Deferred Pension Statements ...

JillyC8

Hello,

Please could any pension savvy people on here help me understand my pensions?

I've been tracing two pensions and have some details now.

I'm 52 and want to try to pay off my mortgage earlier (I've started paying bits off here and there) and hopefully retire when I do or at least work part time.

So,

1: current pension pot with Aviva currently at £16000 after 8 years, forecast to pay out at 67. Pot will be at around £40000+ at 67.

2: Deferred pension (DB) from last job when I was part time: £6975 lump sum with £1035.60 a year at 65, or £1210 a year with no lump sum.

3: Previous pension from another job: DB pension currently at £5201.52 a year. There's a paragraph that I don't quite understand that states:

'During deferment the pension in excess of the guaranteed minimum pension increases each whole year from your date of leaving to your retirement date by the rise in consumer price index to a maximum of 5%. The GMP increases each complete tax year by 6.25% '

Would this allow me to forecast what it might be at age 65?

I have a couple more to trace from years ago but they will be very small as I only worked there for around three/four years each.

Going forward I'm not sure whether I should be paying more into my current pension or trying to bring down my mortgage?

Advice appreciated...

JillyC8

Forgot to add I'm mortgaged till age 70 but intend to over pay and bring down to 67 or hopefully 65.

kidmugsy

JillyC8 wrote: »

1: current pension pot with Aviva currently at £16000 after 8 years, forecast to pay out at 67. Pot will be at around £40000+ at 67.

If that's a DC pension the "forecast to pay out at 67" is rubbish. You can take it once you are 55. I imagine that at some point you've ticked a box saying that you expected to take it at 67, which is just a reminder to them to write to you a few months before your 67th birthday.

"Pot will be at around £40000+ at 67": oh no it won't. Nobody knows what it will be worth at 67. It could even be worth less than £16k.

Still, if it's what you pay into currently you may want to leave it alone.

JillyC8 wrote: »

2: Deferred pension (DB) from last job when I was part time.

How much would you lose if you started drawing it early e.g. at 55?

Have you asked them to quote you a Cash Equivalent Transfer value (CETV)?


Have you got an official prediction of the expected size of your State Retirement Pension?

JillyC8

Re current pension, the £40000+ is what it's forecast to be... I know that may change.

I have 3 years to pay to reach the 35 years currently required to draw the full state pension...

I don't have a CETV for any of them yet ... I was under the impression it wasn't a good idea to draw early on DB pensions?

xylophone

'During deferment the pension in excess of the guaranteed minimum pension increases each whole year from your date of leaving to your retirement date by the rise in consumer price index to a maximum of 5%. The GMP increases each complete tax year by 6.25% '

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

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

Have you obtained a new state pension forecast?

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

kidmugsy

JillyC8 wrote: »

I don't have a CETV for any of them yet ...

Fair enough - a transfer wouldn't suit everyone anyway, however eye-catching the sum offered. But it could conceivably suit you with your ambition to pay off a mortgage and with another DB pension and the State pension to come later.

JillyC8 wrote: »

I was under the impression it wasn't a good idea to draw early on DB pensions?

It depends on the terms. If they would reduce your pension by 5% for every year early you take it, you might not want to draw it early. But if that figure were instead, say, 3% then it might be attractive.

How's your health? Are you from a long-lived family? Do you have a husband to use the widow's pension? On such things do decisions turn.

JillyC8

Hi, thank you for responding - I find pensions confusing.

I am a single parent in good health - don't smoke or drink (could be a bit thinner though) and from a relatively long-lived family ... mum passed at 76, dad still going strong at 88!

The most important issue at the moment for me is trying to reduce my mortgage; it is too long a term, too expensive and keeping me in a job I dislike because I need the money, so if I could 'safely' free up some money to cut it back I would take the opportunity.

My plan is to either stay put or move to a smaller house when children leave home to reduce my outgoings. I've read that DB pensions have something built in for spouses so that could be a positive thing?

Is there any way of estimating what a CETV might be roughly for the DB pensions? It took me two months just to get a letter from each provider telling me the status of the plans (I had lost touch so the full statements didn't reach me so it was quite a hassle.)

I realise I will need to speak to them further but want to try and understand as best I can first, what the scenario could be.

Am I right in thinking that if I was to 'cash in' one of them then it should either be the small DB one or my current Contributory one? Sorry for all the questions! I do appreciate any help.
J

JillyC8

Xylophone: thank you for your response. I have read the info on your links but don't understand fully what the implication is on my pension value when it matures or if it's taken early :-(.

Regarding my state pension, I logged to HMRC on last summer and have three years' contributions to make to reach the current 35 year qualifying level.

JillyC8

Another note, the DB pension with the GMP paragraph from my post above ran from 1991 to 2000 ... I've read that the GMP part can only be taken as an annuity and not cashed in...

p00hsticks

JillyC8 wrote: »

Regarding my state pension, I logged to HMRC on last summer and have three years' contributions to make to reach the current 35 year qualifying level.

Were you actually getting a pension forecast or just checking how many full NI years you have ? I ask in case you are unaware that the '35 years = full new State Pension' rule is only true if you have worked your whole life under the new rules, which you obviously haven't.

And with a couple of DB pensions indicating that you have been previously conttracted out, you may find that the transitional rules mean that you need more that 35 years if you wish to reach the new (higher) value of £164.35

Dorian1958

As you are trying to address this issue now I would forget about looking into a cetv for the DB pensions : you are 52 and you can't do this until you are 55 (unless I stand to be corrected).