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Deferred DB pension - my head is spinning!

Been trying to get a grip on retirement planning and lots of moving parts. consolidated my DC pensions, adjusted the funds and management costs etc. 

I’d like to be able to roughly estimate income at retirement and play with options around different retirement ages.

I have a small DB pension from a private company which became deferred in 2015 when I left. This is now administered by Mercer (or aptiview or whatever they’d called now). The only data I can find is the pension value at the time I left  - £13700. 

I’ve only just found out about revaluation but the government pages about it make my head hurt very quickly. Mercer bluntly told me earlier this year they won’t talk to me until I’m 55 which seems stupid as how can I meaningfully plan my retirement without up to date information? 

I’d like to ask two questions:
1) is the adjustment roughly equivalent to index linking? i.e for simple planning can I use the £13700 as ‘now’ income as any adjusted figure will have approx that purchasing power? 
2) is there any way to estimate what a refreshed 2025 figure would look like so I can get a more ‘now’ amount for planning? 
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Comments

  • mrklaw said:
    Been trying to get a grip on retirement planning and lots of moving parts. consolidated my DC pensions, adjusted the funds and management costs etc. 

    I’d like to be able to roughly estimate income at retirement and play with options around different retirement ages.

    I have a small DB pension from a private company which became deferred in 2015 when I left. This is now administered by Mercer (or aptiview or whatever they’d called now). The only data I can find is the pension value at the time I left  - £13700. 

    I’ve only just found out about revaluation but the government pages about it make my head hurt very quickly. Mercer bluntly told me earlier this year they won’t talk to me until I’m 55 which seems stupid as how can I meaningfully plan my retirement without up to date information? 

    I’d like to ask two questions:
    1) is the adjustment roughly equivalent to index linking? i.e for simple planning can I use the £13700 as ‘now’ income as any adjusted figure will have approx that purchasing power? 
    2) is there any way to estimate what a refreshed 2025 figure would look like so I can get a more ‘now’ amount for planning? 
    What do the scheme rules say about annual revaluation once you are a deferred member?
  • mrklaw
    mrklaw Posts: 37 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    I can’t see anything. All the documentation is general statements bout the fund health (as a whole across all members so very generic) and my ‘deferred statement’ has one line which is the pensionable income at deferrment date. I can’t find a personalised statement at all, and the only one I can find in my files is a similar personal statement that just says the same fixed amount. 

    I’ve never seen an adjusted amount. I was worried thats not what happens until I was googling about index linking of deferred and stumbled on a revaluation thread here - but it got really into the weeds really fast. 

    I will try ringing them - if I wait until my birthday in a few days I’ll be 54 so perhaps ‘approaching’ 55 enough to get them to blooming talk to me at least! but their website page is terrible
  • hyubh
    hyubh Posts: 3,654 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    mrklaw said:
    Been trying to get a grip on retirement planning and lots of moving parts. consolidated my DC pensions, adjusted the funds and management costs etc. 

    I’d like to be able to roughly estimate income at retirement and play with options around different retirement ages.

    I have a small DB pension from a private company which became deferred in 2015 when I left. This is now administered by Mercer (or aptiview or whatever they’d called now). The only data I can find is the pension value at the time I left  - £13700. 

    I’ve only just found out about revaluation but the government pages about it make my head hurt very quickly. Mercer bluntly told me earlier this year they won’t talk to me until I’m 55 which seems stupid as how can I meaningfully plan my retirement without up to date information? 

    I’d like to ask two questions:
    1) is the adjustment roughly equivalent to index linking? i.e for simple planning can I use the £13700 as ‘now’ income as any adjusted figure will have approx that purchasing power? 
    2) is there any way to estimate what a refreshed 2025 figure would look like so I can get a more ‘now’ amount for planning? 
    On leaving you should have received a statement of deferred benefits. This should detail,
    - Any element splits, e.g, if the £13700 includes a post-88 and possibly pre-88 GMP, and if your 'excess' (i.e. non-GMP) pension is subdivided into (e.g.) pre-97, 97-05 and post-05 pension
    - The revaluation method applicable to each split

    If you can dig that information out, we'll probably be able to calculate the revalued pension to date for you.
  • mrklaw
    mrklaw Posts: 37 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    edited 28 November 2024 at 10:09PM
    found this amongst a bunch of documentation

    “ Your deferred pension will be calculated using your Final Pensionable Salary and Pensionable Service at the date you left the Scheme and will be paid to you when you retire. Until you retire, your deferred pension will be increased in line with the rise in the Retail Prices Index, up to a maximum of 5% a year, and subject to any statutory revaluations applied because the Scheme is contracted out of the State Second Pension.


    joined 5 march 2001, exited 15 march 2015.

    There is a GMP aspect but I have no details of it and I can’t find anything from the original leaving docs. I’ll check in the loft if there is anything there. I’d have thought that would be online too..

    If I contact Mercer is there a specifically worded question I can put to them to get an update on the latest valuation and a breakdown of how its all set out? 
  • Marcon
    Marcon Posts: 12,902 Forumite
    Eighth Anniversary 10,000 Posts Name Dropper Combo Breaker
    edited 28 November 2024 at 10:53PM
    mrklaw said:
    found this amongst a bunch of documentation

    “ Your deferred pension will be calculated using your Final Pensionable Salary and Pensionable Service at the date you left the Scheme and will be paid to you when you retire. Until you retire, your deferred pension will be increased in line with the rise in the Retail Prices Index, up to a maximum of 5% a year, and subject to any statutory revaluations applied because the Scheme is contracted out of the State Second Pension.


    joined 5 march 2001, exited 15 march 2015.

