Deferred Benefit Harrods Group Plan

becky2318

Hi, I am still trying to sort out my husbands DB pension which is a slow process dealing with Mercer..

We finally got a log in to the OneView site to access information about his pension.

My husband will be 60 in August and retiring from the civil service at end of Sept (still waiting for figures from them too..)

There is a DB retirement illustration online but it is only giving figures from age 65.

When we try to change the age/date of retirement it is says to contact them (which we have but know they are very slow in responding)

Am I correct that you can take aDB pension from 55?

The figures for age 65 are as follows (not bad considering he only worked there for five years)

Option 1 Full pension £3,225.60 a year

Option 2 Pension Plus cash lump sum £9,608.40
Reduced pension £2,776.80


Any advice really appreciated x

Dazed_and_confused

Am I correct that you can take aDB pension from 55?

No, it usually depends on the rules of the DB scheme. It could be earlier than 55 in certain situations.

Will he be liable to tax on all of the pension?

becky2318

To be honest I don’t know. So as husband is nearly 60 does that mean he has to wait till 65. Apologies I am finding the pension dealings quite confusing.

Dazed_and_confused

Not necessarily, he may well be able to take it at 60 but that usually, but not always, comes at a cost. The pension might be reduced by 4-5% for each year he takes it early.

So the £3225.60 at 65 might only be say £2500 if he wanted it paying from 60.

But all this is guesswork, you need to look at the scheme rules to know what his options are. It's unlikely but not impossible that he could take it early with no reduction.

becky2318

Thank you. I think it probably best to wait it out till he reaches 65. Nice bonus as until a few months back he didn’t realise he had this one.

xylophone

Your husband has a deferred defined benefit pension.

He should have been given a statement of deferred benefits on leaving the scheme.

It is likely that the scheme normal pension age was 65.

It is possible that the rules permitted the pension to be drawn earlier than NPA (possibly at the discretion of the Trustees) but this is likely to have been with a substantial actuarial reduction.

Has your husband obtained a State Pension Forecast?

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

Seabee42

There are some circumstances when a person has a considerable guaranteed minimum pension "GMP" where the scheme will not be able to allow early retirement as they have to provide this GMP from age 65 and by taking a pension early the reduced pension would be insufficient to cover this at 65.

xylophone

There are some circumstances when a person has a considerable guaranteed minimum pension "GMP" where the scheme will not be able to allow early retirement as they have to provide this GMP from age 65 and by taking a pension early the reduced pension would be insufficient to cover this at 65.

Yes indeed. The subject comes up from time to time on the forum.

https://forums.moneysavingexpert.com/discussion/comment/75989714#Comment_75989714

becky2318

I do have this which on on the pension details page

Your annual deferred pension at date of leaving the plan: £393.96
The statement issued to you is a personal record sent on behalf of the Trustees to show your benefits and options under the Scheme. These are subject to the provisions of the Scheme Rules and any overriding legislation. In addition to your option of benefits at normal retirement, please note the following:
You may also retire early on reduced benefits with the consent of the Trustees and the employer.
According to legislation, the earliest age from which you may consider retiring is 55, unless you retire because of ill health or if you had a lower contractual Normal Retirement Age.
You also have the option to transfer your benefits to your new employer's pension scheme or other pension arrangement. You may obtain an up to date Transfer Value of your benefits at any time. If you are considering this option, you should be aware that you can only obtain this information free of charge once every twelve months. The Trustees reserve(s) the right to levy a charge for providing transfer value calculations within a year of the previous request.
Additional Information.
The deferred pension shown above is based on the information currently held by the administrator of the Scheme and is produced for information only. It is not proof of entitlement and confers no right to benefits. All benefits must be calculated and paid only in accordance with the trust deed and rules of the Scheme and the law, and are therefore subject to review before payment.
If you have transferred benefits from a previous employment into the Scheme, known as a transfer-in, the benefits secured from such a transfer are in addition to the benefits shown above.
If you have paid additional voluntary contributions during your membership of the Scheme, the benefits from the additional voluntary contributions are not included in this illustration and will be extra to the benefits shown on this statement. The additional voluntary contributions will remain in the Scheme until you retire unless you decide to transfer your benefits to another arrangement.
If, whilst an active member of the Scheme you were employed by Harrods on a part-time basis, legislation in force since 1 July 2000 means that if you work part-time the benefits you earn after that date will usually be a pro-rata share of a corresponding worker's full-time benefits.
If you are divorced and your benefits are subject to a court order, the benefits available from the Scheme will have to be distributed in accordance with the terms of that order. The values quoted in this benefit statement will, therefore, be subject to reductions under the terms of that order.
For further information about the Scheme please refer to the explanatory booklet or you may contact the Scheme's administrator. In all correspondence please state your name, date of birth, National Insurance number and the title of the Scheme,
As an alternative to the deferred benefits described in the statement, you have the option of transferring the value of your benefits to:
either a suitable individual arrangement in your own name, or;
if you leave the employment of Harrods, your new employer's pension fund, provided the trustees of that fund are willing and able to accept the transfer.
The transfer (often called a 'cash equivalent') will take the form of a cash sum representing the value of your deferred benefits. In order to transfer you will first need to apply to the Trustees for a statement of the transfer value available. The amount shown on the transfer value statement, which may be guaranteed, can vary in amount depending on a number of factors, such as the levels of investment markets applying at the time.

xylophone

The above indicates what may be possible in respect of taking pension benefits before NPA.

However, given your husband's age and the information about his work /pension history, it is almost certain that both his pensions include GMP.

See posts 7 and 8 above which may be relevant to his situation.

And has he obtained a state pension forecast?

Since he will have been "contracted out" of SERPS/S2P for a number of years, he may wish to check whether he would need to pay NI on a voluntary basis to achieve a full new state pension.

Below may be worth a look.

https://www.royallondon.com/siteassets/site-docs/media-centre/good-with-your-money-guides/topping-up-your-state-pension-guide.pdf

becky2318

Thank you all for taking the time to reply.

Yes have checked his state pension forecast he has 44 years of full contributions and 6 years left to contribute until he’s state pension age 2025.

He is retiring from civil service in September this year and his estimated forecast up to this April is £153.51.

So needs another 4 years before 2025.

Will read the link above about voluntary contributions.