Deferred pension

Stevesam64

Ok
Thanks for all the information looks like I may be stuck with it unless I can transfer it out, just seams mad to me I got 100k in there and get to 55 and can't have any of it because of the GMP

sandsy

Stevesam64 wrote: »

Ok
Thanks for all the information looks like I may be stuck with it unless I can transfer it out, just seams mad to me I got 100k in there and get to 55 and can't have any of it because of the GMP

You don't have £100k in there, you have a promise a lifetime inflation linked income from age 65 and the trustees have assets of £100k notionally earmarked to pay your benefits on which they will earn investment returns over the next 10 years.

What they are saying is that to pay you early would cost more than £100k, even after the early retirement factors are applied, as payment of the GMP would cost more than this. At some future point, the situation may change and at 65, they have to pay it irrespective.

Stevesam64

I'm lost now, it says transfer value 100k
But you say I don't have that

Silvertabby

Stevesam64 wrote: »

I'm lost now, it says transfer value 100k
But you say I don't have that

No, you only have a promise of £6K per year from age 65. The £100K is just the sum of money the pension fund will pay you for taking yourself off their books.

£100K for an index linked pension of £6K is extremely poor value. Any reputable IFA would be reluctant to approve such a transfer based on the information you have given thus far.

Stevesam64

Can you explain a bit more why it's poor value and I don't understand the part about the transfer
Sorry if I'm being a bit thick

xylophone

Hi all they said was try again if a few years time

See

https://forums.moneysavingexpert.com/discussion/1439747/guaranteed-minimum-pension-early-retirement

I joined the pension in 1991 and left in 2002

You left with a deferred DB pension.

Your Scheme was contracted out of the State Earnings Related Pension Scheme.

You were a member between 1991 and 2002 and will have built up post 1988 GMP.

This meant that from age 65 (GMP age), your scheme had to guarantee to pay you a pension at least equal to what you would have received from the State Scheme.

When you left service, you should have been given a statement of deferred benefits showing your GMP (all post 1988) and your excess over GMP.

It is very probable that your scheme uses "Fixed Rate" revaluation of your GMP.

See https://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/18/what-is-a-gmp/

The excess too must revalue in deferment.

https://www.barnett-waddingham.co.uk/comment-insight/blog/2012/07/24/revaluation-for-early-leavers/

You can request early payment of your deferred benefits (which would be actuarially reduced for early payment).

Because you have a GMP, the GMP test must be carried out.

The purpose of this test is to ensure that if the request is approved, the Xerox pension that would remain in payment at GMP age would be at least as much as you would have received had you not been contracted out of the State Second Pension.

If the GMP test is not met Xerox cannot allow you to receive early payment of benefits

https://www.plsa.co.uk/Policy-and-Research-Defined-Benefit-GMPs



FAQ may be of interest.

Have you obtained a State Pension Statement?

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

Silvertabby

Stevesam64 wrote: »

Can you explain a bit more why it's poor value and I don't understand the part about the transfer
Sorry if I'm being a bit thick

If you were to take the £100k and put it into, say, a SIPP, it could go down in value as easily as up. If the value level pegged, and you took £6K per year as income, then your fund could be exhausted in less than 20 years. Your final salary pension, however, will only go up in value and is payable for the rest of your life.

xylophone

Can you explain a bit more why it's poor value

How much capital do you think it would take to purchase a £6000 a year index linked annuity, particularly with widow's pension?

http://www.sharingpensions.co.uk/annuity_rates.htm

I don't understand the part about the transfer

The value of your DB benefits is greater than £30,000 therefore you would require the advice of a Pension Transfer Specialist (for which you would have to pay and it would not be cheap) before transfer out of your DB Scheme to a personal pension.

https://www.royallondon.com/Global/documents/GoodWithYourMoney/COMPANY-PENSIONS-FIVE-REASONS-TO-TRANSFER-OUT-AND-FIVE-REASONS-NOT-TO.pdf

xylophone

Do you have your statement of deferred benefits from when you left service?

What does it show?

Does the Scheme use "Fixed Rate"?

When exactly did you leave?

Stevesam64

Left 31/01/2002
When I left It say deferred pension payable from normal benefit age £3526
And on the first April 2017 it says £5912