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Late retirement factors

retroman62
retroman62 Posts: 54 Forumite
Eighth Anniversary 10 Posts
I am in dispute with the scheme trustees of my occupational pension, and have reached the end of the Internal Resolution Disputes Procedure.

In July last year I asked for an alternative quote based on "deferring my pension" until January of this year, my pension otherwise being payable (under the terms of my redundancy) in October of last year. . I didn't use the words "late retirement factor", but when I received the quote, the increase in pension appeared to be equivalent to a late retirement factor being applied. That assumption was reinforced when I responded to the administrators of the scheme stating that I could see 'as a whole in general terms, the pension increases if I defer taking it until the 1st of January". 

Turns out that the increase was not due to a late retirement factor, but due to application of inflation, and my choice to delay my pension has turned out to be disastrous. Apparently under the terms of the scheme, there is no entitlement to a late retirement factor increase after age 60 even though there is for an early retirement factor against age 60.   I therefore appealed, but because I did not use the words "late retirement factor" in my request to reinstate my original retirement date, they have refused my appeal, and actually been very hard-nosed about it. At the time that I made the request in the first place, I was very distracted being away from my home providing constant care to my terminally ill father who died in the August. In their response, just received, they have dismissed that distraction as "regrettable but not the responsibility of the scheme". Nice!

Would be grateful for any advice or thoughts here, although I appreciate that this is not straightforward.

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Comments

  • Ayr_Rage
    Ayr_Rage Posts: 1,930 Forumite
    1,000 Posts Second Anniversary Photogenic Name Dropper
    edited 12 August 2023 at 2:02PM
    Sounds completely normal for an occupational pension scheme.

    If that is what the rules say then you cannot challenge them

    You can defer a state pension and get an increase.
  • Pat38493
    Pat38493 Posts: 3,123 Forumite
    Tenth Anniversary 1,000 Posts Name Dropper Combo Breaker
    Can  you elaborate on what you mean by it being "disastrous" - I might be misunderstanding, but it sounds like you were delaying your pension by 3 months, so even if late retirement factors were a part of the scheme, the difference would have been small.  Late retirement factors in most schemes, as far as I know, are not applied just because you have entered a new calendar year - there would be other locations and at best, the factor would be pro-rated down to 3 months.

    Is it more that you were expecting to get "back pay" for the months from October to January and that it not available?  If so that is not about late retirement factors, it is more about possibly you misunderstanding what would happen if you delay taking the pension.

    The other unfortunate thing about pensions is that the scheme providers are not allowed to give you "advice", so if your decision to delay your pension payment was actually a poor decision because you were just losing money for no reason, not only are the scheme under no obligation to point this out to you, they are actively not allowed to point it out because this might constitute "financial advice" (if you think that's silly, I would tend to agree, but I think that is nevertheless the situation in pensions law).

    Also, is your pension already in payment now and you are disputing the amount?

    On the other hand if the scheme failed to follow clear instructions from you, you might be entitled to some compensation, but even then it would probably be a small amount as it doesn't sound like you were severely financially affected as it seems like the pension payments are broadly what you were expecting, even if it's for a different reason than what you thought.
  • Tommyjw
    Tommyjw Posts: 220 Forumite
    Eighth Anniversary 100 Posts Name Dropper Combo Breaker
    What it sounds like you have is a pension with a general Normal Retirement age of after 60, say 65, but an allowance from the Trustee/Company to retire at age 60 without reduction (assume the redunancy benefit). Therefore, retiring between 60 and 65 doesnt see a Late Increase because you aren't going late in accordance with the Scheme rules and therefore you simply see the normal inflationary increases that you saw up to age 60 in the first place.

    I'm a bit confused about what the issue is and seemingly your benefits are justa s you expected but increased slightly due to inflation, rather than a late factor?

    I guarantee the inflationary icnrease you saw from delaying your retirement and receiving 2023 inflationary increase was higher than any 3 month Late Retirement factor would be.
  • retroman62
    retroman62 Posts: 54 Forumite
    Eighth Anniversary 10 Posts
    edited 12 August 2023 at 3:13PM
    To answer the questions, yes I have started drawing my pension and my loss is basically three months worth of pension. I am not disputing the amount. My reason for deferral until 1st January was because one component part of the occupational pension is capped at 5% inflation until the calendar year in which the pension is drawn at which point it is 2.5%. So a request driven by the current inflation rates together with the fact that my birthday,  unluckily for me, is towards the end of the calendar year. That component part was quite a small part of the pension, so I guess I was just trying to be too clever by half.

    Yes the second pension quote was increased because of inflation, but it's not a real increase because the pro rata increase for the pension if I had retired in October would've been larger when the annual review of inflation took place in June.

    When I got the second quote, that component part was actually unchanged (no inflation applied) but there was an overall increase in the amount of the pension, which I attributed to a late retirement factor, being the equivalent of three months pro rata. I accept that it was a mistaken assumption on my part, a genuine mistake, and as I say I was heavily distracted at the time. Looking after my dying father meant pension decisions were last thing on my mind, but what is so disappointing is the hard-nosed attitude by an organisation I worked for 35 years. 
  • "I guarantee the inflationary icnrease you saw from delaying your retirement and receiving 2023 inflationary increase was higher than any 3 month Late Retirement factor would be"

    Unfortunately it wasn't, it was exactly the same - hence my mistaken assumption. . The inflation increases are heavily capped.
  • Tommyjw
    Tommyjw Posts: 220 Forumite
    Eighth Anniversary 100 Posts Name Dropper Combo Breaker
    To answer the questions, yes I have started drawing my pension and my loss is basically three months worth of pension. My reason for deferral until 1st January was because one component part of the occupational is capped at 5% inflation until the calendar year in which the pension is drawn at which point it is 2.5%. So a request driven by the current inflation rates together with the fact that my birthday,  unluckily for me, is towards the end of the calendar year.

