DB quote query

RoysV

I'm wondering if anyone can shed any light on my DB quote, as it has me puzzled. I've raised the query with the company but they are very slow in responses so thought I'd ask here.
I have in the last 3 years or so received the following quotes

Pension start date 27/3/22

£5465 p.a made up of £1773 pre 97 (increase at discretion of employer) + £3692 (increase 5% pa or RPI if less)

or reduced to £4401 made up of £1345 pre 97 and £3055  increases as above plus £29500 lump sum

Pension start date 6/4/23 

£7216 p.a made up of £3267 pre 97 (increase at RPI) + £3950  (increase 5% pa or RPI if less) 

or reduced to £5380 made up of £2292 pre 97 and £3088 increases as above plus £35800 lump sum.

This one above seems completely wrong to me.

Pension start date 27/4/25

£6247 p.a made up of £1766 pre 97 (increase at discretion of employer) +£4481 (increase 5%or RPI if less
or reduced  £4429 made up of £1153 pre 97 and £3275 increases as above plus £29500 lump sum.

According to my scheme the amounts increase the same when deferred as when taken and the yearly increases are on 1st April, I've no idea what the actuarial reduction is for taking the pension early. So if the second quote is completely wrong, as I suspect, there still doesn't seem much difference between the March 22 quote and the April 25 quote especially on the reduced payment option.
Can anyone say whether these look correct or not?
Cheers

Marcon

RoysV said:

I'm wondering if anyone can shed any light on my DB quote, as it has me puzzled. I've raised the query with the company but they are very slow in responses so thought I'd ask here.
I have in the last 3 years or so received the following quotes

Pension start date 27/3/22

£5465 p.a made up of £1773 pre 97 (increase at discretion of employer) + £3692 (increase 5% pa or RPI if less)

or reduced to £4401 made up of £1345 pre 97 and £3055  increases as above plus £29500 lump sum

Pension start date 27/4/25

£6247 p.a made up of £1766 pre 97 (increase at discretion of employer) +£4481 (increase 5%or RPI if less
or reduced  £4429 made up of £1153 pre 97 and £3275 increases as above plus £29500 lump sum.

According to my scheme the amounts increase the same when deferred as when taken and the yearly increases are on 1st April, I've no idea what the actuarial reduction is for taking the pension early. So if the second quote is completely wrong, as I suspect, there still doesn't seem much difference between the March 22 quote and the April 25 quote especially on the reduced payment option.
Can anyone say whether these look correct or not?
Cheers

You've not said how old you are or what the scheme's Normal Retirement Date is, so I'm not sure what I'm looking at in terms of early/normal/late retirement.

Agree the one in the middle looks completely wrong. Looking at the other two, your quote for a start date of March 2022 must have been given more than two years ago. It's possible that the 'actuarial factors' have been reviewed since then, and the reduction for early retirement has been changed - or the late retirement factor has been changed.

There is also something called GMP equalisation which could have complicated the position further/impacted the numbers. Have you had any correspondence on this?

RoysV

Ah yes sorry 58 in March normal retirement 65. The only thing I have which mentions GMP says "your deferred pension does not include any GMP so there is no guaranteed pension increases"

Phossy

Not much help, but they all look at bit odd to me - no consistency. The first quote has a very high commutation factor  (~27) . the middle one (~19) and the last quote a much lower(~14). The middle one just generally feels out of sync with the other two. Do you have any colleagues who you can compare quotes with (even if is just the commutation factors they have received).

Tommyjw

Do you have your leaver statement and can give the dateyou left and the amounts at leave date? We can then work out the starting pension amount (e.g. £5,465) to see if they are correct.

Agreed middle looks odd, might read the middle one they didnt reduce for early retirement when they should have. Did they mix up what happens withthe Pre 97 in payment (discretionary vs RPI) in the 2023 quote as well or have you just mistyped that?

RoysV said:

According to my scheme the amounts increase the same when deferred as when taken 

This would be incorrect as pre 1997 benefits have to increase in deferment by stuatory orders (CPI max 5%, as a quick summary), whereas as you note some schemes once in-payment they will only be discretionary. 

bjorn_toby_wilde

I had a quote from Crapita for one of my pensions that was wildly different from previous quotes. This was just before I was due to take the pension so I had a few sleepless nights over it before they came back to me and admitted it was an administrative error.

Do the administrators have a helpline? It might be best to talk to a human.

RoysV

Tommyjw said:

Do you have your leaver statement and can give the dateyou left and the amounts at leave date? We can then work out the starting pension amount (e.g. £5,465) to see if they are correct.

Agreed middle looks odd, might read the middle one they didnt reduce for early retirement when they should have. Did they mix up what happens withthe Pre 97 in payment (discretionary vs RPI) in the 2023 quote as well or have you just mistyped that?

RoysV said:

According to my scheme the amounts increase the same when deferred as when taken 

This would be incorrect as pre 1997 benefits have to increase in deferment by stuatory orders (CPI max 5%, as a quick summary), whereas as you note some schemes once in-payment they will only be discretionary. 

Not mistyped that is what it says for that year. Which makes me think that quote was completely wrong, almost as if it was someone elses !
I left Jan 2006. Leaving statement then said £3550 PA I also had another DB that was transferred in £2936 payable at 65. When I log in to the account it says left in Jan 2006 benefit at leaving £6486

@bjorn_toby_wilde  Yes I spoke to them on the phone, as you can imagine they took all my details, security checks etc It went along the lines of "Ah yes I can see your account. How can I help?" So I explained how the quotes didn't seem to make much sense. To which I was told the value of the funds fluctuate everyday. I then told her my pension was a DB one so there are no funds as such, I was then put on hold for about 5 mins just to be told she's raised a case number for me and I'll have a posted reply within 10 -15 working days but it's Xmas so will be longer. So yes it will be better to speak to a human but I guess it depends on which human you speak to 

xylophone

The only thing I have which mentions GMP says "your deferred pension does not include any GMP so there is no guaranteed pension increases"

You have pre 97 accrual so if no GMP, presumably the scheme was not contracted out? Or has there been an equalisation exercise?

Did your statement on leaving show no GMP?

RoysV

xylophone said:

The only thing I have which mentions GMP says "your deferred pension does not include any GMP so there is no guaranteed pension increases"

You have pre 97 accrual so if no GMP, presumably the scheme was not contracted out? Or has there been an equalisation exercise?

Did your statement on leaving show no GMP?

The pre 97 pension was not a contracted out scheme, so I'm assuming that's why there was no GMP?

xylophone

The pre 97 pension was not a contracted out scheme, so I'm assuming that's why there was no GMP?

Then no GMP. Not that common in DB pensions (but we have seen a few examples on the forum).

Do you have a Scheme Guide?

Have you obtained a State Pension Forecast?

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

RoysV

xylophone said:

The pre 97 pension was not a contracted out scheme, so I'm assuming that's why there was no GMP?

Then no GMP. Not that common in DB pensions (but we have seen a few examples on the forum).

Do you have a Scheme Guide?

Have you obtained a State Pension Forecast?

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

Yes got state pension quote £12664
Can't seem to find the scheme guide either my paper copy or online