Delay taking DB pension??

Clueless56

Please could I ask a related question, @Silvertabby?  
You said in an earlier response:
"As far as the LGPS is concerned, as long as you have been deferred for at least 12 months then, yes, it would make sense to further defer until after next April's cost of living increase has been applied.

If taken before then, the pension in payment will increase -  but not the lump sum already taken.

This applies not only to any automatic lump sum (pre 2008 LGPS service) but also any extra commuted lump sum, as the commuted sum will be higher if taken from the increased pension."

I had a deferred pre-2008 LGPS pension come into payment last year.  When the Pension Administrator wrote to me about the amounts and payment dates etc, he ended the letter:

"You may be due inflation on your retirement grant for the period 12 April to xx August 2021. I am unable to assess and pay this amount until April 2022, when the inflation factors become effective. If there is any inflation due, I will pay it in your April 2022 pension instalment. "

In April 2022 I received both an increased pension and a one-off payment described as 'PI on lump sum'.

I'm struggling to marry up what happened to me (not complaining!) and what you have stated above.  What have I misunderstood (this time) please?

Many thanks, 
Clueless56

Silvertabby

Clueless56 said:

Please could I ask a related question, @Silvertabby?  
You said in an earlier response:
"As far as the LGPS is concerned, as long as you have been deferred for at least 12 months then, yes, it would make sense to further defer until after next April's cost of living increase has been applied.

If taken before then, the pension in payment will increase -  but not the lump sum already taken.

This applies not only to any automatic lump sum (pre 2008 LGPS service) but also any extra commuted lump sum, as the commuted sum will be higher if taken from the increased pension."

I had a deferred pre-2008 LGPS pension come into payment last year.  When the Pension Administrator wrote to me about the amounts and payment dates etc, he ended the letter:

"You may be due inflation on your retirement grant for the period 12 April to xx August 2021. I am unable to assess and pay this amount until April 2022, when the inflation factors become effective. If there is any inflation due, I will pay it in your April 2022 pension instalment. "

In April 2022 I received both an increased pension and a one-off payment described as 'PI on lump sum'.

I'm struggling to marry up what happened to me (not complaining!) and what you have stated above.  What have I misunderstood (this time) please?

Many thanks, 
Clueless56

You left your LGPS post before 2008 and then took payment of your deferred benefits last August?

Odd, because the April 2021 CPI increase of 0.5% was known well before it was due to be applied.  The only thing I can think of is that your LGPS had some software problems, possibly only in relation to older deferred records.  Rather than run the (tiny?) arrears through as soon as the problem was resolved, it may have been easier/cheaper to run them after the 2022 increase.  It's certainly not the norm, but sounds like they got there in the end!

Clueless56

Thank you @Silvertabby, that makes sense.  I didn't like to ask at the time because (a) he managed to overdeliver by getting my lump sum and first payment to me in August's pay run rather than September's as I had been expecting, and (b) the LA was going through yet another reorganisation with a lot of people being made redundant and I knew the pensions admins were run ragged at the time.  As you say, they got there in the end!

Thank you again x

spaniel101

@Clueless56

I think this is the 'In Year' Pensions Increase (CPI Sept 2021 3.10%, applied April 2022) to pension and the lump sum individually, on Second Bite, from Deferred 12 April 2021 to xx August 2021    /    to Pension-In-Payment  August 2021 through to 31st March 2022, apportioned to each.


See;  Public Service Pensions Increase: 2023 as posted earlier by @hugheskevi,  Multiplier tables for Preserved Pensions and Preserved Lump Sums, specifically Annex C,   B. (ii);

							ANNEX C
	INCREASES IN LUMP SUMS
	A.	Deferred lump sums which become payable on or after
		11 April 2022.
	These are eligible for the same increase as pensions which begin on the
	same date as the lump sum begins (See Annex B )
	B.	Deferred lump sums which became payable in the period
		12 April 2021 to 11 April 2022.
	(i)	If the lump sum became payable before 12 April 2021, it may have been
		eligible for increases under the Pensions (Increase) Act 1971.
		These should have been paid with the lump sum at the time it
		became payable. A further increase is payable on xxx according
		to the table below.
	(ii)	In years where there is an increase, if the lump sum began on or
		after April of the previous financial year (in this case it would have been
		12 April 2021) an increase is payable in April (11 April 2022
		in this case) according to the table below.
	In calculating the length of period, count complete months starting with
	the beginning date (or 12 April 2021 if later), and then count the remaining
	days, excluding the payable date itself –
	eg 25 May to 7 July is 1 month (25 May to 24 June) and 12 days
	(25 June to 6 July).
	Length of Period						Percentage Increase
		16 days	to	1 month	15 days		0.26
	1 month	16 days	to	2 months	15 days		0.52
	2 months	16 days	to	3 months	15 days		0.78
	3 months	16 days	to	4 months	15 days		1.03
	4 months	16 days	to	5 months	15 days		1.29
	5 months	16 days	to	6 months	15 days		1.55
	6 months	16 days	to	7 months	15 days		1.81
	7 months	16 days	to	8 months	15 days		2.07
	8 months	16 days	to	9 months	15 days		2.33
	9 months	16 days	to	10 months	15 days		2.58
	10 months	16 days	to	11 months	15 days		2.84
	11 months	16 days	to	12 months	15 days		3.10
	It is not possible for the period to exceed 11 months 29 days
	if correctly calculated.

Clueless56

Thank you @spaniel101, that explains it!  

Scrounger

Scrounger said:

Regarding classic; I have today emailed  myCSP asking for clarification of how the 2023 increase will be applied the classic pension & lump sum (when pension taken prior to 10 April 23) and if there is a 'second bite' lump sum etc.

Once I receive a response I'll update with what they have to say.

Scrounger

I have now received a reply from myCSP and they have informed me that the classic pension lump sum does not increase after scheme age (60)  :'(  :

"Thank you for your recent enquiry.

You are able to defer your pension up to a maximum age of 75.

If you choose to defer your pension, it is important to note that the normal pension age for your scheme is 60. Your annual pension attracts pension increases from your 55th birthday which continue past your scheme age. However any lump sum payments due only attract increases up to your scheme age.

Your pension will be paid in arrears and backdated to your 60th birthday. You annual pension will increase in value each year in line with inflation. However the arrears payment will be calculated as if the pension had been claimed at 60, reflecting the correct inflation rates applicable.

It is also worth noting that whilst the lump sum is tax free, the pension does count towards your taxable income. So if you receive a large arrears payment, it will count towards one single year’s taxable income.

If you have any other questions please let us know."


Comments invited...


Scrounger