Access to Defined Benefits Pension

molerat

dunstonh said:

That still makes sense to me. I don't receive that money until I'm 67.  Even if I lived to age 77,  I probably still wouldn't get 28k over the course of those 10 years. If I even lived that long !!

At 65, it won't be £2k you will get.  That figure will be increased between now and then.    Then it increases in each year of payment.  It will just keep going up and up.

It seems madness to me why anyone would risk waiting for that money. 

Because you are basing it on a level figure that wont increase.   Whereas in reality, that annual income increases.
You are also being very pessimistic about life expectancy.     That is a common mistake. So, you are not alone but when you combine all those things, it is leading you down the wrong financial path.

You are going to have other spending needs in your retirement years.  A state pension alone won't cover them.  Your future self is likely to look back and regret what you did.

And a reason why many pension providers run scared when someone asks to transfer their DB pension to them as it is inevitably "someone else's" fault when it has all gone wrong.

FIREDreamer

Marcon said:

FIREDreamer said:

Marcon said:

FIREDreamer said:

Sarahspangles said:

FIREDreamer said:

Sheba42 said:

p00hsticks said:

Brie said:

A DB pension should send you a annual or biennial statement that outlines what you might be entitled to at retirement.  

I'm not sure that that's true for DB pensions - I have one now in payment and one still to come and although I got/get updates on how the pension scheme itself is doing (i.e. is it overfunded, underfunded, total funds currently coming in and going out, expected liabilities) I haven't had a statement personal to me in particular since the one I was sent on leaving the company, and was under the impression that I shouldn't expect to receive another until close to the Normal Retirement Age.

I've had one every year since I started my job.  Tells me everything except CETV. 

This stops when you leave and the pension becomes deferred.

I can access an annual statement for each of my deferred LGPS schemes in the relevant scheme portal. One of the scheme portals services multiple larger LGPS, I think schemes which don’t automatically generate one must be a minority. One of the schemes can also generate forecasts on demand.

Mine were both private sector and they both closed for future accrual after I left. No online portals. Maybe that makes a difference.

Private sector schemes don't generally waste money on things that most members don't value - and annual statements in deferment fall into that category. They have to send Summary Funding Statements on a more or less annual basis, but those too come into the 'instant recycling' category. Actually read them? Perish the thought!

Could work out the revalues benefits myself anyway.

The earliest smallest pension was made non contributory a few months after I joined. It now pays me nearly £4,500 per year with 5% capped CPI inflation. It cost me the princely sum of £75. I think I got a bargain.

Good for you. Most people can't - sadly that includes some of those charged with actually administering the scheme! If there's a GMP involved it's particularly tricky, ditto differing rates of revaluation for different periods of service.

Simple maths.

Non GMP - factors are government revaluation orders 
GMP - Known fixed rate each year

Really wasn’t difficult. Simple spreadsheet calculation really.

Silvertabby

Marcon said:

dunstonh said:

That still makes sense to me. I don't receive that money until I'm 67.  Even if I lived to age 77,  I probably still wouldn't get 28k over the course of those 10 years. If I even lived that long !!

At 65, it won't be £2k you will get.  That figure will be increased between now and then.    Then it increases in each year of payment.  It will just keep going up and up.

It seems madness to me why anyone would risk waiting for that money. 

Because you are basing it on a level figure that wont increase.   Whereas in reality, that annual income increases.
You are also being very pessimistic about life expectancy.     That is a common mistake. So, you are not alone but when you combine all those things, it is leading you down the wrong financial path.

You are going to have other spending needs in your retirement years.  A state pension alone won't cover them.  Your future self is likely to look back and regret what you did.

Don't confuse OP with the facts....they've already made up their mind.

She's probably already picked out her new kitchen and bathroom.

artyboy

Silvertabby said:

Marcon said:

dunstonh said:

That still makes sense to me. I don't receive that money until I'm 67.  Even if I lived to age 77,  I probably still wouldn't get 28k over the course of those 10 years. If I even lived that long !!

At 65, it won't be £2k you will get.  That figure will be increased between now and then.    Then it increases in each year of payment.  It will just keep going up and up.

It seems madness to me why anyone would risk waiting for that money. 

Because you are basing it on a level figure that wont increase.   Whereas in reality, that annual income increases.
You are also being very pessimistic about life expectancy.     That is a common mistake. So, you are not alone but when you combine all those things, it is leading you down the wrong financial path.

You are going to have other spending needs in your retirement years.  A state pension alone won't cover them.  Your future self is likely to look back and regret what you did.

Don't confuse OP with the facts....they've already made up their mind.

She's probably already picked out her new kitchen and bathroom.

