Old Tesco DB Pension, what's it worth?

IAMIAM

I have requested and received a figure stating I could get £4900 per annum from age 60 (the date I set).

In the leaflets, it says it will increase each year up to a maximum of 5% (RPI/CPI/ Capped at 5%)

Does this mean if I plug 4900 into a compound interest calculator with 5% per annum and it quotes £11k for in 20 ish years time, that is actually what I could get per annum instead...ie double the value they have stated today.

Dazed_and_C0nfused

IAMIAM said:

I have requested and received a figure stating I could get £4900 per annum from age 60 (the date I set).

In the leaflets, it says it will increase each year up to a maximum of 5% (RPI/CPI/ Capped at 5%)

Does this mean if I plug 4900 into a compound interest calculator with 5% per annum and it quotes £11k for in 20 ish years time, that is actually what I could get per annum instead...ie double the value they have stated today.

It all depends on what basis they have provided the current quote.

Was this the pension accrued to when you left the scheme?

Or the pension accrued to when you left the scheme revalued to now?

Or the pension accrued to when you left the scheme revalued to NPA?

Something else?

IAMIAM

cant find this anywhere

Pat38493

Is this their real terms estimate of what you would get when retiring at 60?

What is the normal retirement age of the pension? 

Is the pension deferred (i.e. you are no longer an employee paying in to the scheme)?

If you provide some more details about the estimate and the pension it will be easier to comment - typically deferred DB pensions are revalued by cumulative RPI then CPI from a certain year, up to the normal retirement date.  There will then be various factors applied for retiring earlier or later than the normal date.

Once the pension is in payment, typically it will have annual increases according to the current rate of inflation, but often capped at a certain %.  However this depends on the details of your scheme.

Dazed_and_C0nfused

IAMIAM said:

cant find this anywhere

I'd assumed it was a deferred pension, is that correct?

If if is do you have a figure from when you originally lef the scheme?

xylophone

Presumably you were given a statement of deferred benefits on leaving the scheme.

What does it show?

When did you leave the scheme?

Age 60 is under Scheme Pension Age? 

Marcon

IAMIAM said:

I have requested and received a figure stating I could get £4900 per annum from age 60 (the date I set).

In the leaflets, it says it will increase each year up to a maximum of 5% (RPI/CPI/ Capped at 5%)

Does this mean if I plug 4900 into a compound interest calculator with 5% per annum and it quotes £11k for in 20 ish years time, that is actually what I could get per annum instead...ie double the value they have stated today.

What will increase each year - your deferred pension (assuming that's what it is, given your reference in the thread's title to an 'old' pension), or the pension once in payment?

If £4,900 from age 60 is a projection, the document you've received should indicate whether or not that takes revaluation in deferment (ie annual increases) into account.

Not nearly enough info to give a helpful (accurate!) answer.

hyubh

IAMIAM said:

I have requested and received a figure stating I could get £4900 per annum from age 60 (the date I set).

In the leaflets, it says it will increase each year up to a maximum of 5% (RPI/CPI/ Capped at 5%)

Does this mean if I plug 4900 into a compound interest calculator with 5% per annum and it quotes £11k for in 20 ish years time, that is actually what I could get per annum instead...ie double the value they have stated today.

Personally I don't think that's a good way of looking at it. Revaluation in a DB scheme isn't a sort of ersatz investment return, instead its purpose is to maintain the pension's value in real terms, to a 'reasonable' extent. What that extent exactly is depends, though it sounds like yours is statutory (S52a orders) with the higher revaluation option. So were inflation to continue at its current levels, your pension would lose value in real times by retirement; however, were inflation to soon fall and stay on average 5% or less, then your pension would maintain its current value.