Pension Illustration Error?

xylophone

For a DB public sector pension 

It is DB  but the OP has not said that it is public sector.

Marcon

xylophone said:

For a DB public sector pension 

It is DB  but the OP has not said that it is public sector.

The fact it seems to have a 25% tax free lump sum suggests it probably is.

Bodovlov

Hi all, thanks again for the comments.

If it helps I can confirm that this a British Aerospace pension that is (now) being administered by Mercer.

Also, to respond to an earlier question, the administrator has not yet confirmed what they believe has caused the discrepancy between the online illustration and the latest quote. They did advise this may take up to 10 days so I hope to get that confirmed next week. 

Bodovlov

Also, to clarify, I am aware of the Mercer tax code issue that many BAE pension claimants are dealing with. My issue is not related to that.

Sarahspangles

Bodovlov said:

Hi all, thanks again for the comments.

If it helps I can confirm that this a British Aerospace pension that is (now) being administered by Mercer.

Also, to respond to an earlier question, the administrator has not yet confirmed what they believe has caused the discrepancy between the online illustration and the latest quote. They did advise this may take up to 10 days so I hope to get that confirmed next week. 

Now you’ve named them I think my OH’s experience is relevant, but it’s such a large and complex employer it could be different in your division.

OH retired shortly pre-Mercer so he went through HR for quotes. I don’t recall him accessing online illustrations, but maybe there’s a reason they wouldn’t be accurate for him personally.

There is a concept of ‘consent to retire’ with this employer (or at least there is in OH’s division), so quotes included ‘with’ and ‘without’ projections. Note (for others reading this) - consent isn’t SVER, though that was sometimes a further option during restructures. HR needed management’s permission to ask pension team to provide the ‘with-consent’ quotes.

I don’t know how all this would have worked once Mercer took over as admin, but I assume internal HR would still be involved in agreeing a ‘with consent’ quote could be given? OH has only had to deal with Mercer once post-retirement, and they were clearly just a call centre reading from scripts. So despite being retired he had to contact a former manager directly to get action to resolve the issue.

Given the nature of the employer, OH/you don’t have the option of things like online forums where you give lots of detail, but his workplace Union rep was useful.

xylophone

https://www.baesystems.com/en-pensions/defined-benefit

https://www.baesystems.com/en-pensions/pension-guide 

If the OP doesn't have a copy of his scheme guide, it might be worth downloading.

Askfirst

Is the pension without TFLS option lower, or just that the TFLS is no longer as attractive as it was once reported? I know that on my scheme, there is a table of commutation factors that reduces the older and closer you get to NRA.

As for the pure DB pension payable today, it should be possible to take your pension value at leaving and scale it up for yearly revaluation to get to an approx value. You would have to check your scheme for different components  making up the whole e.g. GMP may be revalued on a fixed basis and the rest of the pension only at CPI, or RPI up to a certain point if you're lucky .

Still, a 10 day wait for them to come up with answers is not too bad if you get them.

Bodovlov

Thanks "Xylophone" for the links to the scheme downloads, this may point to the source of the issue...

The scheme documentation shows Normal Retirement Date (NRD) at age 65, however both the Mercer online illustration _and_ the paper quote show my NRD as age 60.

Retiring 5 years earlier than the NRD incurs a 28% reduction benefits - suspiciously close to the discrepancy I see.

So it's possible that Mercer has made a mistake with the NRD, although, it's still odd that their formal quote hasn't rectified this.

xylophone

You are just about to reach age 65?

Have you checked your state pension forecast - SPA will be sometime next year?

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

Bodovlov

Nope, I am coming up to 60 and the Mercer site has 60 as the NRD, however, the scheme documentation states 65 is the NRD