Pity it wasn't cashed in a few years ago when CETVs were double todays values - even after the cost of mandatory advice, you'd probably could have afforded a loft conversion as well 

Silvertabby

artyboy said:

Silvertabby said:

Marcon said:

dunstonh said:

That still makes sense to me. I don't receive that money until I'm 67.  Even if I lived to age 77,  I probably still wouldn't get 28k over the course of those 10 years. If I even lived that long !!

At 65, it won't be £2k you will get.  That figure will be increased between now and then.    Then it increases in each year of payment.  It will just keep going up and up.

It seems madness to me why anyone would risk waiting for that money. 

Because you are basing it on a level figure that wont increase.   Whereas in reality, that annual income increases.
You are also being very pessimistic about life expectancy.     That is a common mistake. So, you are not alone but when you combine all those things, it is leading you down the wrong financial path.

You are going to have other spending needs in your retirement years.  A state pension alone won't cover them.  Your future self is likely to look back and regret what you did.

Don't confuse OP with the facts....they've already made up their mind.

She's probably already picked out her new kitchen and bathroom.

Pity it wasn't cashed in a few years ago when CETVs were double todays values - even after the cost of mandatory advice, you'd probably could have afforded a loft conversion as well 

Not in the case of a LGPS CETV - factors are set by GAD and have always been notoriously low.

Cobbler_tone

I think the OP said they were 59 and quoted a pension of £900 PA on £28k.
They would be looking at the age of 81 (with 2.5% PA applied - depends on their scheme) before getting this amount back.

TBF if I had other plans in place and someone offered me £75 per month for life vs £28k to do something tangible I'd probably take it.

I think they want the kitchen now  

Secret2ndAccount

... It seems everyone thinks I should be keeping my pension but I don't feel that 2k or so per year is worth keeping. ...

You asked on a forum populated by pension experts. What answer would you expect to get?  If you went to a forum populated by kitchen salesmen I'm sure you would get an opposite point of view. It boils down to whether you want to get your financial advice from kitchen salesmen or pension experts...

Marcon

FIREDreamer said:

Marcon said:

FIREDreamer said:

Marcon said:

FIREDreamer said:

Sarahspangles said:

FIREDreamer said:

Sheba42 said:

p00hsticks said:

Brie said:

A DB pension should send you a annual or biennial statement that outlines what you might be entitled to at retirement.  

I'm not sure that that's true for DB pensions - I have one now in payment and one still to come and although I got/get updates on how the pension scheme itself is doing (i.e. is it overfunded, underfunded, total funds currently coming in and going out, expected liabilities) I haven't had a statement personal to me in particular since the one I was sent on leaving the company, and was under the impression that I shouldn't expect to receive another until close to the Normal Retirement Age.

I've had one every year since I started my job.  Tells me everything except CETV. 

This stops when you leave and the pension becomes deferred.

I can access an annual statement for each of my deferred LGPS schemes in the relevant scheme portal. One of the scheme portals services multiple larger LGPS, I think schemes which don’t automatically generate one must be a minority. One of the schemes can also generate forecasts on demand.

Mine were both private sector and they both closed for future accrual after I left. No online portals. Maybe that makes a difference.

Private sector schemes don't generally waste money on things that most members don't value - and annual statements in deferment fall into that category. They have to send Summary Funding Statements on a more or less annual basis, but those too come into the 'instant recycling' category. Actually read them? Perish the thought!

Could work out the revalues benefits myself anyway.

The earliest smallest pension was made non contributory a few months after I joined. It now pays me nearly £4,500 per year with 5% capped CPI inflation. It cost me the princely sum of £75. I think I got a bargain.

Good for you. Most people can't - sadly that includes some of those charged with actually administering the scheme! If there's a GMP involved it's particularly tricky, ditto differing rates of revaluation for different periods of service.

Simple maths.

Non GMP - factors are government revaluation orders 
GMP - Known fixed rate each year

Really wasn’t difficult. Simple spreadsheet calculation really.

Not always that simple - and not everyone is that numerate. Rather refreshing to come across someone who's both willing and able to have a go at doing their own sums. 

FIREDreamer

Marcon said:

FIREDreamer said:

Marcon said:

FIREDreamer said:

Marcon said:

FIREDreamer said:

Sarahspangles said:

FIREDreamer said:

Sheba42 said:

p00hsticks said:

Brie said:

A DB pension should send you a annual or biennial statement that outlines what you might be entitled to at retirement.  

I'm not sure that that's true for DB pensions - I have one now in payment and one still to come and although I got/get updates on how the pension scheme itself is doing (i.e. is it overfunded, underfunded, total funds currently coming in and going out, expected liabilities) I haven't had a statement personal to me in particular since the one I was sent on leaving the company, and was under the impression that I shouldn't expect to receive another until close to the Normal Retirement Age.

I've had one every year since I started my job.  Tells me everything except CETV. 

This stops when you leave and the pension becomes deferred.

