DB quote query

Storcko14

I don't know if this helps but I had a similar query with my DB a few months ago where I couldn't understand why, if I retired today at age 58 I'd get 35% more pension than at 60 and also if I opted for a lump sum, it'd be 4 times the sum at 60.  After a lot of to'ing and fro'ing with the administrator I got this reply which kind of made sense:

For members of your category of the Group Pension Fund, the calculation provides an uplift to the pension on early retirement to take account of the Guaranteed Minimum Pension (GMP) element that is included in your pension.  Any calculations for early retirement include this uplift, however calculations for retirement at normal retirement date (NRD) do not. Both the early retirement figures and the figures at NRD have been calculated on the correct basis as provided by the Pension Fund Actuary. Calculations for early retirement can, however, create a potential anomaly between early retirement figures and retirement figures for pension drawn from NRD, whereby, due to the way the uplift applies, in some circumstances pension drawn before NRD may be higher than pension drawn at NRD.

I can confirm that the reason for the higher figure at age 65 is due to the GMP coming in to payment, however if you took the lower pension between age 60 to age 65 you would receive a step up at age 65 to cover the level of GMP.

Getting to this stage has taken almost 4 months and, in that time, I've had at least 2 unintelligible and irrelevant poorly cut and pasted replies so my advice is to keep on at them.  They also appear not to want to answer my questions directly or completely so I've had to piece things together.  It shouldn't be like this and must be somewhat disconcerting for deferred members with more than my relatively trivial sums.

Hoenir

RoysV said:

Pat38493 said:

RoysV said:

Well here's the update. I asked for all information to be sent to me, scheme rules, actuarial reductions etc but received nothing.

I got my quote yesterday evening    Full pension £5273        Reduced pension £3787   with lump of £25400  so lower than my March 22 quote.

I've rang the company up and spoke to two different people who have both told me that the figures change due to stock market fluctuations and that the trustees invest the money so it's down to them as to how the pension has performed and how much I get.

This is a deferred DB pension can someone please tell me I'm not going mad and this isn't correct or tell me they are correct and I've misunderstood for the last 40 years what a DB scheme is

If you are taking the pension early, or taking a lump sum, they could be sort of correct - most DB pensions have something in their rules that the trustees can alter the early repayment factors and commutation factors on pensions according to market conditions (even without informing members!).

Theoretically speaking, the adjustments should leave you no better or no worse off - i.e. the fact that your pension is lower, means that they think inflation will be lower in the following years and so the amount you get during the years before NRA is "worth" more.  Of course this is based on forecasts and guesswork so the real future might end up different.

If you are taking the pension at normal retirement age, then you are broadly correct - it should not change according to market conditions unless you take PCLS, but even this could be a bit more complicated if your pension has multiple tranches with different NRA.

Cheers. They just mentioned stock market performance and nothing about trustees moving the goal posts. Just seems strange that 3 years closer to NRA and the amount has gone down, didn't think it could happen

The Truss incident hit the bond markets hard. Will take time for the fund to recover. Supertankers aren't nimble. 

RoysV

Hoenir said:

RoysV said:

Pat38493 said:

RoysV said:

Well here's the update. I asked for all information to be sent to me, scheme rules, actuarial reductions etc but received nothing.

I got my quote yesterday evening    Full pension £5273        Reduced pension £3787   with lump of £25400  so lower than my March 22 quote.

I've rang the company up and spoke to two different people who have both told me that the figures change due to stock market fluctuations and that the trustees invest the money so it's down to them as to how the pension has performed and how much I get.

This is a deferred DB pension can someone please tell me I'm not going mad and this isn't correct or tell me they are correct and I've misunderstood for the last 40 years what a DB scheme is

If you are taking the pension early, or taking a lump sum, they could be sort of correct - most DB pensions have something in their rules that the trustees can alter the early repayment factors and commutation factors on pensions according to market conditions (even without informing members!).

Theoretically speaking, the adjustments should leave you no better or no worse off - i.e. the fact that your pension is lower, means that they think inflation will be lower in the following years and so the amount you get during the years before NRA is "worth" more.  Of course this is based on forecasts and guesswork so the real future might end up different.

If you are taking the pension at normal retirement age, then you are broadly correct - it should not change according to market conditions unless you take PCLS, but even this could be a bit more complicated if your pension has multiple tranches with different NRA.

Cheers. They just mentioned stock market performance and nothing about trustees moving the goal posts. Just seems strange that 3 years closer to NRA and the amount has gone down, didn't think it could happen

The Truss incident hit the bond markets hard. Will take time for the fund to recover. Supertankers aren't nimble. 

