Boots Pension defined benefit

Savermum8818

I am really confused and don’t know if I have any way to challenge my pension forecast.
I left the Boots Pension Scheme in 1997 and in August 2022 was given a projected value of around £4,500 if I took the pension in 2035 and £3,293 in 2030.

I was wondering if I should take it at age 55 in 2025. The projection for this was £2,300. 

You used to be able to take the Boots pension at age 60 with no reduction (I think) which is now no longer the case. It’s now 65.

I asked for a projection this year and they don’t do that at the moment as they are transferring to an online projection site. However , they told me my actual value of pension at 65 is now £2,700 and if I took it early it would be reduced down from that figure. I was told it includes 5 years of reductions that didn’t use to be the case before the sale of the Pension Scheme to Legal and General.Boots want to offload the pension liability as they want to sell the company. So if I was 59 and 11 months, and wanted to take it at 60 where there used to be no reduction now there are 5 years of reductions and I wouldn’t be able to retire.

How can people plan for their retirement when the goalposts are changed overnight? I know figures are only projections but how can I have a projected value of £4,500 last year when I reach 65 and now I’m told the the value is £2,700 at 65 and adjusted downwards from that if I retire early? I have print outs of the projections but I don’t understand why it’s dropped so much . Can anyone explain? Thank you

Silvertabby

Unless you were on a very high salary,  £4,500 sounds a bit high for just 5 years service.

It may be that your original statement was wrong, but has since been corrected.  The only way to find out for sure would be to contact them to ask.

Marcon

Silvertabby said:

Unless you were on a very high salary,  £4,500 sounds a bit high for just 5 years service.

It may be that your original statement was wrong, but has since been corrected.  The only way to find out for sure would be to contact them to ask.

I'm not sure OP had only 5 years of service unless I'm misreading the post. The references to '5 years' are surely to the five years between 60 and 65 which OP says have not been subject to early retirement reduction factors in the past?

Hoenir

Projections are simply estimates based on present circumstances and on future trends. Inflation cannot even be forecast accurately month to month. Let alone over 5 or 10 years ahead. Nor the health of the overall group pension scheme. 

Once the pension is transferred to Legal and General and you have your own individual plan. The impact of early taking of the benefits should become more transparent. 

Savermum8818

Marcon said:

Silvertabby said:

Unless you were on a very high salary,  £4,500 sounds a bit high for just 5 years service.

It may be that your original statement was wrong, but has since been corrected.  The only way to find out for sure would be to contact them to ask.

I'm not sure OP had only 5 years of service unless I'm misreading the post. The references to '5 years' are surely to the five years between 60 and 65 which OP says have not been subject to early retirement reduction factors in the past?

Thanks for replying the 5 years means between 60 and 65. I worked from 1989 to 1997 and ended my time there on a practice managers salary. 

Marcon

Savermum8818 said:

Marcon said:

Silvertabby said:

Unless you were on a very high salary,  £4,500 sounds a bit high for just 5 years service.

It may be that your original statement was wrong, but has since been corrected.  The only way to find out for sure would be to contact them to ask.

I'm not sure OP had only 5 years of service unless I'm misreading the post. The references to '5 years' are surely to the five years between 60 and 65 which OP says have not been subject to early retirement reduction factors in the past?

Thanks for replying the 5 years means between 60 and 65. I worked from 1989 to 1997 and ended my time there on a practice managers salary. 

Any idea what that salary was, please? And does any of your paperwork show a split showing 'GMP' and 'non-GMP' pension - that would help to assess whether the statement showing £4.5K might be incorrect.

Pat38493

Hoenir said:

Projections are simply estimates based on present circumstances and on future trends. Inflation cannot even be forecast accurately month to month. Let alone over 5 or 10 years ahead. Nor the health of the overall group pension scheme. 

Once the pension is transferred to Legal and General and you have your own individual plan. The impact of early taking of the benefits should become more transparent. 

It's a DB pension I think.  If it's a deferred DB pension, then in theory the administrators should be able to tell you a correct amount at your normal retirement date.  In practice this can be complicated if there are different parts to the pension based on different legislation in force at that time.  Also - we've seen some threads on these boards where administrators simply got the calculation wrong.

Another aspect could be that discretionary parts of the scheme that the trustees could grant previously were removed - however I don't think this should impact on an estimate at the normal retirement age of the pension.

Another one could be - did the Boots pension administrators provide estimates that were uplifted for future estimated inflation, and the new admin is providing real terms numbers?

Unfortunately we've also seen posts where the pension was paid out wrongly and the administrators came back later on asking for money back from the member - hopefully this is rare.

bjorn_toby_wilde

Do you have a figure for your "preserved pension" on any of your statements?  I have some past statements from Boots which show a figure for preserved pension.  Normally that would increase every year to account for inflation, although it may be capped, and I don't believe it should never go below that.

As others have said, don't take what you were told at face value.  I have another pension which is managed by Capita and six months before retirement I was sent a much lower annual figure than any I had previously been sent and it was explained away as "changes in actuarial factors by the Trustees". After an initial panic I challenged this and eventually got an admission that no such actuarial change had happened, they had simply miscalculated.  I would push them for a definitive number, but I imagine they're overwhelmed at the moment as Boots Pensions are a small operation and the letters that have been going out this week are bound to have triggered a lot of enquiries.

Marcon

Pat38493 said:

Hoenir said:

Projections are simply estimates based on present circumstances and on future trends. Inflation cannot even be forecast accurately month to month. Let alone over 5 or 10 years ahead. Nor the health of the overall group pension scheme. 

Once the pension is transferred to Legal and General and you have your own individual plan. The impact of early taking of the benefits should become more transparent. 

It's a DB pension I think.  If it's a deferred DB pension, then in theory the administrators should be able to tell you a correct amount at your normal retirement date.  

Not ahead of time they can't (and OP is talking about projections), unless they're psychic and can predict future inflation!

xylophone

This was a DB scheme and  it was "contracted out" of SERPS.

Therefore you should have a GMP as part of your pension.


The scheme was obliged to pay you at least your revalued GMP at GMP age (60 F/65M) and to increase it in payment by up to 3% CPI.

When you left Boots, you should have been given a statement of deferred benefits at date of leaving the scheme.

Given your dates, it should show post 88 GMP and excess over GMP.

See here (which shows statutory position) 

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

It  appears that that "Fixed Rate Revaluation" is used to revalue the GMP.

Have you received any information from the Administrator on how and when the scheme will equalise GMPs?

See

https://www.grove-pensions.co.uk/defined-benefit-pension-transfer/schemes/boots/

which states that benefits may be taken unreduced from age 60 BUT this is not the scheme's own guide - do you have a copy of the guide?

With regard to the buy out, you should not be in any worse a position as a result of this.

What information have you received about the buy out?

Were you a member of a contracted out scheme before employment with Boots or after employment with Boots?

Have you obtained a state pension forecast? What exactly does it say?

What is the COPE shown (page 2).

https://www.gov.uk/check-state-pension

Marcon

xylophone said:

With regard to the buy out, you should not be in any worse a position as a result of this.

See https://forums.moneysavingexpert.com/discussion/6488072/boots-and-coop-offload-workplace-pensions-to-insurers/p1

Members cannot be worse off in terms of benefits promised under the rules.