with a DC especially nearing retirement age.

This is a bit confusing. Are you saying, you are an active member of a DB scheme, and accrued pension over the past year has failed to keep up with inflation...? The Annual Allowance calculation for DB has nothing to do with either employer contributions or the funding level of the pension scheme. Can you give more details...?

AnotherJoe

I believe the OP is saying that the notional amount attributed to her DB pension this year "annual pension savings value" , is less than last year.

hyubh

AnotherJoe wrote: »

I believe the OP is saying that the notional amount attributed to her DB pension this year "annual pension savings value" , is less than last year.

The notional value of the DB pension for AA purposes won't have gone down. Or is it just the rate of increase has fallen...?

kidmugsy

AnotherJoe wrote: »

I believe the OP is saying that the notional amount attributed to her DB pension this year "annual pension savings value" , is less than last year.

Attributed by whom? For what purpose?

AnotherJoe

kidmugsy wrote: »

Attributed by whom? For what purpose?

Well, in the absence of the OP I'm guessing. And that guess is that she gets a yearly statement saying how much has been contributed to her pension by her and her employer.

kidmugsy

I wonder whether it refers to the amount relevant to AA calculations. But if the OP is ignoring her own ruddy thread I suppose we'll never know.

vikkiew

My mum was ill.


It is the pension savings amount used in relation to the annual allowance and I understand calculated by comparing the value of the pension from one year to the other. My value for 17-18 is much lower than 16-17. Does this mean the value of the pension has not grown as fast as the previous year or has it in fact gone down? Would it be zero if the value went down? Other than for tax purposes against the annual allowance limit does this value have any significance?

NoMore

It has no bearing on your benefits from your DB pension, its a calculation used to test against the AA. So if it goes down, which it can as the calculation involves a CPI factor adjustment, just means you have more headroom in the AA to add to a different pension.

In short, unless your looking to use your full allowance, don't worry about it.

You may find this calculator useful to see why changing the CPI factor can make it go up or down.

https://www.pruadviser.co.uk/xpf_calculators/defined-benefit-pension-input-tool/

kidmugsy

vikkiew wrote: »

It is the pension savings amount used in relation to the annual allowance and I understand calculated by comparing the value of the pension from one year to the other. My value for 17-18 is much lower than 16-17. Does this mean the value of the pension has not grown as fast as the previous year ...

Other than for tax purposes against the annual allowance limit does this value have any significance?

Yes.

No.