Help, husband's closed work save pension and new stakeholder pension

bsmm228

Hi
Firstly apologies for the really long post, but feel that I need to provide as much information as possible in order to get the best advice from you guys.

Husbands company closed his old work save pension on the 31st March 2017 and enrolled him into a Stakeholder Pension. There was formal consultation with all pension members at the time. At the time of closure he received a Preserved Pension Statement showing a pension of £8500 p.a. as at 31.3.2017 with pension increases RPI max 5%.

As compensation his company is paying an enhanced payment into his stakeholder pension for the next 5 years, obviously to build up a pot in the new stakeholder pension. Husband was 60 in July 2017 and wants to retire at 65, so actually hasn't got that long to build up much in this new pension.

The new Stakeholder Pension is with L&G and he has since received communication from them asking if he wants to transfer his old frozen pension into his new stakeholder pension. However, this is what is worrying. On the form it says current value of old plan is £17,765.05, how can that be. He joined the old scheme in June 2006, believed he had a preserved pension of £8,500 pa in 2017, why would his pot be so small. Are we missing something? What has happened to the preserved pension?

Would really appreciate some advice. Should we get independent financial advice? What should we be asking L&G? We're now worried he has been swindled out of his pension pot through this buy out.

Thank you in advance of any advice. If anyone needs any further information please let me know.

Dazed_and_confused

Was the pension that closed in 2017 a defined benefit scheme?

If so there wouldn't be a pot/fund.

If it was frozen how could it increase by upto 5% (per annum?)?

Do you mean it was deferred?

bsmm228

Hi

Thanks for your quick response. Yes it was a Defined Benefit Plan. If there was no pot/fund, what would the current value of old plan £17,765.05 refer to?

On the preserved pension statement it say "the benefits are subject to increases between the date of leaving and NRA, as well as increases in payment. Please refer to the table below for further information. The table says Pension Increases in Payment - RPI max 5%.

Hope this answers your questions.

Dox

bsmm228 wrote: »

Hi

Thanks for your quick response. Yes it was a Defined Benefit Plan. If there was no pot/fund, what would the current value of old plan £17,765.05 refer to?

On the preserved pension statement it say "the benefits are subject to increases between the date of leaving and NRA, as well as increases in payment. Please refer to the table below for further information. The table says Pension Increases in Payment - RPI max 5%.

Hope this answers your questions.

He hasn't been swindled out of anything, so you can relax on that score.

Did he by any chance pay extra into his old scheme, to build up some extra benefits on top of the 'standard' defined benefits being offered - perhaps by means of an Additional Voluntary Contribution scheme or a personal/stakeholder pension actually run by L&G?

Alternatively, was he a member of another pension scheme earlier in his career - again, one run by L&G?

If the answer is no to both the above, sounds like a simple error. He needs to contact L&G and ask where they got the value from and what it represents.

bsmm228

Dox wrote: »

He hasn't been swindled out of anything, so you can relax on that score.

Did he by any chance pay extra into his old scheme, to build up some extra benefits on top of the 'standard' defined benefits being offered - perhaps by means of an Additional Voluntary Contribution scheme or a personal/stakeholder pension actually run by L&G?

Alternatively, was he a member of another pension scheme earlier in his career - again, one run by L&G?

If the answer is no to both the above, sounds like a simple error. He needs to contact L&G and ask where they got the value from and what it represents.

We think he may have an old Prudential pension, but we need to check this out. It wouldn't be worth much I don't think.

Would the L&G be responsible for paying his annual pension when he does retire, only we have had no correspondence from them about this aspect of his pension.

xylophone

https://forums.moneysavingexpert.com/showthread.php?p=70646855#post70646855

My husband is 59 this year and has 14 years service, he has been advised by his employer that they are closing the Defined Benefits Pension Plan as of 1.1.17.

Husbands company closed his old work save pension on the 31st March 2017 and enrolled him into a Stakeholder Pension.

Is there some confusion?
Worksave seems to be an L&G DC plan?

https://www.legalandgeneral.com/employer/files/workplace-pensions/_resources/files/members-booklet.pdf

Up to 2017, did your husband have both a DB Scheme and perhaps an AVC through Legal and General?

If your husband does have a deferred Defined Benefits Pension and that pension was offering £8500 pa at age 65 then the value would be far in excess of the £30,000 that would permit a transfer into a DC scheme without the advice of a Pension Transfer Specialist.

Does your husband have the Scheme Booklet for the pre 2017 pension?
Do you have the statement of deferred benefits to hand?

What exactly does it say?

Has your husband obtained a state pension forecast?

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

bsmm228

xylophone wrote: »

https://forums.moneysavingexpert.com/showthread.php?p=70646855#post70646855





Is there some confusion?
Worksave seems to be an L&G DC plan?

https://www.legalandgeneral.com/employer/files/workplace-pensions/_resources/files/members-booklet.pdf

Up to 2017, did your husband have both a DB Scheme and perhaps an AVC through Legal and General?

If your husband does have a deferred Defined Benefits Pension and that pension was offering £8500 pa at age 65 then the value would be far in excess of the £30,000 that would permit a transfer into a DC scheme without the advice of a Pension Transfer Specialist.

