Pension Company planning to move to "Full Buy Out"?

Stubod

Hi all,

I have a deferred DB pension which was originally transferred from an old employer, (long since gone), to a pension company called Vesuvius.

I have just had the annual review letter and they have advised that due to a positive funding position they are considering the option to move to a "full buy out"?

Just wondered what this meant in layman's terms? I had been considering taking a CETV as the transfer rate is around 34 time the annual pension, (which I don't think is index linked once started), and I was wondering if this would still be allowed post "buy out"?.

Thanks for any input...

Joey_Soap

I have a DB pension from ICI in payment. If it's like that one, it means the responsibility for running the fund and paying benefits until the last pensioner dies has been transferred to Legal and General, Scottish Widows and Blackrock. To me as a beneficiary, it is transparent and business as usual. It'sstill the ICI pension fund, benefits are unchanged. I have never heard of "Vesuvius", if it's something more than I described, then yes, you need to do more homework.

Albermarle

I do not know about the buy out but I think you need to get some clarity on this as a priority .
which I don't think is index linked once started
Whilst X 34 multiple is not unusual for an index linked pension , it would be very generous for a non index linked one.

Notepad_Phil

I think you may have quite a lot of GMP built up in that DB pension for your CETV multiple to be 34.

Post 88 GMP is index linked to a max of 3% and the percentage of it in your pension can get to high levels if your pension scheme uses fixed revaluation - e.g. my Post 88 GMP increases each year by 7% and so will comprise nearly half of my pension by the time I get to 65, so even though there is no other index-linking I'm still intending to keep my DB pension as the CETV is a lot smaller than yours at about 22 when I last looked.

Thrugelmir

With the "buy out". Your benefits may well be secured by an individual pension policy. The investment risk is then transfered to the insurance company. 

xylophone

I have a deferred DB pension which was originally transferred from an old employer, (long since gone), to a pension company called Vesuvius.

Do you mean that you are a deferred member of the Vesuvius Pension Plan?

https://www.vesuvius.com/en/responsibility/vesuvius-uk-pension-plan---statement-of-investment-principles.html
https://en.wikipedia.org/wiki/Vesuvius_plc

https://www.wearejust.co.uk/definedbenefit/trustees/buy-in-and-buy-out/

Do you have a scheme guide which gives details of the benefits payable by the scheme? 
What does it have to say about revaluation in deferment/indexation in payment?

Do you have a statement of deferred benefits on leaving the scheme showing any GMP/excess?


Have you obtained a CETV?

Joey_Soap

xylophone said:

I have a deferred DB pension which was originally transferred from an old employer, (long since gone), to a pension company called Vesuvius.

Do you mean that you are a deferred member of the Vesuvius Pension Plan?

https://www.vesuvius.com/en/responsibility/vesuvius-uk-pension-plan---statement-of-investment-principles.html
https://en.wikipedia.org/wiki/Vesuvius_plc

https://www.wearejust.co.uk/definedbenefit/trustees/buy-in-and-buy-out/

Do you have a scheme guide which gives details of the benefits payable by the scheme? 
What does it have to say about revaluation in deferment/indexation in payment?

Do you have a statement of deferred benefits on leaving the scheme showing any GMP/excess?


Have you obtained a CETV?

That's exactly the conclusion I came to yesterday when googling around this. It seems there are no pension providers with the name Vesuvius. However, Vesuvius PLC does look active in farming out pension provision.  Nothing to worry about in my experience.  Nothing will really change, I expect the entire thing to be transparent to the pensioner. Anyway, that's been my experience of similar circumstance.

Stubod

Hi all and thanks for the replies.

Most of the pension is pre 1988, hence the reason for no index linking, and I have had CETV's every year for the last few years, and they have always been around the 32/34 year mark. On the face of it, it seems like a no brainer to take it, but I am a little risk averse!

Brynsam

Stubod said:

Hi all and thanks for the replies.

Most of the pension is pre 1988, hence the reason for no index linking, and I have had CETV's every year for the last few years, and they have always been around the 32/34 year mark. On the face of it, it seems like a no brainer to take it, but I am a little risk averse!

If you are 'a little risk averse' then it isn't a no brainer (and for the record, with a DB transfer, it rarely is).