So are you saying that DB pensions are influenced by stock market movements? I honestly never realised that was the case.

Hoenir

RoysV said:

Hoenir said:

RoysV said:

Pat38493 said:

RoysV said:

Well here's the update. I asked for all information to be sent to me, scheme rules, actuarial reductions etc but received nothing.

I got my quote yesterday evening    Full pension £5273        Reduced pension £3787   with lump of £25400  so lower than my March 22 quote.

I've rang the company up and spoke to two different people who have both told me that the figures change due to stock market fluctuations and that the trustees invest the money so it's down to them as to how the pension has performed and how much I get.

This is a deferred DB pension can someone please tell me I'm not going mad and this isn't correct or tell me they are correct and I've misunderstood for the last 40 years what a DB scheme is

If you are taking the pension early, or taking a lump sum, they could be sort of correct - most DB pensions have something in their rules that the trustees can alter the early repayment factors and commutation factors on pensions according to market conditions (even without informing members!).

Theoretically speaking, the adjustments should leave you no better or no worse off - i.e. the fact that your pension is lower, means that they think inflation will be lower in the following years and so the amount you get during the years before NRA is "worth" more.  Of course this is based on forecasts and guesswork so the real future might end up different.

If you are taking the pension at normal retirement age, then you are broadly correct - it should not change according to market conditions unless you take PCLS, but even this could be a bit more complicated if your pension has multiple tranches with different NRA.

Cheers. They just mentioned stock market performance and nothing about trustees moving the goal posts. Just seems strange that 3 years closer to NRA and the amount has gone down, didn't think it could happen

The Truss incident hit the bond markets hard. Will take time for the fund to recover. Supertankers aren't nimble. 

So are you saying that DB pensions are influenced by stock market movements? I honestly never realised that was the case.

In the private sector at least. Underpinning the pensions that are in payment (and due to be paid) will be an investment fund. Early reduction factors are entirely at the discretion of the Trustees on the advice of the scheme's actuaries. Ultimately the solvency of the fund is what matters. Employers themselves are having to increase their own annual funding levels to help plug any deficit. 

bjorn_toby_wilde

Hoenir said:

RoysV said:

Hoenir said:

RoysV said:

Pat38493 said:

RoysV said:

Well here's the update. I asked for all information to be sent to me, scheme rules, actuarial reductions etc but received nothing.

I got my quote yesterday evening    Full pension £5273        Reduced pension £3787   with lump of £25400  so lower than my March 22 quote.

I've rang the company up and spoke to two different people who have both told me that the figures change due to stock market fluctuations and that the trustees invest the money so it's down to them as to how the pension has performed and how much I get.

This is a deferred DB pension can someone please tell me I'm not going mad and this isn't correct or tell me they are correct and I've misunderstood for the last 40 years what a DB scheme is

If you are taking the pension early, or taking a lump sum, they could be sort of correct - most DB pensions have something in their rules that the trustees can alter the early repayment factors and commutation factors on pensions according to market conditions (even without informing members!).

Theoretically speaking, the adjustments should leave you no better or no worse off - i.e. the fact that your pension is lower, means that they think inflation will be lower in the following years and so the amount you get during the years before NRA is "worth" more.  Of course this is based on forecasts and guesswork so the real future might end up different.

If you are taking the pension at normal retirement age, then you are broadly correct - it should not change according to market conditions unless you take PCLS, but even this could be a bit more complicated if your pension has multiple tranches with different NRA.

Cheers. They just mentioned stock market performance and nothing about trustees moving the goal posts. Just seems strange that 3 years closer to NRA and the amount has gone down, didn't think it could happen

The Truss incident hit the bond markets hard. Will take time for the fund to recover. Supertankers aren't nimble. 

So are you saying that DB pensions are influenced by stock market movements? I honestly never realised that was the case.

In the private sector at least. Underpinning the pensions that are in payment (and due to be paid) will be an investment fund. Early reduction factors are entirely at the discretion of the Trustees on the advice of the scheme's actuaries. Ultimately the solvency of the fund is what matters. Employers themselves are having to increase their own annual funding levels to help plug any deficit. 

Still doesn’t add up to me.

If the early retirement factors have changed then why not share them with the OP? They are subject to change but the administrators should be able to tell the OP when they changed, and from what to what.

The idea that they should fluctuate with the stock market doesn’t bear scrutiny.  My three private sector DBs didn’t change their ERFs once in thirty odd years.  One pension changed them after I had retired but communicated the new rates and the reason for them to all pensioners.

hyubh

Hoenir said:

RoysV said:

Hoenir said:

RoysV said:

Pat38493 said:

RoysV said:

Well here's the update. I asked for all information to be sent to me, scheme rules, actuarial reductions etc but received nothing.