I can access an annual statement for each of my deferred LGPS schemes in the relevant scheme portal. One of the scheme portals services multiple larger LGPS, I think schemes which don’t automatically generate one must be a minority. One of the schemes can also generate forecasts on demand.

Mine were both private sector and they both closed for future accrual after I left. No online portals. Maybe that makes a difference.

Private sector schemes don't generally waste money on things that most members don't value - and annual statements in deferment fall into that category. They have to send Summary Funding Statements on a more or less annual basis, but those too come into the 'instant recycling' category. Actually read them? Perish the thought!

Could work out the revalues benefits myself anyway.

The earliest smallest pension was made non contributory a few months after I joined. It now pays me nearly £4,500 per year with 5% capped CPI inflation. It cost me the princely sum of £75. I think I got a bargain.

Good for you. Most people can't - sadly that includes some of those charged with actually administering the scheme! If there's a GMP involved it's particularly tricky, ditto differing rates of revaluation for different periods of service.

Simple maths.

Non GMP - factors are government revaluation orders 
GMP - Known fixed rate each year

Really wasn’t difficult. Simple spreadsheet calculation really.

Not always that simple - and not everyone is that numerate. Rather refreshing to come across someone who's both willing and able to have a go at doing their own sums. 

Would have thought the overwhelming majority here are numerate. The general population, not so much.

hyubh

Lemon_dr1zzle said:

The LGPS fund I work for sends annual statements for active and deferred members. 

It's been a requirement under the LGPS regulations since the mid-2000s, when ABSs for active members became a statutory requirement (though with most public sector schemes allowed off, oddly enough).

FIREDreamer said:

Sheba42 said:

p00hsticks said:

Brie said:

A DB pension should send you a annual or biennial statement that outlines what you might be entitled to at retirement.  

I'm not sure that that's true for DB pensions - I have one now in payment and one still to come and although I got/get updates on how the pension scheme itself is doing (i.e. is it overfunded, underfunded, total funds currently coming in and going out, expected liabilities) I haven't had a statement personal to me in particular since the one I was sent on leaving the company, and was under the impression that I shouldn't expect to receive another until close to the Normal Retirement Age.

I've had one every year since I started my job.  Tells me everything except CETV. 

This stops when you leave and the pension becomes deferred.

While it is not a statutory requirement for DB schemes in general, the LGPS is a statutory scheme, and deferred ABSs are not optional for LGPS administrators.

Marcon said:

FIREDreamer said:

Sheba42 said:

FIREDreamer said:

Sheba42 said:

p00hsticks said:

Brie said:

A DB pension should send you a annual or biennial statement that outlines what you might be entitled to at retirement.  

I'm not sure that that's true for DB pensions - I have one now in payment and one still to come and although I got/get updates on how the pension scheme itself is doing (i.e. is it overfunded, underfunded, total funds currently coming in and going out, expected liabilities) I haven't had a statement personal to me in particular since the one I was sent on leaving the company, and was under the impression that I shouldn't expect to receive another until close to the Normal Retirement Age.

I've had one every year since I started my job.  Tells me everything except CETV. 

This stops when you leave and the pension becomes deferred.

I left in 2008 and like I said,  I get a full statement every year !

Interesting. I left 2 defined benefit schemes in 1993 and 2007. I got no further personalised correspondence (only general scheme circulars) until I claimed them early in 2021 and 2019 respectively. Had the LTA not existed I would have left both until normal retirement age, but that’s just unfortunate.

I could work out the updated benefits myself each year using government revaluation orders - it wasn’t a difficult calculation.

It's one of the differences between private and public sector schemes. The latter waste a lot of money sending people annual statements for pensions which are in deferment, which typically hit the bin unread, judging by some of the comments on this website!

This is wrong on multiple levels... Public sector schemes as a class expect much more automation by default from their system providers compared to most private sector ones, given their much greater scale (a middling sized LGPS fund is far larger than a middling sized private sector scheme). In addition, core calculations are typically less complex (one example: GMP rectification projects for the average private sector scheme are way more complex than the average public sector scheme). As such, in practice, deferred ABS runs are a small effort - ABSs for active members are far, far more time intensive since the source data will be a mess (lots of participating employers and outsourced payroll providers, a membership that is chock full of short term part timers with multiple pensions, a move to CARE that necessitates more year-by-year admin, etc...).

That said, it really wouldn't be surprising for deferred ABSs to be come a statutory requirement for DB schemes generally given Pension Dashboard (finally) happening.

Marcon said:

Private sector schemes don't generally waste money on things that most members don't value - and annual statements in deferment fall into that category.

Maybe members don't so much value deferred ABSs (though do you have any evidence...?), but they certainly value and actually expect member portals, which for deferred members effectively cover the same purpose as deferred ABSs, but in a much more through going manner.