Occupational Pensions Revaluation Order 2022

Pat38493

AlwaysLearnin said:

Zagfles (and SnowMan) is (are) correct.  Your pension provider/administrator will have a split of amounts you accrued in each period, to which the relevant revaluation percentage(s) will be applied during deferral.

Thanks and apologies to @zagfles - always happy to be proved wrong and as I stated above, I guess I was not aware of this aspect because my pension was forced deferred in 2008.

I went back and checked some documents from my DB pension this morning and in my pension data it says that revaluations are done "based on RPI for periods of deferment up to 2010 and CPI for periods after that".  As far as I understood this is exactly what this OPRO actually does so I would only need the one number of 47.3%?  (I've probably got that wrong too!).
  
So going back to the OP question, in practical purposes they would have deferred value pre April 2009 and a deferred value post 2009.

In the example I posited above, they would apply 40.3% to the first figure and 37.9% to the second figure?

That being the case, I guess @BennyBrownBoy would then have to confirm whether he has been given this split estimate for his DB pension, and his exact deferral date.

hyubh

Pat38493 said:

What you appear to be saying is that if you retired after 1st April 2009, your pension admin has to store a value for how much pension service you obtained before that date, and how much service after that date.

The 'usual' way of recording this is for the active to deferred calculation to look at the service details held and create separate preserved pension 'elements' for different splits of service as required (the sum of the elements = the total preserved pension on leaving). So depending on the age of the record you may have separate elements for non-revaluing pre-85 excess, revaluing pre-97 excess (no statutory increases once in payment), post-97 excess, post-05 excess (where lower rate revaluation is used), and pre- and post-88 GMP (and indeed, the post-88 GMP split into three for equalisation purposes). And those are just the generic splits (though not every scheme will need them), there may also be scheme-specific one.

Of course, it may the case that splits aren't stored - but if not, that will only be a legacy of the fact annual benefit statements aren't a statutory obligation, and providing on-demand estimates for deferreds is a relatively new phenomenon. Private sector DB admin can also be a pretty manual affair due to the lack of scale.

Pat38493

hyubh said:

Pat38493 said:

What you appear to be saying is that if you retired after 1st April 2009, your pension admin has to store a value for how much pension service you obtained before that date, and how much service after that date.

The 'usual' way of recording this is for the active to deferred calculation to look at the service details held and create separate preserved pension 'elements' for different splits of service as required (the sum of the elements = the total preserved pension on leaving). So depending on the age of the record you may have separate elements for non-revaluing pre-85 excess, revaluing pre-97 excess (no statutory increases once in payment), post-97 excess, post-05 excess (where lower rate revaluation is used), and pre- and post-88 GMP (and indeed, the post-88 GMP split into three for equalisation purposes). And those are just the generic splits (though not every scheme will need them), there may also be scheme-specific one.

Of course, it may the case that splits aren't stored - but if not, that will only be a legacy of the fact annual benefit statements aren't a statutory obligation, and providing on-demand estimates for deferreds is a relatively new phenomenon. Private sector DB admin can also be a pretty manual affair due to the lack of scale.

It's probably different for each provider I guess but for mine I have a table that they sent me which has some (but not all) of the splits you mention above.  Some of the categories are nil in my case anyway.  It does not mention anything about pre or post 2009 splits, but since the whole scheme was put into deferment in 2008 I guess that category isn't needed.

It also actually does say "statutory non GMP increases prior to retirement" against all of the categories that still have a remaining value after GMP conversion and in the small print below it says that this means "RIP up to 2010 and CPI after 2010 subject to a maximum of 5% per annum".  I take this to mean that I am always using the left hand column if I am trying to do a rough estimate for mine.

hyubh

Pat38493 said:

It's probably different for each provider I guess but for mine I have a table that they sent me which has some (but not all) of the splits you mention above.  Some of the categories are nil in my case anyway.  It does not mention anything about pre or post 2009 splits, but since the whole scheme was put into deferment in 2008 I guess that category isn't needed.

Correct. And the scheme may still do higher S52a revaluation for post-09 service anyway - statutory minimums are just that, minimums.

