Trying to understand Deferred DB pension benefits (value)

carrspaints

Hi. I am trying to make sense of my deferred DB pension forecasts. (Deferred from September 30th, 2017)

Exactly 12 months ago, I requested an update on my deferred pension benefits. This came in at £11,516.10 a year, payable at normal retirement age. (65, or on the 1st Feb 2030)

I was curious to see what that value is today, 12-months later, given the rampant inflation going on. This shows "Plan pension at retirement" at £14,246.09 (normal retirement age). That is a significant increase in 12-months, which seems odd given how they apply increases to this pension policy, as below:

• A maximum of 5% per annum for your pension in respect of Pensionable Service before 6 April 2009;

• and A maximum of 2.5% per annum for your pension in respect of Pensionable Service after 5 April 2009.                     

The increases to the pension are calculated on a compound basis with the cap applied to each year of increase.

Have I missed something here? I mean I welcome the increase, but is it real given this huge jump from just 12-months back? Perhaps last years value does not factor in any increases but is the actual value as of September 2021, whereas today's value factors in increases? Stumped. Thanks

Dazed_and_C0nfused

Only the scheme administrator can say for certain but I wouldn't be surprised if the £11.5k value was what it was at deferment with the £14.2k taking into account all annual increases up to now?

Do you not have the value from when it was deferred?

p00hsticks

Are you sure that they realise that the pension is deferred and they haven;t included an additional years service in the latest one ?

carrspaints

The value of the pension at deferment date (30th September 2017) is £10,999.00

I would hope they realize the DB pension is deferred. It has a pension policy number, so not sure how they would get the clacs wrong.

I think what I am seeing are two different numbers. One is the value of the DB pension at the date of request, the other is perhaps a forecast that factors in anticipated increases from date of request until retirement date.

Marcon

carrspaints said:

The value of the pension at deferment date (30th September 2017) is £10,999.00

I would hope they realize the DB pension is deferred. It has a pension policy number, so not sure how they would get the clacs wrong.

I think what I am seeing are two different numbers. One is the value of the DB pension at the date of request, the other is perhaps a forecast that factors in anticipated increases from date of request until retirement date.

Read what you've just received very carefully (including those endless bits of small print) and it should tell you. "Should" doesn't equate to "definitely will" !

If in doubt, go back to the scheme administrators and ask them to clarify. 

xylophone

According posts in another thread

https://forums.moneysavingexpert.com/discussion/comment/79370930/#Comment_79370930

the OP was a member of the scheme between 2002 and 2017.

It appears from the post above that he was given a statement of deferred benefits at date of leaving

The value of the pension at deferment date (30th September 2017) is £10,999.00

- this would have been generated by the Administrator's system so it seems unlikely that there is any glitch regarding his deferred status.

  Regarding revaluation in  deferment, he has been advised by the Administrator

1. In broad terms these increases will usually be calculated using the statutory measure of inflation for the period from the date you left the Plan until the date you start to receive your pension. These increases are restricted to:

• A maximum of 5% per annum for your pension in respect of Pensionable Service before 6 April 2009;

• and A maximum of 2.5% per annum for your pension in respect of Pensionable Service after 5 April 2009.                     

The increases to the pension are calculated on a compound basis with the cap applied to each year of increase.

According to Barnett Waddingham

Social Security Act 1990

Leavers on or after 1 January 1991

Revaluation extended to cover the whole of the member's pension, in excess of the GMP.  Annual increase applicable was the increase in the Retail Price Index (RPI), capped at 5% (sometimes known as 5% Limited Price Indexation - LPI).

Pensions Act  2008

		Allowed schemes to reduce the revaluation percentage from RPI capped at 5% a year (as above) to RPI capped at 2.5% for pensions accrued after 6 April 2009. Pensions Act 2011 effective from 6 April 2011
		Consumer Prices Index (CPI) replaced RPI as the basis for the minimum statutory revaluation.  Rules for the pension scheme will determine whether this change was applied to benefits. The OP does not have a GMP.  He has PS both before and after 6/4/2009. He needs to check on whether RPI or CPI or a mixture of both is being used as the measure of inflation.