Pension information from scheme administrators

RueyE

I'm currently a deferred member of a (half decent) DB pension scheme, having left my employers about 6 years ago.
At the time of leaving the projected pension details offered by the then scheme administrators provided details of a variety of options highlighting my potential pension and the 25% tax free lump sum (TFLS) values at my NRD.
However last year I finally managed obtain a revised pension statement from the (utterly useless) new scheme administrators (which was like getting blood from a stone). This showed that my potential pension at NRD was way down on the original projections.
As I'm rapidly approaching my NRD I need to gain some understanding of my potential pension, how can I find out what my TFLS will be, based on the new pension values?
I have read about the commutable values that are applied to determine TFLS, but also understand that the calculations are very complicated and can vary quite considerably.
Are scheme administrators obliged to tell you the relevant details, and are they obliged to provide annual deferred benefit statements?

xylophone

Do you have a scheme booklet or is it available on line?


This should give details of how the pension revalues in deferment and of how to claim your pension at NRD. It should also give details of commutation options.

https://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/06/what-is-commutation/


https://www.pensionsadvisoryservice.org.uk/pension-problems/avoiding-problems/what-you-have-the-right-to-ask-your-scheme

I am a deferred member of a final salary scheme but each year I have to phone up for a benefit statement. Can't they just flag something on their system?

Currently there is no requirement to provide a benefit statement to members of final salary schemes other than once a year on request.


When you left your employer, were you given a "statement of deferred benefits"?

Was there any pre/post 88 GMP?

Have you obtained a state pension forecast?

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

Marcon

RueyE wrote: »

I have read about the commutable values that are applied to determine TFLS, but also understand that the calculations are very complicated and can vary quite considerably.
Are scheme administrators obliged to tell you the relevant details, and are they obliged to provide annual deferred benefit statements?

No - few administrators will provide any sort of projections on potential lump sums from a DB scheme until you are within a matter of months of retirement. They simply don't have the relevant crystal ball!

Deferred benefit statements from a DB scheme - no, very unusual to provide annual statements once someone has left.

How far from retirement are you?

RueyE

Everything is now online, and also looking back through my old paper documentation I do not have a full policy document to hand.
However I have previously contacted the scheme administrators, and queried the possibility of obtaining an annual pension statement. The good news is that they stated that from 2018, they mean to provide an annual statement for deferred members as at April (of that year), which should be sent out from December each year. However as yet I hadn't been in receipt of this document for 2018.
If they honour this commitment, that is a big plus going forwards.
State pension wise I currently logon to the government portal (to annually complete my tax return), and therefore can see my SP forecast. From what I can see, there are only a few more years of work required to eliminate the contracted-out element from preventing a full SP.

The TFLS information is probably going to be much more difficult to evaluate at such an early stage. An old pension statement states they will only provide full details a few months before the due NRD.
I would like to finish my current work within the next 2 years, and I hope the forthcoming annual pension statements will permit me to make a more informed guess as to any TFLS (using the original pension statement projections & TFLS figures at the time of leaving the DB scheme)

The links were very useful background information - thanks

xylophone

Is the NRD age 60?

If you intend to continue to work after the NRD of the scheme, have you checked whether if you did not claim the pension at NRD, there would be "late retirement increases"?

MarkCarnage

Once you get the up to date position of what the deferred pension is, it's not too difficult to project it forward provided you know the Scheme Rules for that, which is usually to increase it by CPI for pensions which have accrued since about 1988 I think. Subject to caveats about any GMP component.....

The administrator will often then project it forward to what it might be at NRD making an assumption on the relevant cost of living increase. However, if CPI undershoots this, be prepared for the actual pension to come in at less than that. In my case, I had one year where the projected pension actually fell marginally as CPI had been very slightly negative year on year....

RueyE

Hi
Thanks for the queries, just you asking questions is making me dig a little further into the information I have available.
So, an update after doing lots of reading through old documentation (it's good to hoard these things sometimes), and more importantly I found an old Pension scheme booklet.
It does state how the TFLS is calculated although the caveat is added that rates etc are subject to change by the trustees, and are therefore not guaranteed. So this is very useful indeed.

My NRD was changed many years ago when the scheme was absorbed into the umbrella pension scheme of the company that took over the original company, and is currently set to age 65, but I'm permitted to take the pension at age 60 (without financial penalty) as that was agreed at the time.
My situation is further complicated by me undertaking over 20 years of AVC contributions, and looking at the last statement I received back into April 2017 (these have subsequently stopped arriving from the scheme administrators), there is a decent final bonus upon maturity (at age 60).
Also deferring taking my pension at 60 will incur an uplift factor (increase), but only for a complete year of deferment.

Regarding the currently deferred pension increases, it now increases by CPI, and for several years now it has hardly increased at all. Hence the original query at the top of this thread.

More digging to be done, and contacting the scheme administrators to get hold of more recent documentation required.

Thanks

Seabee42

Most schemes use the HMRC formula for tax free cash sums


TFCS = ((pension * Commutation factor)+ money purchase fund)/(1+(0.15 * Commutation factor))


All this means is that is not a fixed amount. If you take your pension earlier clearly it will be a lower figure but worth more so have a higher commutation factor.

xylophone

over 20 years of AVC contributions,

What is the position about using these to fund the PCLS so as to lessen or obviate the reduction on monthly pension?

Parking_Trouble

The quality of the pension administrators is generally poor in my experience.

I've had to deal with Willis Towers Watson for 2 pensions and Equiniti for the other.

Getting to the bottom of pension entitlements that were deferred 32 and 38 years ago with various mergers and scheme changes with little or mostly no communication has been fun.

Cannot properly trace the changes and end up with a default position which invariably seems to favour the scheme.

DT2001

Xylophone asked if there was any GMP? Do you know, as when your pension is drawn can affect increases at NRD. Something to consider.