Final Salary Pension

Misteeq

Hi,

Sorry if this has been asked before, but can someone please explain how a Final Salary Pension is calculated please?

I worked for Eagle Star between 1995-2000 and only left as I was made redundant. Z Pen hold the pension fund which is a final salary pension.

My salary at the time of leaving was around £25,000.00. I have been a member of the scheme since 1995. I turn 55 in March 2028, which means I would have been a member of the scheme for a total of 33 years.

I'm not sure how to work out how much this will equate to in terms of a monthly income. I understand no one has the exact answer to this, but a rough idea would be helpful ! 

Many thanks  

Ayr_Rage

You will have 5 years worth of contributions, the years when you were employed and both you and your employer made contributions.

You became a deferred member when you ceased that employment.

You will have acquired a pension at whatever the accrual rate was, for instance is it was 60ths then you will have a pension on leaving of 5/60 x £25000 = £2083.33 pa

That should have been updated annually by whatever figure is used, CPI, RPI etc

The pension will be accessible at the normal retirement age for the scheme subject to any legislation, so you may not be able to get it at 55, more knowledgeable members will advise

Beddie

You cannot work it out yourself, you need to ask the pension administrators for an illustration at whatever age or ages you want to take it from.

Brie

You should get an annual benefit statement from the scheme administrators which should give you some idea of what you might be paid.  Have you kept in contact and given them your current address??

Tommyjw

Brie said:

You should get an annual benefit statement from the scheme administrators which should give you some idea of what you might be paid.  Have you kept in contact and given them your current address??

Rare for a deferred DB Scheme, they dont have to provide one so the majority (from my experience) don't do it to save costs. 

xylophone

Rare for a deferred DB Scheme, they dont have to provide one so the majority (from my experience) don't do it to save costs. 

Indeed.....

https://www.pensionfundsonline.co.uk/articles/how-to-get-ready-for-the-annual-pension-benefit-statement-iorp-ii

Defined benefit schemes, however, find themselves in a different situation, having never been compelled to send deferred members a personalised annual statement.

xylophone

I worked for Eagle Star between 1995-2000 and only left as I was made redundant. Z Pen hold the pension fund which is a final salary pension.

The Eagle Star Staff Pension Scheme was part of a merger (2001 (?))  which formed 

Zurich Financial Services UK Pension Scheme "ZPen".

Is there a Pensions Portal to which deferred members may have access?

Do you have a copy of the Scheme Guide?

When you left, were you given a statement of deferred benefits?

If "contracted out" (which it almost certainly was), the statement should have shown your GMP and probably pre and post 97 excess.

Were you ever a member of any other contracted out pension scheme?

 is a COPE shown on your state pension forecast?

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

https://www.barnett-waddingham.co.uk/comment-insight/blog/revaluation-for-early-leavers/ may be of interest but your 

scheme may be more generous in respect of increases in deferment.

And when your pension is brought into payment, there may be other considerations.

Have a look at this thread.

https://forums.moneysavingexpert.com/discussion/comment/80585991/#Comment_80585991

expectingtofly

Misteeq said:

Hi,

Sorry if this has been asked before, but can someone please explain how a Final Salary Pension is calculated please?

I worked for Eagle Star between 1995-2000 and only left as I was made redundant. Z Pen hold the pension fund which is a final salary pension.

My salary at the time of leaving was around £25,000.00. I have been a member of the scheme since 1995. I turn 55 in March 2028, which means I would have been a member of the scheme for a total of 33 years.

I'm not sure how to work out how much this will equate to in terms of a monthly income. I understand no one has the exact answer to this, but a rough idea would be helpful ! 

Many thanks  

It's a very good pension.   You can get an online quote specific to you at https://zpen.info    

For info the zpen site is going down for 8 weeks for maintenance soon,  

expectingtofly

Misteeq said:

Hi,

Sorry if this has been asked before, but can someone please explain how a Final Salary Pension is calculated please?

I worked for Eagle Star between 1995-2000 and only left as I was made redundant. Z Pen hold the pension fund which is a final salary pension.

My salary at the time of leaving was around £25,000.00. I have been a member of the scheme since 1995. I turn 55 in March 2028, which means I would have been a member of the scheme for a total of 33 years.

I'm not sure how to work out how much this will equate to in terms of a monthly income. I understand no one has the exact answer to this, but a rough idea would be helpful ! 

Many thanks  

Additionally, I can probably work out roughly what your pension will be if you were on the ES Tier (which it sounds like you were) as once you leave this pension goes up 5% every year until your 60 (regardless of inflation)

So if you take it at 60 and you were on an accrual rate of 60ths (which was the default, you might have sacrificed salary for a better accrual rate) your pension will be around :

25000 x 5/60 = 2083.33      
If you take it at 60 you will be 33 years of 5% compound interest in 2033  = £10,810  index linked pension for the rest of your life.
Not bad for 5 years work early on in your career!
You can take it earlier with actuarial reduction.

Misteeq

Brie said:

You should get an annual benefit statement from the scheme administrators which should give you some idea of what you might be paid.  Have you kept in contact and given them your current address??

I called them on Friday and they don't send out statements anymore unless someone requests one! They had all my correct details etc, and will send me an up to date statement in the next 7-10 working days. 

Misteeq

Tommyjw said:

Brie said:

You should get an annual benefit statement from the scheme administrators which should give you some idea of what you might be paid.  Have you kept in contact and given them your current address??

Rare for a deferred DB Scheme, they dont have to provide one so the majority (from my experience) don't do it to save costs. 

expectingtofly said:

Misteeq said:

Hi,

Sorry if this has been asked before, but can someone please explain how a Final Salary Pension is calculated please?

I worked for Eagle Star between 1995-2000 and only left as I was made redundant. Z Pen hold the pension fund which is a final salary pension.

My salary at the time of leaving was around £25,000.00. I have been a member of the scheme since 1995. I turn 55 in March 2028, which means I would have been a member of the scheme for a total of 33 years.

I'm not sure how to work out how much this will equate to in terms of a monthly income. I understand no one has the exact answer to this, but a rough idea would be helpful ! 

Many thanks  

Additionally, I can probably work out roughly what your pension will be if you were on the ES Tier (which it sounds like you were) as once you leave this pension goes up 5% every year until your 60 (regardless of inflation)

So if you take it at 60 and you were on an accrual rate of 60ths (which was the default, you might have sacrificed salary for a better accrual rate) your pension will be around :

25000 x 5/60 = 2083.33      
If you take it at 60 you will be 33 years of 5% compound interest in 2033  = £10,810  index linked pension for the rest of your life.
Not bad for 5 years work early on in your career!
You can take it earlier with actuarial reduction.

Thank you so much! Agreed - not bad for 5 years work in my 20's!