    When I got the second quote, that component part was actually unchanged (no inflation applied) but there was an overall increase in the amount of the pension, which I attributed to a late retirement factor, being the equivalent of three months pro rata. I accept that it was a mistaken assumption on my part, a genuine mistake, and as I say I was heavily distracted at the time. Looking after my dying father meant pension decisions were last thing on my mind, but what is so disappointing is the hard-nosed attitude by an organisation I worked for 35 years. 
    But you initiated the query to go in January in the first case knowing you'd be 'losing' three months of pension because you expected higher starting figures once they added the late increase you thought they'd give you. Where they have increased your options, and you're receviing higher pension by the sounds of it, but because of the inflationary increase. 

    So i'm still a bit confused what the actual issue is. The end result is the exact same, you wanted to retire later and receiving an increase for doing so, which youv'e got. 
  • Marcon
    Marcon Posts: 12,938 Forumite
    Eighth Anniversary 10,000 Posts Name Dropper Combo Breaker
    To answer the questions, yes I have started drawing my pension and my loss is basically three months worth of pension. 
    That's annoying, but possibly not 'disastrous' as your first post suggested.


    When I got the second quote, that component part was actually unchanged (no inflation applied) but there was an overall increase in the amount of the pension, which I attributed to a late retirement factor, being the equivalent of three months pro rata. I accept that it was a mistaken assumption on my part, a genuine mistake, and as I say I was heavily distracted at the time. Looking after my dying father meant pension decisions were last thing on my mind, but what is so disappointing is the hard-nosed attitude by an organisation I worked for 35 years. 
    The trustees are, absolutely correctly, applying the rules of the scheme and paying you the benefits to which you are entitled under those rules. You accept that it was an error on your part, so the trustees have done nothing wrong and have no scope to do anything else. It's possible that the rules give the employer scope to pay extra into the fund to give additional benefits (which is what you are requesting), but it would set a dangerous precedent for them to do so, even with your very long service and the difficult personal situation prevailing at the time you were taking decisions. That isn't being 'hard nosed' - it is being realistic.


    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • Thanks Marcon

    'That's annoying, but possibly not 'disastrous' as your first post suggested."

    Fair comment.

    "It's possible that the rules give the employer scope to pay extra into the fund to give additional benefits (which is what you are requesting), but it would set a dangerous precedent for them to do so, even with your very long service and the difficult personal situation prevailing at the time you were taking decisions. That isn't being 'hard nosed' - it is being realistic"

    No, that is not what I am requesting. When I realised that late retirement factors were not applicable, I requested that my pension be calculated back to a retirement date of October with the retrospective adjustments required. They were "hard-nosed" because they offered no compassion whatsoever in relation to my "lifetime event" distraction.
  • retroman62
    retroman62 Posts: 54 Forumite
    Eighth Anniversary 10 Posts
    edited 12 August 2023 at 4:00PM
    "But you initiated the query to go in January in the first case knowing you'd be 'losing' three months of pension because you expected higher starting figures once they added the late increase you thought they'd give you. Where they have increased your options, and you're receviing higher pension by the sounds of it, but because of the inflationary increase. 

    So i'm still a bit confused what the actual issue is. The end result is the exact same, you wanted to retire later and receiving an increase for doing so, which youv'e got"

    The end result is not the same. Although I received an inflationary increase, that inflation adjustment was for the period between October and December, and I would've received that increase anyway when inflation for that component was revalued in June.. In fact, it was that whole thing that misled me into believing I had received a late retirement factor. There was an inflation increase on that component, but not the component (which was the component I was trying to get a higher inflation increase by delaying to January). As there was no inflationary increase on that component, I assumed that the increase in the main component was not because of inflation either.

    I accept that I've made a mistake, that I was heavily distracted at the time, and that technically the trustees are probably within the rules. However, as a layperson not familiar with the precise technical jargon, I thought that what I asked for (Please see the top of this thread) was clear and the information I was then provided with was misleading.



  • Marcon
    Marcon Posts: 12,938 Forumite
    Eighth Anniversary 10,000 Posts Name Dropper Combo Breaker
    Thanks Marcon

    'That's annoying, but possibly not 'disastrous' as your first post suggested."

    Fair comment.

    "It's possible that the rules give the employer scope to pay extra into the fund to give additional benefits (which is what you are requesting), but it would set a dangerous precedent for them to do so, even with your very long service and the difficult personal situation prevailing at the time you were taking decisions. That isn't being 'hard nosed' - it is being realistic"

    No, that is not what I am requesting. When I realised that late retirement factors were not applicable, I requested that my pension be calculated back to a retirement date of October with the retrospective adjustments required. They were "hard-nosed" because they offered no compassion whatsoever in relation to my "lifetime event" distraction.
    But you are requesting higher benefits than those you are entitled to given your choice of retirement date.

    I don't think you'll get anywhere with pursuing that, but you obviously feel you've been badly treated in terms of the tone of the communications you received - something which will, I fear, continue to needle you. There is nothing to stop you writing to the trustees and making that point, so possibly do that? I don't think you'll get any 'result' in financial terms, but at least you'll feel you've had your say on that aspect.
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
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