DB pension forecast query

Leigh-Anne_60

After nearly a year of trying to access, finally got details/access of a DB pension from employment that ended nearly 20 years ago

Employment was only 7 years long, at the very early stages of my working life, so pleasantly surprised by the figures (all subsequent pensions are DC)

But not sure on a couple of aspects, hoping some of you wiser ones can advise
1/ obviously the general consensus is never to transfer out DB pots due to protected benefits, obviously the age is one, death benefits/spousal pension is another (I have no spouse) What other protected benefits are there to think of?
2/ there seems to be two figures mentioned, £3,897 & £2,394.  Is the former a projected figure or at todays figure
3/ at NRD I would be 62, but GMP says 60.  What do these mean? I’m sure back along in the office talking about this scheme an earlier age of 55 was bandied around 

Sorry is some of this is obvious, having not seen these projections before and being used to just DC pots, it’s all a bit alien

eastcorkram

I can see the £2394.00 figure. Where are you seeing the £3897 one??
Ah. Don't mind me! Short sighted !

hara____

The 2394 value is 'at date of leaving' so as of 2004. The higher value must be after uprating to today, for whatever the rules are for deferred members.

Edited to add: as it says, the NRD is the date at which you can take the pension without any reduction for early payment. There is probably also an 'earliest payment' date/age but it doesn't seem to be mentioned here. 

Pat38493

Another confusing DB quote.

I would normally expect that “Pension at date of leaving” would be the deferred amount of the pension as of the date you left the company stated in 1997 nominal terms.

The £3897 figure appears to be the pension you would get in today’s money if you were at normal retirement age, after increasing the number for intervening inflation.  

When you leave a DB scheme you get a “deferred” amount which is then adjusted for inflation each year.  This sounds simple but in reality it’s more complicated because there are often different rules that has to be applied to different parts of the scheme, depending on what dates you were a member.  

GMP age 60 means that if your pension has a part of it that is Guaranteed Minimum pension resulting from contracting out of NI, then the retirement age of that small part of the pension is 60 and not 65 (either because you are female or because your scheme chose to treat everybody as if they had been female after legal rulings back in the day),  so if you are taking the pension at 65, that part would have been adjusted upwards.

Fundamentally the £3897 number is the key number as that is the pension you would actually get if you were retiring today at normal pension age.  If you are allowed to take the pension earlier e.g. 55, it will be adjusted downwards based on early retirement factors.

I am not sure what the “Guaranteed transfer value” is - the wording implies that it’s the CETV transfer value to move the pension to another provider, but the amount seems pretty low to me.  If that’s what it is, I wouldn’t accept it (especially as you would have to pay several thousand pounds for advice to do so).  

xylophone

As you joined this scheme in July 1997, you do not have a GMP as part of your pension.

The GMP arrangement operated between 6/4/78 and 5/4/1997.

When you left the scheme, your pension became deferred.

The value at DOL was £2394.

Since then, your pension has been revaluing and will continue to revalue in deferment.

https://www.barnett-waddingham.co.uk/comment-insight/blog/revaluation-for-early-leavers/

Above shows statutory revaluation but your scheme may be more generous.

Normal Scheme Pension Age is 62 but it may be possible to put the pension into payment earlier than this, depending on scheme rules.

If a pension is put into payment earlier than NSPA it will usually be reduced for early payment (Early Retirement Factor).

Conversely, if put into payment later than  NSPA, it may be increased by a Late Retirement Factor, if required by the rules of the scheme.

Once the pension comes into payment, there will usually be an annual increase - the scheme guide should give information on this point.

The Guaranteed Transfer Value  (CETV) is the value of the pension at 1 September 2023  if you were transferring out to another pension scheme - the guarantee may only be valid for a certain period. See

https://www.moneyhelper.org.uk/en/pensions-and-retirement/building-your-retirement-pot/transferring-your-defined-benefit-pension

Pat38493

xylophone said:

The Guaranteed Transfer Value  (CETV) is the value of the pension at 1 September 2023  if you were transferring out to another pension scheme - the guarantee may only be valid for a certain period. See

But doesn't this number look way too low?  It's less than the LTA calculated value at 20x the pension, and it's a lot less than current annuity costs shown on another running thread - would cost more like 100K to get these benefits in an RPI linked annuity?

QrizB

Pat38493 said:

xylophone said:

The Guaranteed Transfer Value  (CETV) is the value of the pension at 1 September 2023  if you were transferring out to another pension scheme - the guarantee may only be valid for a certain period. See

But doesn't this number look way too low?

No, not really. Values have fallen.

In 2021 my DB pension (very roughly 5x the size of the OPs) had an illustrative CETV of £488k. Today the online tool is suggesting £291k.

Pat38493 said:

... would cost more like 100K to get these benefits in an RPI linked annuity?

There's likely to be a cap on annual increases in the OP's pension.

xylophone

But doesn't this number look way too low?  

It does look low but  the letter clearly refers to the option of transferring the value of your benefits to another registered plan.

Further down it refers to

 transfer entitlement

and to 

guaranteed transfer value

Then see 

https://www.moneyhelper.org.uk/en/pensions-and-retirement/building-your-retirement-pot/transferring-your-defined-benefit-pension

The transfer value is guaranteed for three months. You must have left your scheme and no longer be an active member for this to apply. If you’re still an active member, the guaranteed transfer value won’t apply.

I don't see what else it can be except the CETV?

The OP can check with the administrator.

Phossy

Your pension has grown at approx 3.1% / year since you stopped contributing 16 years ago - that's the difference between the original 2394 number and the 3897.

Leigh-Anne_60

Thanks for taking the time to respond, appreciated 😊. Wouldn’t look to transfer out anyway, so CETV not of concern xx