Old DB Scheme - sanity check required

xylophone

 Might post again if there is anything I don't understand

Do post again anyway - I'd like to know what it means in the context of what appears to be a transfer in to the DB Scheme.

As I said, the oddity is that you do not appear to have any information as to how you will take benefits from these "transfers in".

I've now found a post from years back

https://forums.moneysavingexpert.com/discussion/1735869/what-exactly-does-made-paid-up-mean-please

concerning  a "paid up" pension policy,

If your policy had stayed with EL (or their successor), then the insurer would have been responsible for paying any benefits at pension 

age

If your DC plan had stayed with the provider, that provider would have a similar responsibility.

However, both these pensions were transferred to your DB Scheme - so what happens to the benefits?

Are they paid separately?

Or were the funds used to purchase benefits in the DB Scheme so that the estimate you have quoted includes the value of the transfers 

in?

stevedresden

Thankfully I found the folder full of all my pensions correspondence of the last 20 years! I guess young, carefree me wasn't *totally* irresponsible!

The exact wording on the letters confirming the transfers was the same

"This transfer value has secured an additional fixed pension payable from age 65 of £5,932"
and
"This transfer value has secured an additional fixed pension payable from age 65 of £16,486"

All the older statements refer to it as an "additional fixed pension of £22,418" (the sum of the two)

It's only this last statement which has changed the language to "a paid-up pension"

Cus

stevedresden said:

Marcon said:

stevedresden said:

Thanks - I did transfer them in. Or at least in some fashion. Sadly memory and documentation is scant

1 was an old Equitable Life pension that had gone bust and I don't think I had any choice to move it to my current employers DB scheme. The other was the Money Purchase scheme that I'd been in at the same employer, as you couldn't join the DB scheme until you were 30, so again - there wasn't a choice as I recall, it just happened automatically when I turned 30

I've seen these 2 numbers referenced in all my statements, but as retirement wasn't really on my agenda I didn't really think about what they meant - hence my question here.

I seem to remember them saying that the pensions transferred in would give me a guaranteed pension of £x - in addition to the main DB pension - so that's why I'm asking if that seems "normal", or if I'm best to just contact the Administrator and ask

Only problem there is that, because the scheme is !!!!!! - you have to wait months for anyone to answer you!

But you've waited years to ask the question...

Yes, as I said. I was young, and only now starting to contemplate my pension options
Who spend the ages of 20-40 thinking about their pension? Apart from really boring people obvs

A lot of the exciting people wish they had been a bit boring earlier in their lives when facing poverty 

Silvertabby

stevedresden said:

Thankfully I found the folder full of all my pensions correspondence of the last 20 years! I guess young, carefree me wasn't *totally* irresponsible!

The exact wording on the letters confirming the transfers was the same

"This transfer value has secured an additional fixed pension payable from age 65 of £5,932"
and
"This transfer value has secured an additional fixed pension payable from age 65 of £16,486"

All the older statements refer to it as an "additional fixed pension of £22,418" (the sum of the two)

It's only this last statement which has changed the language to "a paid-up pension"

These were schemes that you paid into for 3 and 7 years.  Even if the latter (7 years) was DB,  they can't possibly be giving you an annual pension of £22,418.  Do your records include the actual transfer values paid over to your new scheme?  What was your salary when you left the DB scheme?

xylophone

Even if the latter (7 years) was DB,

This is definitely not the case according to the information given by the OP.

The additional pensions - the £"5k" one is the Money Purchase scheme I was in for 3 years between 1998 and 2001, so that does seem quite high in comparison

The "16k" one is the old Equitable Life one which I'd paid into for 7 years from 1991 to 1998

With regard to his annual statements

The exact wording on the letters confirming the transfers was the same

"This transfer value has secured an additional fixed pension payable from age 65 of £5,932"
and
"This transfer value has secured an additional fixed pension payable from age 65 of £16,486"

All the older statements refer to it as an "additional fixed pension of £22,418" (the sum of the two)

It's only this last statement which has changed the language to "a paid-up pension"

looking at the old post I linked,  https://forums.moneysavingexpert.com/discussion/comment/22218057/#Comment_22218057

duncanh  commented 

be made paid up (with a value and/or benefits to be paid out later).

It would seem that the OP does not get £22,418 a year at age 65 but rather the benefits that the amount secures (lump sum? annuity? 

benefits purchased in DB scheme?

The OP should write to the Administrator  for clarification.

