Late retirement factors

Gary1984

I'm sorry for your loss. However, it sounds like the Trustees answered your query correctly and have applied the scheme rules. From their point of view everything has been done correctly. Time to move on I think.

Tommyjw

retroman62 said:

"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.

Have to say I don't quite understand your point about the inflationary increase. 

You would have received a 2023 increase, a "whole year" increase when someone's deferred pension enters into a new calender year, there is no such thing as a partial year increase for a couple months

There is a reason in periods of high inflation if people are aiming to take their DB pension towards the end of a year, people will suggest taking it in January, the cumulative inflation increase will be higher.

retroman62

So what they did, or at least I think they did (they've never explained it) , was to update the inflation increase on the main component on the basis of drawing the pension in January rather than October. But there is also a provision in the scheme that, in the first year after drawing the pension, in June when the pension is revalued for inflation, any inflation increase (this year 5% at the cap) will be added pro-rata from when pension is drawn. So when`I got my pension increase in June, it was pro-rata back to January rather than last October, so a smaller sum. 

The small component operates differently. That is strictly on a calendar year basis, January to January - no pro-rata. Capped at 5%, until you draw pension, then capped at 2.5%. That was why `I wanted to delay until January. Big mistake.

Pat38493

Were you retiring directly from employment with the same employer or was the pension deferred for a period of time (i.e. you had officially left the company and the scheme)?

Part of the confusion here could be that I believe the inflationary increases for pensions in deferment are applied according the number of entire calendar years since the anniversary date of original deferment, and not your birthday.  These adjustments are usually done from a set of statutory tables which are published each November (unless you scheme has more generous rules that exceeded this).

You don't give specific numbers, but it could also be that if another round of increases has been applied between your original intended date, and the revised date, you will actually end up better off in the long run because that higher amount will be carried forward into every future increase you will get.  If you had taken the benefits in October you would have not got that inflation increase and your starting number would have been lower and forever capped at 2.5%pa.  This might actually mean you were better off in the long run.

Outside of inflation, I too am a bit confused about why you think that moving your retirement date 3 months later, would have increased the pension by the same amount as an annual inflation uplift, even if late retirement factors had been applicable.  I guess this depends on the exact rules of the scheme, but I doubt that retiring one day before or after your birthday would give an entire year of late retirement factors in most schemes?  I think it's pro-rated?