Calculation method changed on db pension for early retirement

Thrugelmir

toolateforsums said:

Thrugelmir said:

hyubh said:

toolateforsums said:

From the trustee secretary: -

'On checking your file and reworking the calculations, done when XXXXXXXX were the administrator, it is clear that they based the Early retirement pensions on your estimated pension at Normal Retirement Date and then reduced it by the 4%.

 

YYYYYYYY, as the new administrators, have challenged this method and their administration and calculation system was set up under instruction from the Actuary to revalue only to the early retirement date. The rules of the scheme are not clear but do imply that that revaluation is to normal retirement date which is most unusual.'

 

Clearly a change in the calculation method and a significant one since changing scheme administrators.

It appears this trustee secretary has been taking tips from recent defenders of Boris Johnson. What the new administrator thinks would save money on implementing the scheme is neither here nor there, ditto whether the rules of the scheme are 'most unusual' or not. I'd ask the trustee to reconsider, and if they don't, raise a formal complaint (IDRP) about the (apparently acknowledged) recalculation contrary to established understanding of scheme rules...

Not a question of saving money. More a question of the solvency of the scheme at the current time to meet it's projected future liabilities. Future funding being entirely dependent upon on the scheme sponsor . 

https://www.thepensionsregulator.gov.uk/en/document-library/codes-of-practice/code-3-funding-defined-benefits-/#3b9aa4771dbb428f8bde6e829c3d3a6c

The scheme sponor is very solvent and has a repayment plan to fill the pension defecit over 10 years , reviewed every three years when a full valuation is done.

If the scheme sponsor was very solvent there'd be no need for a 10 year plan to address the deficit that already exists. High levels of inflation aren't going to make addressing the deficit any easy. 

toolateforsums

Thrugelmir said:

toolateforsums said:

Thrugelmir said:

hyubh said:

toolateforsums said:

From the trustee secretary: -

'On checking your file and reworking the calculations, done when XXXXXXXX were the administrator, it is clear that they based the Early retirement pensions on your estimated pension at Normal Retirement Date and then reduced it by the 4%.

 

YYYYYYYY, as the new administrators, have challenged this method and their administration and calculation system was set up under instruction from the Actuary to revalue only to the early retirement date. The rules of the scheme are not clear but do imply that that revaluation is to normal retirement date which is most unusual.'

 

Clearly a change in the calculation method and a significant one since changing scheme administrators.

It appears this trustee secretary has been taking tips from recent defenders of Boris Johnson. What the new administrator thinks would save money on implementing the scheme is neither here nor there, ditto whether the rules of the scheme are 'most unusual' or not. I'd ask the trustee to reconsider, and if they don't, raise a formal complaint (IDRP) about the (apparently acknowledged) recalculation contrary to established understanding of scheme rules...

Not a question of saving money. More a question of the solvency of the scheme at the current time to meet it's projected future liabilities. Future funding being entirely dependent upon on the scheme sponsor . 

https://www.thepensionsregulator.gov.uk/en/document-library/codes-of-practice/code-3-funding-defined-benefits-/#3b9aa4771dbb428f8bde6e829c3d3a6c

The scheme sponor is very solvent and has a repayment plan to fill the pension defecit over 10 years , reviewed every three years when a full valuation is done.

If the scheme sponsor was very solvent there'd be no need for a 10 year plan to address the deficit that already exists. High levels of inflation aren't going to make addressing the deficit any easy. 

The scheme is in defecit , but with a very solvent company who are required to provide a defecit reduction plan by the PPF I believe? They may be insolvent in 10 years!

ian16527

'YYYYYYYY, as the new administrators, have challenged this method and their administration and calculation system was set up under instruction from the Actuary to revalue only to the early retirement date. The rules of the scheme are not clear but do imply that that revaluation is to normal retirement date which is most unusual.'

I have just taken my DB pension early and this was the method they used, i.e. revalued from  leaving date to early retirement date.

The difference does seems a large amount so in the first instance did it also assume that you continued in the scheme till NRD, rather than just the RPI/CPI increments from leaving date.

toolateforsums

ian16527 said:

'YYYYYYYY, as the new administrators, have challenged this method and their administration and calculation system was set up under instruction from the Actuary to revalue only to the early retirement date. The rules of the scheme are not clear but do imply that that revaluation is to normal retirement date which is most unusual.'

I have just taken my DB pension early and this was the method they used, i.e. revalued from  leaving date to early retirement date.

The difference does seems a large amount so in the first instance did it also assume that you continued in the scheme till NRD, rather than just the RPI/CPI increments from leaving date.

what % reduction did they apply to yours ?

