Calculation method changed on db pension for early retirement

zagfles

toolateforsums said:

Dazed_and_C0nfused said:

Then the fun starts. I then asked for a new db quotation to take in just over a years time , and am told that they have changed the calculation. I would now only receive a pension of 14k PA as they have changed pension administrators who didn't like the way early retirement was calculated

Do you really mean they changed the calculation or was it that the original calculation is now believed to be wrong?

This sort of thing will be set by the scheme rules - have you checked those?

They have changed the calculation method. The trust deed and rules state :

'The Deferred Member’s pension under this Rule 4.9A shall be the deferred pension to which he or she would have been entitled to on Normal Retirement Date under Rule 4.8 (Deferred Pension) reduced by the Early Retirement Discount.  '

'The Early Retirement Discount which will apply initially, on and from 1 October 2011, until the Trustees determine otherwise (having had regard to the Actuary’s advice), will be 4% for each complete year that the payment of the deferred pension precedes Normal Retirement Date'

That is how my original quotation for 21k pa was calculated. Very clear in the rules.

So the rules look like they allow the Trustees to change the early retirement discount.

Chewbecca

Given £14k also happens to be the amount of the expected reduction (35 x 4% x 10 years), I would be very suspicious this is an admin error in the quote.

toolateforsums

zagfles said:

toolateforsums said:

Dazed_and_C0nfused said:

Then the fun starts. I then asked for a new db quotation to take in just over a years time , and am told that they have changed the calculation. I would now only receive a pension of 14k PA as they have changed pension administrators who didn't like the way early retirement was calculated

Do you really mean they changed the calculation or was it that the original calculation is now believed to be wrong?

This sort of thing will be set by the scheme rules - have you checked those?

They have changed the calculation method. The trust deed and rules state :

'The Deferred Member’s pension under this Rule 4.9A shall be the deferred pension to which he or she would have been entitled to on Normal Retirement Date under Rule 4.8 (Deferred Pension) reduced by the Early Retirement Discount.  '

'The Early Retirement Discount which will apply initially, on and from 1 October 2011, until the Trustees determine otherwise (having had regard to the Actuary’s advice), will be 4% for each complete year that the payment of the deferred pension precedes Normal Retirement Date'

That is how my original quotation for 21k pa was calculated. Very clear in the rules.

So the rules look like they allow the Trustees to change the early retirement discount.

I have checked and the 4% still applies for every year before NRD

Dazed_and_C0nfused

toolateforsums said:

zagfles said:

toolateforsums said:

Dazed_and_C0nfused said:

Then the fun starts. I then asked for a new db quotation to take in just over a years time , and am told that they have changed the calculation. I would now only receive a pension of 14k PA as they have changed pension administrators who didn't like the way early retirement was calculated

Do you really mean they changed the calculation or was it that the original calculation is now believed to be wrong?

This sort of thing will be set by the scheme rules - have you checked those?

They have changed the calculation method. The trust deed and rules state :

'The Deferred Member’s pension under this Rule 4.9A shall be the deferred pension to which he or she would have been entitled to on Normal Retirement Date under Rule 4.8 (Deferred Pension) reduced by the Early Retirement Discount.  '

'The Early Retirement Discount which will apply initially, on and from 1 October 2011, until the Trustees determine otherwise (having had regard to the Actuary’s advice), will be 4% for each complete year that the payment of the deferred pension precedes Normal Retirement Date'

That is how my original quotation for 21k pa was calculated. Very clear in the rules.

So the rules look like they allow the Trustees to change the early retirement discount.

I have checked and the 4% still applies for every year before NRD

Is this a deferred DB pension or one that you were still accruing additional pension?

Maybe the issue is with the starting point of the calculation not the actuarial reduction.

What was the initial 35k actually based on?

toolateforsums

It is a deferred pension. The 35k was my  calculated pension at NRD

ewaste

I believe some schemes have differing ERFs if a member is retiring from service while an active member of a scheme or claiming a deferred pension. Could that be one reason for the difference? 

If you don't mind telling us, which scheme is it?

Edited to add:- Along the lines of Marcons comment below. The first quote could have been made on the basis of active membership to age 55 then retirement from active membership. The second would have been based on claiming deferred rights you had accrued to age 53.

Essentially only the scheme admin will be able to explain the difference.

Marcon

Dazed_and_C0nfused said:

toolateforsums said:

zagfles said:

toolateforsums said:

Dazed_and_C0nfused said:

Then the fun starts. I then asked for a new db quotation to take in just over a years time , and am told that they have changed the calculation. I would now only receive a pension of 14k PA as they have changed pension administrators who didn't like the way early retirement was calculated

Do you really mean they changed the calculation or was it that the original calculation is now believed to be wrong?

This sort of thing will be set by the scheme rules - have you checked those?

They have changed the calculation method. The trust deed and rules state :

'The Deferred Member’s pension under this Rule 4.9A shall be the deferred pension to which he or she would have been entitled to on Normal Retirement Date under Rule 4.8 (Deferred Pension) reduced by the Early Retirement Discount.  '

'The Early Retirement Discount which will apply initially, on and from 1 October 2011, until the Trustees determine otherwise (having had regard to the Actuary’s advice), will be 4% for each complete year that the payment of the deferred pension precedes Normal Retirement Date'

That is how my original quotation for 21k pa was calculated. Very clear in the rules.

So the rules look like they allow the Trustees to change the early retirement discount.

I have checked and the 4% still applies for every year before NRD

Is this a deferred DB pension or one that you were still accruing additional pension?

Maybe the issue is with the starting point of the calculation not the actuarial reduction.

What was the initial 35k actually based on?

What's the betting:

• the first quote was based on revaluing (on a 'best guess') to NRD, then reducing that figure
• the current quote which was based on revaluation to the date on which OP asked for the quote, then reducing that figure?

Very clear in the rules that the Trustees can change the 4% after taking advice from the Actuary - but not at all clear which method is required to get to the starting (i.e. pre-discounted) figure.

On-the-coast

ewaste said:

I believe some schemes have differing ERFs if a member is retiring from service while an active member of a scheme or claiming a deferred pension. Could that be one reason for the difference? 

This is the way my db scheme works. 

If I took redundancy without being in a position to take pension at time of leaving then my early retirement factors would be less generous than the 4% stated in my scheme rules.  

Exactly how less generous would be explained when I asked to start drawing the pension, although trustees would be expected to treat me fairly. 

I intend to take my DB pension at NRD to avoid any surprises (and fund the in between years from savings - if I stop enjoying my job, and if I’ve saved enough)

Albermarle

Chewbecca said:

Given £14k also happens to be the amount of the expected reduction (35 x 4% x 10 years), I would be very suspicious this is an admin error in the quote.

I also wondered that . As with 4%pa  the reduction is 40% - leaving 60% of the pension to be paid .
The new calculation is a reduction of 60% .
Has someone just got the figures the wrong way around ? Not unheard of for pension administrators to make mistakes...

Although the OP said this 
I then asked for a new db quotation to take in just over a years time , and am told that they have changed the calculation. I would now only receive a pension of 14k PA as they have changed pension administrators who didn't like the way early retirement was calculated.

xylophone

What method was used to calculate that the pension would be £35,000 pa at Normal Scheme Retirement Age?