Pension question

CathA

I was filing some paperwork regarding my husband's pensions, and a mathematical question occurred to me. They are all with Royal London, formerly the Co-op. My husband is 55, still working and he's had them for years.

Ignoring any future increases/decreases in pension payouts r values (he's not accessed them yet as he has no need) or the issue of a spouse pension/annuity, can anyone explain this?

3 of the policies are valued at less than £15,000 each. The projections of future payments, from a mathematical point of view, means that the possible pension paid out on each of them means that he would receive back the value of the pensions within about 12 years. e.g pension valued at £12,000, pension of £1000 paid for 12 years. (That's not the actual value, just an example)

A 4th one has a much greater value, £60,000+ but the pension payments predicted would take nearly twice as long to equal the value of the pension, which seems strange.

All of them have a GAR and were started when he was quite young, although they are all now paid up and he's not contributed for a long time. I don't know why, this occurred a long time before I met him. Any ideas/suggestions? Thank you.

Brynsam

How recent are the projections? If they are all 'old' and were done at different times, the basis of projections would have varied according to the requirements of the time.

CathA

Brynsam wrote: »

How recent are the projections? If they are all 'old' and were done at different times, the basis of projections would have varied according to the requirements of the time.

No they were all done at the same time (the annual update, dated April/May this year I believe?) He gets an update every year. Thank you.

James145

This does sound strange, but it may be the GAR is different on each policy. It's probably best to contact Royal London to ask they why there's such a large valuation difference between the policies.

atush

Different GAR rates.

What is he doing for pension now/currently? What are the GARs under each policy?

sandsy

As well as the GAR rates being different, the way the GAR is paid could be different. Typically, a GAR pays out a flat amount to a single life very year. But it could be set up that it would pay a partial benefit to a spouse following death and the payment may not be flat - it could increase.

All these variations would change the apparent payback period.

CathA

I'll have a look at the policies for the GAR figures. Presumably they'll be on the original policy paperwork? I don't know, never seen it when I've been glancing through them but I've never consciously looked, IYSWIM.
He's got other work pensions as well as these. Thanks all.

atush

Or you can call them and ask. If your OH hasn't given you authority on his behalf, he will need to make the call.

wallpaperman

Some policies do not pay out the GAR at age 55, they might be 60 or 65. You might want to check that the last one definitely has the GAR and is not quoting at standard annuity rates.