Does your husband have the Scheme Booklet for the pre 2017 pension?
Do you have the statement of deferred benefits to hand?

What exactly does it say?

Has your husband obtained a state pension forecast?

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

Hi

Sorry no wrong wording, it wasn't a Work Save scheme it was a Defined Benefit Scheme (was confused then and still am now )

No he definitely didn't or doesn't have an AVC with L&G.

I don't think we have the scheme booklet for the old scheme, I will look through all his paperwork, however, I do have an estimated Benefits Statement as at 31/12/2016 and a Preserved Benefit Statement issued on the close of the plan. What would you want me to quote?

I've not got a quote for his state pension, I will do that.

On going through all his paperwork I have now established that Capita are the administrators of the scheme and would contact him six months prior to his NRA, so that answers that question.

I'm just confused with this sum that L&G are quoting.

xylophone

Preserved Benefit Statement issued on the close of the plan.

Then we have established that your husband does indeed have a deferred defined benefits pension - the scheme is administered by Capita. What does his statement of preserved benefits say?

Although he is still working for the company, in terms of the DB scheme, the deferred members of the scheme are "early leavers" - see

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

He left after 2011 but his scheme still offers revaluation in deferment at
RPI capped at 5% a year, which is more generous than statutory revaluation.

Your husband's deferred pension is a "safeguarded benefit" and as the value of the benefit is certainly greater than £30,000 - therefore he could not simply agree to transferring the benefit to the stakeholder plan (even if he wanted to) - he would be required to take the advice of a Pension Transfer Specialist.

Under the circumstances I too am baffled by L&G's reference to a frozen pension valued at £17,765.05.

Is there any chance that before he became eligible for the DB Scheme he was in an L&G DC plan?

Or is there any chance that an earlier pension plan was transferred to L&G?

If not, I can only suggest that your husband telephones L&G to enquire what the sum in question relates to.

And do get him to check his SP forecast - you might like to check on your own as well if appropriate.

Come back and let us know the answer!

ex-pat_scot

The way i read this is as follows:

1. there is an old DB scheme that closed to future accrual on 31.3.2017, and which was worth £8500 PA.

2. from 1 April 2017 there is a replacement DC scheme in operation, into which he and the company have been contributing. The value of this is £17000

3. the company are moving DC scheme provider, and wish to know if your husband wants to leave his DC pot where it is, or transfer across into the new DC provider.

If the above is correct, then there's no "swindling" involved.
The company has a duty of care to ensure that the DC provider is fit for purpose and provides the best option for scheme members, hence the switch of provider.
There should be no risk in switching or staying. Your choice should depend on the following:
- admin costs. Some providers are more expensive.
- fund selection. the current or new provider might have different funds to select, which may not be to your requirement (frankly, most have a broad spread of funds and risk classes, so unless you have a very specific requirement then you should probably be adequately catered for)
- ease of administration. Unless you switch, you will have your money in separate pots, and keeping track of the totals, the investment choices etc is a little laborious.

bsmm228

Hi

I've now been able to get more information from L&G. It would seem that from the 1.4.17 it would appear that a Stakeholder Pension Plan was set up, on the Pension Benefit Statement it quotes - closed scheme. The value of his pension post at 17/10/19 was £19,652.90, obviously increased from the £17k figure. Then on the 1 November 2018 a Work Save Pension Plan was set up, and his pension pot value at 20/9/19 is £10,105.06. So it would seem he does have 2 separate pension pots with L&G, which he was not aware of. Should we transfer the stakeholder pension pot into the Work Save pension pot. Still isn't going to generate a big pension as he's only got 5 years to accumulate it and both him and his employer are paying the max in.

Hubby wants to reduce his hours, is this likely to have a significant impact on his final pension? Should he consider releasing his Deferred Benefits Pension to make up the shortfall in salary? Or should we just leave everything alone and wait for his 65th birthday in 2.5 years time?

xylophone

That is clearer.

He has a deferred DB pension. This was closed 31 March 2017.

1 April 2017 his company set up a Stakeholder Pension Plan with L&G and contributed on an enhanced basis up to 1 Nov 2018 when this plan was closed in favour of

a Worksave Pension Plan also with L&G and this is the pension to which your husband and his employer (on an enhanced basis) are currently contributing.

He has the option to transfer the closed L&G Stakeholder into the open L&G Worksave.

The value of the closed Stakeholder is currently c £19,652.90.
The value of the open Worksave is currently c£10,105.06.

Your husband could look at the charges in both - it may well be that the newer plan is cheaper so it may well be worth considering the transfer in on the basis of costs and administrative simplicity.

I an assuming that the Normal Scheme Pension Age of his deferred DB Scheme is 65. Your husband has only two and a half years before reaching this age so any actuarial reduction for taking it early might be relatively modest but any reduction means a lower pension for life so possibly not a good option.

You do mention an old Prudential Pension Plan.

He needs to check the position in regard to this.

If he is able to take this pension now, perhaps that would be sufficient to allow him to work fewer hours as he approaches his planned retirement age?