Pension Protection Fund

Unusre

Hello and thanks in advance for any information i receive back.
I am 56 years old and have a pension in the fund that i can take now, i am asking if i am better taking it now or waiting till i am 65.
If i take it now i can get a one off payment of £6090 tax free plus £79.61 per week.
If i wait till i am 65 I can get a one of payment of £6830 tax free plus £90.38 per week.
I figure if i live to 90 i will get more if i take it now rather than wait till 65.
Am i right or wrong.

Thanks 

molerat

The reduction is not massive, roughly 1.3% per year so it seems reasonable to take it now if it means retiring early.  The bigger question is why do you want to take it now and what other income do you have ?

Unusre

Thank you for the reply.
The reason i am thinking about taking it now is because i have been on furlough and now going to go on to the new scheme, so it will help.
The only income i have is the new government scheme so about 70% of my wages.
I also have a work pension for when i am 67 and the state pension when i am 67.
Sorry for being ignorant but if i take it now it runs until i die.
Thanks.

xylophone

This is a deferred DB pension presumably.
How does it increase when it comes into payment?

Tealblue

xylophone said:

This is a deferred DB pension presumably.
How does it increase when it comes into payment?

I think you might have missed the title of the question - it's in the PPF, so standard PPF increases apply.

Notepad_Phil

Tealblue said:

xylophone said:

This is a deferred DB pension presumably.
How does it increase when it comes into payment?

I think you might have missed the title of the question - it's in the PPF, so standard PPF increases apply.

But presumably if the old scheme had very poor inflationary increases then the PPF would simply continue with them rather than increase them? e.g. my one and only DB pension will have some GMP increases when it starts, but the main body of the pension relies on discretionary increases and they've not been added for umpteen years

Marcon

Notepad_Phil said:

Tealblue said:

xylophone said:

This is a deferred DB pension presumably.
How does it increase when it comes into payment?

I think you might have missed the title of the question - it's in the PPF, so standard PPF increases apply.

But presumably if the old scheme had very poor inflationary increases then the PPF would simply continue with them rather than increase them? e.g. my one and only DB pension will have some GMP increases when it starts, but the main body of the pension relies on discretionary increases and they've not been added for umpteen years

If the main body of your pension relies wholly on discretionary increases, it must have been built up before 1997. Taken from the PPF's website:

How we increase your compensation is set by law. Any part of your compensation [PPF uses the term 'compensation' rather than 'pension'] derived from pensionable service before 6 April 1997 won’t increase in payment.

From April 1997, scheme had to increase pensions in excess of the GMP:

• pension built up from 6 April 1997 is increased in line with the consumer prices index (CPI) or 5%, whichever is lower
• any pension built up from 6 April 2005 is increased in line with the consumer prices index (CPI) or 2.5%, whichever is lower.

Taken from the PPF's website:

But any part of your compensation derived from pensionable service on or after 6 April 1997 may increase annually. Increases to compensation payments are applied on 1 January each year. As we no longer issue paper payslips, you won’t now be notified in advance of any increase you may be entitled to. But all your payslips are available to view online. 

The annual increase is set in line with the change in the Consumer Prices Index (CPI) up to a maximum of 2.5 per cent. In the year to May 2019 the CPI rose by 2.0 per cent, and we have therefore used this figure in our calculations on 1 January 2020.

You’ll get a proportionate increase in your first year of retirement if you’ve been receiving compensation from us for less than 12 months.

Notepad_Phil

Marcon said:

Notepad_Phil said:

Tealblue said:

xylophone said:

This is a deferred DB pension presumably.
How does it increase when it comes into payment?

I think you might have missed the title of the question - it's in the PPF, so standard PPF increases apply.

But presumably if the old scheme had very poor inflationary increases then the PPF would simply continue with them rather than increase them? e.g. my one and only DB pension will have some GMP increases when it starts, but the main body of the pension relies on discretionary increases and they've not been added for umpteen years

If the main body of your pension relies wholly on discretionary increases, it must have been built up before 1997. Taken from the PPF's website:

How we increase your compensation is set by law. Any part of your compensation [PPF uses the term 'compensation' rather than 'pension'] derived from pensionable service before 6 April 1997 won’t increase in payment.

From April 1997, scheme had to increase pensions in excess of the GMP:

• pension built up from 6 April 1997 is increased in line with the consumer prices index (CPI) or 5%, whichever is lower
• any pension built up from 6 April 2005 is increased in line with the consumer prices index (CPI) or 2.5%, whichever is lower.

Taken from the PPF's website:

But any part of your compensation derived from pensionable service on or after 6 April 1997 may increase annually. Increases to compensation payments are applied on 1 January each year. As we no longer issue paper payslips, you won’t now be notified in advance of any increase you may be entitled to. But all your payslips are available to view online. 

The annual increase is set in line with the change in the Consumer Prices Index (CPI) up to a maximum of 2.5 per cent. In the year to May 2019 the CPI rose by 2.0 per cent, and we have therefore used this figure in our calculations on 1 January 2020.

You’ll get a proportionate increase in your first year of retirement if you’ve been receiving compensation from us for less than 12 months.

Yes I left that company pre-97. I take it that means that even the post 88 GMP inflationary increases would not be paid if it ever went into the PPF?

Unusre

Thank you all for the responses.
So the bottom line is i would be as well taking it just now rather than waiting.
Thanks again..

garmeg

If your deferred pension goes into the PPF, because it is deemed to be compensation and not (technically) a pension any more, does it use any LTA when it comes into payment?

Marcon

garmeg said:

If your deferred pension goes into the PPF, because it is deemed to be compensation and not (technically) a pension any more, does it use any LTA when it comes into payment?

Yes it does, calculated in the same way as if it were 'a pension' (which it is, just in disguise!).