I got my quote yesterday evening    Full pension £5273        Reduced pension £3787   with lump of £25400  so lower than my March 22 quote.

I've rang the company up and spoke to two different people who have both told me that the figures change due to stock market fluctuations and that the trustees invest the money so it's down to them as to how the pension has performed and how much I get.

This is a deferred DB pension can someone please tell me I'm not going mad and this isn't correct or tell me they are correct and I've misunderstood for the last 40 years what a DB scheme is

If you are taking the pension early, or taking a lump sum, they could be sort of correct - most DB pensions have something in their rules that the trustees can alter the early repayment factors and commutation factors on pensions according to market conditions (even without informing members!).

Theoretically speaking, the adjustments should leave you no better or no worse off - i.e. the fact that your pension is lower, means that they think inflation will be lower in the following years and so the amount you get during the years before NRA is "worth" more.  Of course this is based on forecasts and guesswork so the real future might end up different.

If you are taking the pension at normal retirement age, then you are broadly correct - it should not change according to market conditions unless you take PCLS, but even this could be a bit more complicated if your pension has multiple tranches with different NRA.

Cheers. They just mentioned stock market performance and nothing about trustees moving the goal posts. Just seems strange that 3 years closer to NRA and the amount has gone down, didn't think it could happen

The Truss incident hit the bond markets hard. Will take time for the fund to recover. Supertankers aren't nimble. 

So are you saying that DB pensions are influenced by stock market movements? I honestly never realised that was the case.

In the private sector at least. Underpinning the pensions that are in payment (and due to be paid) will be an investment fund. Early reduction factors are entirely at the discretion of the Trustees on the advice of the scheme's actuaries. Ultimately the solvency of the fund is what matters.

That's a bit tenuous... retirement factors don't reviewed just because Donald Trump has done another flip-flop, instead they will typically get reviewed every few years (if that). And if LRFs apply, they will usually get more generous from the POV of the individual member when ERFs get less so.

hyubh

RoysV said:

Hoenir said:

RoysV said:

Pat38493 said:

RoysV said:

Well here's the update. I asked for all information to be sent to me, scheme rules, actuarial reductions etc but received nothing.

I got my quote yesterday evening    Full pension £5273        Reduced pension £3787   with lump of £25400  so lower than my March 22 quote.

I've rang the company up and spoke to two different people who have both told me that the figures change due to stock market fluctuations and that the trustees invest the money so it's down to them as to how the pension has performed and how much I get.

This is a deferred DB pension can someone please tell me I'm not going mad and this isn't correct or tell me they are correct and I've misunderstood for the last 40 years what a DB scheme is

If you are taking the pension early, or taking a lump sum, they could be sort of correct - most DB pensions have something in their rules that the trustees can alter the early repayment factors and commutation factors on pensions according to market conditions (even without informing members!).

Theoretically speaking, the adjustments should leave you no better or no worse off - i.e. the fact that your pension is lower, means that they think inflation will be lower in the following years and so the amount you get during the years before NRA is "worth" more.  Of course this is based on forecasts and guesswork so the real future might end up different.

If you are taking the pension at normal retirement age, then you are broadly correct - it should not change according to market conditions unless you take PCLS, but even this could be a bit more complicated if your pension has multiple tranches with different NRA.

Cheers. They just mentioned stock market performance and nothing about trustees moving the goal posts. Just seems strange that 3 years closer to NRA and the amount has gone down, didn't think it could happen

The Truss incident hit the bond markets hard. Will take time for the fund to recover. Supertankers aren't nimble. 

So are you saying that DB pensions are influenced by stock market movements? I honestly never realised that was the case.

They aren't, in the main...

Hoenir

hyubh said:

Hoenir said:

RoysV said:

Hoenir said:

RoysV said:

Pat38493 said:

RoysV said:

Well here's the update. I asked for all information to be sent to me, scheme rules, actuarial reductions etc but received nothing.

I got my quote yesterday evening    Full pension £5273        Reduced pension £3787   with lump of £25400  so lower than my March 22 quote.

I've rang the company up and spoke to two different people who have both told me that the figures change due to stock market fluctuations and that the trustees invest the money so it's down to them as to how the pension has performed and how much I get.

This is a deferred DB pension can someone please tell me I'm not going mad and this isn't correct or tell me they are correct and I've misunderstood for the last 40 years what a DB scheme is

If you are taking the pension early, or taking a lump sum, they could be sort of correct - most DB pensions have something in their rules that the trustees can alter the early repayment factors and commutation factors on pensions according to market conditions (even without informing members!).