For mine it was RPI to NRD from date of being deferred and then a 4% reduction pa to actual retirement age.

ian16527

toolateforsums said:

ian16527 said:

'YYYYYYYY, as the new administrators, have challenged this method and their administration and calculation system was set up under instruction from the Actuary to revalue only to the early retirement date. The rules of the scheme are not clear but do imply that that revaluation is to normal retirement date which is most unusual.'

I have just taken my DB pension early and this was the method they used, i.e. revalued from  leaving date to early retirement date.

The difference does seems a large amount so in the first instance did it also assume that you continued in the scheme till NRD, rather than just the RPI/CPI increments from leaving date.

what % reduction did they apply to yours ?

For mine it was RPI to NRD from date of being deferred and then a 4% reduction pa to actual retirement age

It was more than 4% - somewhere near 5% but changes with age of retirement 
The RPI increase is 5% before NRD and after for non GMP pension.

Thrugelmir

toolateforsums said:

Thrugelmir said:

toolateforsums said:

Thrugelmir said:

hyubh said:

toolateforsums said:

From the trustee secretary: -

'On checking your file and reworking the calculations, done when XXXXXXXX were the administrator, it is clear that they based the Early retirement pensions on your estimated pension at Normal Retirement Date and then reduced it by the 4%.

 

YYYYYYYY, as the new administrators, have challenged this method and their administration and calculation system was set up under instruction from the Actuary to revalue only to the early retirement date. The rules of the scheme are not clear but do imply that that revaluation is to normal retirement date which is most unusual.'

 

Clearly a change in the calculation method and a significant one since changing scheme administrators.

It appears this trustee secretary has been taking tips from recent defenders of Boris Johnson. What the new administrator thinks would save money on implementing the scheme is neither here nor there, ditto whether the rules of the scheme are 'most unusual' or not. I'd ask the trustee to reconsider, and if they don't, raise a formal complaint (IDRP) about the (apparently acknowledged) recalculation contrary to established understanding of scheme rules...

Not a question of saving money. More a question of the solvency of the scheme at the current time to meet it's projected future liabilities. Future funding being entirely dependent upon on the scheme sponsor . 

https://www.thepensionsregulator.gov.uk/en/document-library/codes-of-practice/code-3-funding-defined-benefits-/#3b9aa4771dbb428f8bde6e829c3d3a6c

The scheme sponor is very solvent and has a repayment plan to fill the pension defecit over 10 years , reviewed every three years when a full valuation is done.

If the scheme sponsor was very solvent there'd be no need for a 10 year plan to address the deficit that already exists. High levels of inflation aren't going to make addressing the deficit any easy. 

The scheme is in defecit , but with a very solvent company who are required to provide a defecit reduction plan by the PPF I believe? They may be insolvent in 10 years!

Simply looking at the matter from a macro level and the scheme as a whole. Very different to your micro view where you want the biggest share of the available pie possible. 

Albermarle

ian16527 said:

toolateforsums said:

ian16527 said:

'YYYYYYYY, as the new administrators, have challenged this method and their administration and calculation system was set up under instruction from the Actuary to revalue only to the early retirement date. The rules of the scheme are not clear but do imply that that revaluation is to normal retirement date which is most unusual.'

I have just taken my DB pension early and this was the method they used, i.e. revalued from  leaving date to early retirement date.

The difference does seems a large amount so in the first instance did it also assume that you continued in the scheme till NRD, rather than just the RPI/CPI increments from leaving date.

what % reduction did they apply to yours ?

For mine it was RPI to NRD from date of being deferred and then a 4% reduction pa to actual retirement age

It was more than 4% - somewhere near 5% but changes with age of retirement 
The RPI increase is 5% before NRD and after for non GMP pension.

On a previous thread it was discussed that one of the big  public sector pensions did not reduce each year by the same amount for retiring before NRD . So as you say it can be that the average % pa reduction can change with some schemes , depending on how many years early is being calculated .

toolateforsums

Thrugelmir said:

toolateforsums said:

Thrugelmir said:

toolateforsums said:

Thrugelmir said:

hyubh said:

toolateforsums said:

From the trustee secretary: -

'On checking your file and reworking the calculations, done when XXXXXXXX were the administrator, it is clear that they based the Early retirement pensions on your estimated pension at Normal Retirement Date and then reduced it by the 4%.

 

YYYYYYYY, as the new administrators, have challenged this method and their administration and calculation system was set up under instruction from the Actuary to revalue only to the early retirement date. The rules of the scheme are not clear but do imply that that revaluation is to normal retirement date which is most unusual.'

 

Clearly a change in the calculation method and a significant one since changing scheme administrators.

It appears this trustee secretary has been taking tips from recent defenders of Boris Johnson. What the new administrator thinks would save money on implementing the scheme is neither here nor there, ditto whether the rules of the scheme are 'most unusual' or not. I'd ask the trustee to reconsider, and if they don't, raise a formal complaint (IDRP) about the (apparently acknowledged) recalculation contrary to established understanding of scheme rules...

