RHM pension valuation fallen

RSVP2000

Hello,

My partner as part of her divorce settlement in 2004, received a proportion of her ex-husbands pension within the RHM group.

She considered taking the pension in 2018 when the benefits she would have received were either option A,  a £12,102 p.a pension or option B, a £9,096 p.a pension with a £60,645 lump sum. She decided at that time she would continue working and let the benefits increase another couple of years.

Today she received the new figures, to her horror the figures they have sent have dropped dramatically.
Now being, option A, a pension of £8,252 or option B, a £5,899 p.a pension with a £39,291 lump sum. She has been in touch and they are going to review this.
 The question and big concern is can the figures, in a her position as divorcee in the Defined Benefit scheme, go down like this?

As you can imagine it is a big worry for her.

Brynsam

RSVP2000 said:

Hello,

My partner as part of her divorce settlement in 2004, received a proportion of her ex-husbands pension within the RHM group.

She considered taking the pension in 2018 when the benefits she would have received were either option A,  a £12,102 p.a pension or option B, a £9,096 p.a pension with a £60,645 lump sum. She decided at that time she would continue working and let the benefits increase another couple of years.

Today she received the new figures, to her horror the figures they have sent have dropped dramatically.
Now being, option A, a pension of £8,252 or option B, a £5,899 p.a pension with a £39,291 lump sum. She has been in touch and they are going to review this.
 The question and big concern is can the figures, in a her position as divorcee in the Defined Benefit scheme, go down like this?

As you can imagine it is a big worry for her.

Sounds very odd - and more like a mistake than anything, unless the figures she received in 2018 weren't in fact the 'take now' figures, but the amount she would receive at the scheme's normal retirement date. Little you can do except wait for the scheme to get back to her.

Silvertabby

Brynsam's second explanation is the most likely.  Your partner's normal retirement age will be either 65 or the same as her State pension age, with early payment reductions should the pension be taken before this.

How old is your partner now?

Linton

Fixed annuity rates, especially for people retiring earlier than 65, appear to have dropped by about 15% since 2018.  I havent been able to find the figures but would guess that inflation linked annuities have dropped by more.  Is the pension fixed or index linked?

Brynsam

Linton said:

Fixed annuity rates, especially for people retiring earlier than 65, appear to have dropped by about 15% since 2018.  I havent been able to find the figures but would guess that inflation linked annuities have dropped by more.  Is the pension fixed or index linked?

This is a DB scheme where the benefits are still within the scheme, so annuity rates aren't going to explain this.

RSVP2000

Thanks for the replies.
 Looking through the 2018 figures and these were to actually start drawing the pension from 26/12/2018.

Thrugelmir

RSVP2000 said:

Thanks for the replies.
 Looking through the 2018 figures and these were to actually start drawing the pension from 26/12/2018.

How many years to normal scheme retirement age (65?)...

JoeCrystal

No idea how the pension provision for divorce works but is it possible that the ex-husband already started to draw his pension actuarially reduced before the normal retirement age and thus affecting her proportion.

Thrugelmir

JoeCrystal said:

No idea how the pension provision for divorce works but is it possible that the ex-husband already started to draw his pension actuarially reduced before the normal retirement age and thus affecting her proportion.

The notional pot/entitlement is split. 

Linton

Brynsam said:

Linton said:

Fixed annuity rates, especially for people retiring earlier than 65, appear to have dropped by about 15% since 2018.  I havent been able to find the figures but would guess that inflation linked annuities have dropped by more.  Is the pension fixed or index linked?

This is a DB scheme where the benefits are still within the scheme, so annuity rates aren't going to explain this.

The same things which affect annuity rates also affect the valuation of DBs.  So presumably they will affect the conversion of a a proportion of the value at a particular time in the past back to a pension.

ffacoffipawb

If under normal retirement age, two more possibilities:

(1) Early retirement factors have been made more penal
(2) Scheme is in a bigger deficit than 2018 and early retirement pensions have been reduced as a result.

Third possibility I suppose ...
(3) One or both pension quotations are actually wrong.