Defined benefit pension- why reducing between 65 and State Pension age

cfdmaxted

Hi, I’ve been searching on internet and cannot find an explanation 
I have known for years that my defined benefit final salary pension will be reducing when I get to 65 until
my new state pension age ( 67.5 for me) 
I took early retirement a couple of years back so don’t have easy access to company pension people to ask

Why is his happening? I know it’s something to do with opting out of SERPS but can’t get my head around why it should be. 

I’m also now unsure how much it will reduce by. So as I’m planning for future I’m sort of guessing based on last figures I was given a few years ago. It’s a significant drop of a few thousand £ that my income will drop by before state pension kicks in. Is there a way of calculating this for myself? Does it change depending on state pension levels by time I retire?

  I do have a figure in my state pension estimate on line from government around my equivalent opt out pension , not sure if that’ll help me 

is there anyone who could shed some light on this for me please 

Marcon

cfdmaxted said:

Hi, I’ve been searching on internet and cannot find an explanation 
I have known for years that my defined benefit final salary pension will be reducing when I get to 65 until
my new state pension age ( 67.5 for me) 
I took early retirement a couple of years back so don’t have easy access to company pension people to ask

Why is his happening? I know it’s something to do with opting out of SERPS but can’t get my head around why it should be. 

I’m also now unsure how much it will reduce by. So as I’m planning for future I’m sort of guessing based on last figures I was given a few years ago. It’s a significant drop of a few thousand £ that my income will drop by before state pension kicks in. Is there a way of calculating this for myself? Does it change depending on state pension levels by time I retire?

  I do have a figure in my state pension estimate on line from government around my equivalent opt out pension , not sure if that’ll help me 

is there anyone who could shed some light on this for me please 

Yes - your pension scheme administrators. Contact them and ask for confirmation of what will happen - nobody here can guess (and it might be better news than you fear!).

xylophone

This reduction is unlikely to have anything to do with having been contracted out of SERPS.

It is more likely that  the  scheme operated as described in this link.

https://researchbriefings.files.parliament.uk/documents/SN01121/SN01121.pdf


Until 6/4/2010, females became eligible for SP at age 60 while men became eligible at age 65 - this started to change as from that date.

Scheme Guides  published before this date would often show age 60/65 as the age at which the state pension reduction/abatement/clawback/integration would operate but as far as I can gather, some at least were rewritten to show simply SPA rather than a specific age.

Are you sure that the reduction will apply at age 65? Have you checked the latest version of the scheme guide/checked with the administrator?

xylophone

https://forums.moneysavingexpert.com/discussion/comment/79170469/#Comment_79170469

might be of interest.

SouthCoastBoy

Not sure what applies in your case, as said previously the best action would be to ask the pension administrator.

I can comment in my wife's case, she has a db pension that she takes at 60 which has an enhanced rate until aged 65. It was set at 65 as that was the state pension age,  they have never amended the enhanced rate in line with state pension age so between 65 and 67 she will have the non enhanced pension and no state pension. Then at 67 non enhanced rate and state pension. 

Reading between the lines I think the idea of having the pension front loaded was to help employees retire at 60. In her case there is no benefit in deferring.

xylophone

I can comment in my wife's case, she has a db pension that she takes at 60 which has an enhanced rate 

A "bridging pension"? Well explained here by the Irish Pension Authority.

An additional pension benefit paid between the date of retirement and some later date when it will reduce or be discontinued. The most common type of bridging pension is paid in the interval between the date of retirement and the date an individual qualifies for a State pension where the calculation of the pension involves a State pension offset, but members retire before the State pension becomes payable.

Marcon

All this is just speculation. OP simply needs to contact the scheme's administrators and get a correct answer based on the facts.