Theoretically speaking, the adjustments should leave you no better or no worse off - i.e. the fact that your pension is lower, means that they think inflation will be lower in the following years and so the amount you get during the years before NRA is "worth" more.  Of course this is based on forecasts and guesswork so the real future might end up different.

If you are taking the pension at normal retirement age, then you are broadly correct - it should not change according to market conditions unless you take PCLS, but even this could be a bit more complicated if your pension has multiple tranches with different NRA.

Cheers. They just mentioned stock market performance and nothing about trustees moving the goal posts. Just seems strange that 3 years closer to NRA and the amount has gone down, didn't think it could happen

The Truss incident hit the bond markets hard. Will take time for the fund to recover. Supertankers aren't nimble. 

So are you saying that DB pensions are influenced by stock market movements? I honestly never realised that was the case.

In the private sector at least. Underpinning the pensions that are in payment (and due to be paid) will be an investment fund. Early reduction factors are entirely at the discretion of the Trustees on the advice of the scheme's actuaries. Ultimately the solvency of the fund is what matters.

That's a bit tenuous... retirement factors don't reviewed just because Donald Trump has done another flip-flop, 

Think you are overlooking the Truss debacle of 2023. Which coincides with the period the OP is referrng too. The pension scheme will by default highly invested into UK Government Gilts. Certainly won't be speculating by holding unhedged US $ assets. Though if it had been would be in much healthier financial position. 

PS. Personally I'd ignore the Trump noise for now. Going to take some months for the extent of the financial damage to reveal itself and it what form it takes. 

hyubh

Hoenir said:

hyubh said:

Hoenir said:

RoysV said:

Hoenir said:

RoysV said:

Pat38493 said:

RoysV said:

Well here's the update. I asked for all information to be sent to me, scheme rules, actuarial reductions etc but received nothing.

I got my quote yesterday evening    Full pension £5273        Reduced pension £3787   with lump of £25400  so lower than my March 22 quote.

I've rang the company up and spoke to two different people who have both told me that the figures change due to stock market fluctuations and that the trustees invest the money so it's down to them as to how the pension has performed and how much I get.

This is a deferred DB pension can someone please tell me I'm not going mad and this isn't correct or tell me they are correct and I've misunderstood for the last 40 years what a DB scheme is

If you are taking the pension early, or taking a lump sum, they could be sort of correct - most DB pensions have something in their rules that the trustees can alter the early repayment factors and commutation factors on pensions according to market conditions (even without informing members!).

Theoretically speaking, the adjustments should leave you no better or no worse off - i.e. the fact that your pension is lower, means that they think inflation will be lower in the following years and so the amount you get during the years before NRA is "worth" more.  Of course this is based on forecasts and guesswork so the real future might end up different.

If you are taking the pension at normal retirement age, then you are broadly correct - it should not change according to market conditions unless you take PCLS, but even this could be a bit more complicated if your pension has multiple tranches with different NRA.

Cheers. They just mentioned stock market performance and nothing about trustees moving the goal posts. Just seems strange that 3 years closer to NRA and the amount has gone down, didn't think it could happen

The Truss incident hit the bond markets hard. Will take time for the fund to recover. Supertankers aren't nimble. 

So are you saying that DB pensions are influenced by stock market movements? I honestly never realised that was the case.

In the private sector at least. Underpinning the pensions that are in payment (and due to be paid) will be an investment fund. Early reduction factors are entirely at the discretion of the Trustees on the advice of the scheme's actuaries. Ultimately the solvency of the fund is what matters.

That's a bit tenuous... retirement factors don't reviewed just because Donald Trump has done another flip-flop, 

Think you are overlooking the Truss debacle of 2023. Which coincides with the period the OP is referrng too. The pension scheme will by default highly invested into UK Government Gilts.

In general, the Truss premiership was a great boon to DB funding levels, as the cost of pension promises greatly reduced. Across all types of funded DB schemes (private sector and LGPS alike), assets declined in value, but liabilities fell much more, meaning funding levels greatly improved.

RoysV

Received more information late on yesterday. The quote I got was supposed to be sent out as FYI and not a retirement quote.
They've explained that it was to show what the quote should have been in Apr 23, the high one that looked out of sync with the others. They said they'd revalued the £3000 part when they shouldn't have. So that's fair enough but it did cause me a lot of stress.
Just had a phone call from them and they are going to look at my quote again so hopefully I'm on the way to getting it sorted. Crosses fingers and touches wood