    There is a GMP aspect but I have no details of it and I can’t find anything from the original leaving docs. I’ll check in the loft if there is anything there. I’d have thought that would be online too..

    If I contact Mercer is there a specifically worded question I can put to them to get an update on the latest valuation and a breakdown of how its all set out? 
    If you joined the scheme in 2001 you won't have a GMP unless you transferred in benefits from a 'contracted out' scheme relating to employment before April 1997.

    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • JoeCrystal
    JoeCrystal Posts: 3,249 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    mrklaw said:
    found this amongst a bunch of documentation

    “ Your deferred pension will be calculated using your Final Pensionable Salary and Pensionable Service at the date you left the Scheme and will be paid to you when you retire. Until you retire, your deferred pension will be increased in line with the rise in the Retail Prices Index, up to a maximum of 5% a year, and subject to any statutory revaluations applied because the Scheme is contracted out of the State Second Pension.


    joined 5 march 2001, exited 15 march 2015.

    There is a GMP aspect but I have no details of it and I can’t find anything from the original leaving docs. I’ll check in the loft if there is anything there. I’d have thought that would be online too..

    If I contact Mercer is there a specifically worded question I can put to them to get an update on the latest valuation and a breakdown of how its all set out? 
    There you go; it should be easy enough for you to work out your rough estimate of the deferred pension in today's term.


  • Moonwolf
    Moonwolf Posts: 409 Forumite
    Tenth Anniversary 100 Posts Name Dropper Combo Breaker
    edited 29 November 2024 at 11:09AM
    mrklaw said:
    found this amongst a bunch of documentation

    “ Your deferred pension will be calculated using your Final Pensionable Salary and Pensionable Service at the date you left the Scheme and will be paid to you when you retire. Until you retire, your deferred pension will be increased in line with the rise in the Retail Prices Index, up to a maximum of 5% a year, and subject to any statutory revaluations applied because the Scheme is contracted out of the State Second Pension.


    joined 5 march 2001, exited 15 march 2015.

    There is a GMP aspect but I have no details of it and I can’t find anything from the original leaving docs. I’ll check in the loft if there is anything there. I’d have thought that would be online too..

    If I contact Mercer is there a specifically worded question I can put to them to get an update on the latest valuation and a breakdown of how its all set out? 
    A couple of things to note.

    This looks late enough that you kept RPI when the government moved to CPI as a preferred measure.  RPI is generally higher but it could be they are using CPI now.

    It would also appear that it is all 5%, pensions after 2009 are sometime limited to 2.5% as that is the minimum set by government.

    Generally 5% is an average while the pension is deferred, once you take it each year's growth would be capped at 5% - so inflation like two and three years ago at 6.7% and 10.1% would still see a real terms cut.

    All the above would be in the small print somewhere.

    There is a CPI revaluation order here which I think implies your pension would be about £18,000 now at CPI, a bit easier to find and less disappointing if you don't have the small print and it has changed.

    https://www.legislation.gov.uk/uksi/2023/1265/article/2/made
  • xylophone
    xylophone Posts: 45,426 Forumite
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    There is a GMP aspect

    You say that you joined this scheme in 2001.

    Assuming that you did not transfer in pre 6/4/97 benefits into this scheme, you will not have a GMP.

    You will have Scheme Reference Test benefits.


    https://techzone.abrdn.com/public/pensions/Tech-guide-guaranteed-min-pen


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

    The above is a general guide but you should read your own scheme guide for specific details.


  • mrklaw
    mrklaw Posts: 37 Forumite
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    edited 29 November 2024 at 7:41PM
    so the 5% is used as an estimate (or they use their own estimates) for future growth illustrations, but then revert to government published lists like the one shared for *actual* years up to the current date and will recalculate at that point with real numbers? 

    the 18k figure if accruate as a ballpark would be good just to let me baseline with my other planning at the moment which is based on ‘now’ money. Although I would like to do some estimates of drawing at 60 so I’m guessing between 20-25% reduction from that again as a ballpark for rough planning purposes


    in payment they mention increases of retail prices of capped at 5%. They also mention a 5% reduction per year earlier that you retire. Thats pretty high so might put me off but 60 might be doable (I’ll play with both estimates)
  • mrklaw said:
    so the 5% is used as an estimate (or they use their own estimates) for future growth illustrations, but then revert to government published lists like the one shared for *actual* years up to the current date and will recalculate at that point with real numbers? 

    the 18k figure if accruate as a ballpark would be good just to let me baseline with my other planning at the moment which is based on ‘now’ money. Although I would like to do some estimates of drawing at 60 so I’m guessing between 20-25% reduction from that again as a ballpark for rough planning purposes
    The 5% is a cap.  It will grow by RPI but no more than 5%, if inflation is 6% or 10% you will only get 5%, if inflation is 2% you will only get 2%.  We haven't had a lot of high interest years recently.

    On the information given it should be around £18,000 in todays money, possibly a little higher, but one the reasons why no one else has answered your question with even that level of precision is there are too many unknowns so it could be wrong.

    You should be able to request an up to date estimate of your future pension from your pension administrator.

    My deferred private sector scheme says benefits after 6/4/1997 grow by CPI capped at 5% and benefits after 6/4/2009 grow by CPI capped at 2.5% and gives me numbers in each part.  It also mentions GMP but then the figures are zero in those boxes, I don't have any.


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