Not a question of saving money. More a question of the solvency of the scheme at the current time to meet it's projected future liabilities. Future funding being entirely dependent upon on the scheme sponsor . 

https://www.thepensionsregulator.gov.uk/en/document-library/codes-of-practice/code-3-funding-defined-benefits-/#3b9aa4771dbb428f8bde6e829c3d3a6c

The scheme sponor is very solvent and has a repayment plan to fill the pension defecit over 10 years , reviewed every three years when a full valuation is done.

If the scheme sponsor was very solvent there'd be no need for a 10 year plan to address the deficit that already exists. High levels of inflation aren't going to make addressing the deficit any easy. 

The scheme is in defecit , but with a very solvent company who are required to provide a defecit reduction plan by the PPF I believe? They may be insolvent in 10 years!

Simply looking at the matter from a macro level and the scheme as a whole. Very different to your micro view where you want the biggest share of the available pie possible. 

I want what i signed up for when I joined the scheme 30 years ago and is promised according to the schemes rules.The same as other coleagues who have retired earlier than me . Nothing more , and as per my original quotation from the original administrators!

xylophone

I don't have site of rule 4.8 i'm afraid

Ask the administrator for a copy of the rules.

Thrugelmir

toolateforsums said:

Thrugelmir said:

toolateforsums said:

Thrugelmir said:

toolateforsums said:

Thrugelmir said:

hyubh said:

toolateforsums said:

From the trustee secretary: -

'On checking your file and reworking the calculations, done when XXXXXXXX were the administrator, it is clear that they based the Early retirement pensions on your estimated pension at Normal Retirement Date and then reduced it by the 4%.

 

YYYYYYYY, as the new administrators, have challenged this method and their administration and calculation system was set up under instruction from the Actuary to revalue only to the early retirement date. The rules of the scheme are not clear but do imply that that revaluation is to normal retirement date which is most unusual.'

 

Clearly a change in the calculation method and a significant one since changing scheme administrators.

It appears this trustee secretary has been taking tips from recent defenders of Boris Johnson. What the new administrator thinks would save money on implementing the scheme is neither here nor there, ditto whether the rules of the scheme are 'most unusual' or not. I'd ask the trustee to reconsider, and if they don't, raise a formal complaint (IDRP) about the (apparently acknowledged) recalculation contrary to established understanding of scheme rules...

Not a question of saving money. More a question of the solvency of the scheme at the current time to meet it's projected future liabilities. Future funding being entirely dependent upon on the scheme sponsor . 

https://www.thepensionsregulator.gov.uk/en/document-library/codes-of-practice/code-3-funding-defined-benefits-/#3b9aa4771dbb428f8bde6e829c3d3a6c

The scheme sponor is very solvent and has a repayment plan to fill the pension defecit over 10 years , reviewed every three years when a full valuation is done.

If the scheme sponsor was very solvent there'd be no need for a 10 year plan to address the deficit that already exists. High levels of inflation aren't going to make addressing the deficit any easy. 

The scheme is in defecit , but with a very solvent company who are required to provide a defecit reduction plan by the PPF I believe? They may be insolvent in 10 years!

Simply looking at the matter from a macro level and the scheme as a whole. Very different to your micro view where you want the biggest share of the available pie possible. 

I want what i signed up for when I joined the scheme 30 years ago and is promised according to the schemes rules.The same as other coleagues who have retired earlier than me . Nothing more , and as per my original quotation from the original administrators!

Stay to NRA and you will receive your full benefits. Nothing else is guaranteed as has been explained previously. 

For information.

London, 1 December 2021

 

Mercer’s Pensions Risk Survey data shows that the accounting deficit of defined benefit (DB) pension schemes and other post-retirement benefit plans for the UK’s 350 largest listed companies rose by £10bn over the course of November, standing at £104bn at the end of the month, an increase from £94bn at the end of October. The increase was driven by a £31bn increase in liabilities from £931bn at 29 October 2021 to £962bn at the end of November caused by a fall in corporate bond yields and an increase in market expectations of inflation. Asset values increased to £858bn compared to £837bn at the end of October.

Tess Page, UK Wealth Trustee Leader at Mercer, said: “The impact on markets of the new Omicron variant served to highlight that the pandemic is not yet over. Alongside this fresh uncertainty, inflation remains a hot topic with significant increases observed and potentially more to come. Whilst some inflation drivers such as supply chain issues and reopening price pressures are arguably “temporary”, others may be longer term.  As a pandemic-fatigued nation heads towards the Christmas break, this was a month in which unhedged assets again failed to keep pace with liabilities – risk management should be high on the agenda for all schemes in 2022”

 

Inflation has since been projected to be higher and less transitory. There's a squeeze coming.