Silvertabby

OP said that he couldn't join the DB scheme until he was 30, hence the DC scheme prior to that.  Or did he mean his current DB scheme?

xylophone

OP said that he couldn't join the DB scheme until he was 30, hence the DC scheme prior to that.  Or did he mean his current DB scheme?

It is a little difficult to disentangle exactly how many employers the OP had between 1991 and 2016 but probably two?

He says

1 was an old Equitable Life pension that had gone bust and I don't think I had any choice to move it to my current employers DB scheme. The other was the Money Purchase scheme that I'd been in at the same employer, as you couldn't join the DB scheme until you were 30, so again - there wasn't a choice as I recall, it just happened automatically when I turned 30

I assumed that there was a "then" omitted between "my" and "current"..


Between 1991 and 1998 he seems to have been a member of a scheme provided by Equitable Life.   This was with employer A?


He then took a job (1998) with employer B where a DB scheme was on offer but not until age 30?


Between 1998 and 2001 he was a member of a Money Purchase Scheme offered to under age 30 employees?


He became eligible to join his employer's DB Scheme when he was 30.


The DB Scheme closed to future accrual in 2016. It is not clear whether the OP then left that employer for a new employer or

stayed on under new pension terms and conditions.



In some way or another, the EL pension and the MP pension  have been "transferred in" (?) (or at least come under the

administrative umbrella of) the Trustees of the closed Defined Benefit Scheme.


The OP says that he was a member of the DB Scheme for eighteen years  (not the fifteen one would have expected from the dates)

so presumably as he stayed in the firm after age 30, by some concession  his benefits were "written back" to 1998?


It appears that his current statement of deferred  DB benefits  shows a pension of £15,000 per annum at age 65.


In addition, he will receive benefits from the "paid up"  EL and MP pensions.


It seems highly unlikely that the paid up benefits would give him an annual pension of over £22,000 per annum in addition to the

DB benefits.


The OP needs to write to the Administrator to find out what kind of benefits his paid up pensions have secured.

stevedresden

Thanks all - looks like I have confused folks with timelines and number of employers etc, but I'm not sure those things are important enough for me to try and clarify

Suffice to say that the pensions statements are very clear that the money transferred in to the DB scheme in 2003 from the previous schemes will provide me with a pension of £22,418 pa from age 65

However - that's fixed in stone and is not subject to growth for inflation like the rest of the money I paid into the DB

In 2003 I was still 30 odd years away from being 65, so I think they calculated what they expected the pension to be worth when I reached 65 and came up with the figure. That figure will never increase

I will write to them to confirm this, but I don't see any other explanation - and the language is very clear. If there was weird stuff about having to buy annuities then it would say that

Incidentally, when I requested a CETV in 2019 (out of curiosity rather than any intent to withdraw) they said the whole thing was worth £625k

xylophone

Incidentally, when I requested a CETV in 2019 (out of curiosity rather than any intent to withdraw) they said the whole thing was worth £625k

You may find that if you requested a CETV now that it would be considerably less.

https://www.thisismoney.co.uk/money/pensions/article-11315527/Why-pension-transfer-value-plunged-740k-340k.html

https://forums.moneysavingexpert.com/discussion/6440680/pension-has-drastically-reduced-in-value

However, as you are not planning a transfer out any variation in CETV is irrelevant.

What is of interest is exactly what  benefits the "transfer in" of the EL and MP pensions will provide.

Suffice to say that the pensions statements are very clear that the money transferred in to the DB scheme in 2003 from the previous schemes will provide me with a pension of £22,418 pa from age 65

In 2003 I was still 30 odd years away from being 65, so I think they calculated what they expected the pension to be worth when I reached 65 and came up with the figure. That figure will never increase

I think that you should ask the Administrator to confirm your understanding that from age 65, you can expect a non increasing 

pension of £22, 418 per annum from the paid up pensions AND  in addition a pension from the  DB pension scheme which closed 

in  2016 and of which you were a member for 18 years.

Incidentally. when the DB scheme closed in 2016. what was shown on your statement of deferred benefits and what were you 

told about how those benefits would increase in (1) deferment and (2) payment?

And have you obtained a state pension forecast?

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

CarolWHerts

This is totally unhelpful but I remember being told when studying for a life assurance and pensions exam back in the 1980s that a common workplace windup was to send the new trainee to collect a basket of 'pups' from the mail room. This anecdote is all I remember on the subject (never actually worked in that field), but I suppose it did ensure the phrase Paid Up Policy stuck in my mind.