It also actually does say "statutory non GMP increases prior to retirement" against all of the categories that still have a remaining value after GMP conversion and in the small print below it says that this means "RIP up to 2010 and CPI after 2010 subject to a maximum of 5% per annum".  I take this to mean that I am always using the left hand column if I am trying to do a rough estimate for mine.

That's higher revaluation, yes. 'Statutory non GMP increases prior to retirement' will mean Section 52a orders in general (typically the term 'increases' is used only once the pension comes into payment, but 'statutory non GMP increases prior to retirement' can only mean revaluation prior to that).

BennyBrownBoy

zagfles said:

Pat38493 said:

zagfles said:

When did you leave the scheme? It's only service from April 2009 that uses the lower revaluation % so likely only applies to a very small amount of your pension if any.

What do you mean exactly there by April specifically?

What I understood from other threads is that OP would need to know whether their pension scheme rules capped the increase at 5% or at 2.5% post 2009, which should be stated in the pension fact sheet?  Something like “RPI then CPI Capped 5%”.

Then, the number to use is based on the number of whole years since deferral date, so if OPs pension was on the 5% column and was deferred 1st June 2010 for example:
When putting into payment between 1/1/23 and 31/5/23 they would use the 38% figure but if putting into payment from 01/06/23 to 31/12/23 they would use the 42.2%.  

I am not clear what a hard coded April date has to do with it unless I misunderstood something before.

Service from April 2009, like I said.

So if the OP worked from 2000 to 2010, the vast majority of his pension would revalue at the higher %.

Thanks everyone for the replies.

If it helps further details are as follows:

Date of entering pensionable service: 1/4/93

Date of leaving pensionable service: 15/2/10   (i.e. date of deferment)

My pension contains a GMP element which revalues at 7.5%, however for the “excess”, non-GMP element, the scheme rules say the following:

Pre 06/04/2009 revaluation in line with CPI, up to a maximum of 5% p.a. compound.

Post 06/04/2009 revaluation in line with CPI, up to a maximum of 2.5% p.a. compound.

What impact does this information have on the % that must be used to revalue this portion of the pension for payment say in June 2023?

Many thanks.

Pat38493

BennyBrownBoy said:

zagfles said:

Pat38493 said:

zagfles said:

When did you leave the scheme? It's only service from April 2009 that uses the lower revaluation % so likely only applies to a very small amount of your pension if any.

What do you mean exactly there by April specifically?

What I understood from other threads is that OP would need to know whether their pension scheme rules capped the increase at 5% or at 2.5% post 2009, which should be stated in the pension fact sheet?  Something like “RPI then CPI Capped 5%”.

Then, the number to use is based on the number of whole years since deferral date, so if OPs pension was on the 5% column and was deferred 1st June 2010 for example:
When putting into payment between 1/1/23 and 31/5/23 they would use the 38% figure but if putting into payment from 01/06/23 to 31/12/23 they would use the 42.2%.  

I am not clear what a hard coded April date has to do with it unless I misunderstood something before.

Service from April 2009, like I said.

So if the OP worked from 2000 to 2010, the vast majority of his pension would revalue at the higher %.

Thanks everyone for the replies.

If it helps further details are as follows:

Date of entering pensionable service: 1/4/93

Date of leaving pensionable service: 15/2/10   (i.e. date of deferment)

My pension contains a GMP element which revalues at 7.5%, however for the “excess”, non-GMP element, the scheme rules say the following:

Pre 06/04/2009 revaluation in line with CPI, up to a maximum of 5% p.a. compound.

Post 06/04/2009 revaluation in line with CPI, up to a maximum of 2.5% p.a. compound.

What impact does this information have on the % that must be used to revalue this portion of the pension for payment say in June 2023?

Many thanks.

Do you have the deferred value figure split by pre and post 2009?

If not you would have to ask them for he split to get a really good estimate.

However based on the discussion above, if you take the left hand side figure it will be pretty close but slightly too high as you only have 10 months of your total service after April 2009.

If you do have the split then I think you have to apply the left hand side figure for 2009 to the pre 2009 value and the right hand side figure for 2010 to the post 2009 value and add them up.  At least that would be my understanding based on the discussions above.  

Also you may know this already but the actual date that you are proposing to start taking the benefit affects which row you use as well because it’s based on whole years so if you take the benefit before 15th February in that year you have to use the next later row which is almost always going to leave you worse off.