Between 'Buy In' and 'Buy Out' stage....

butterflymum

does a deferred member of a Defined Benefits pension scheme usually have rights to a statement/ongoing statements during this stage?

Before a 2023 Buy In was secured, the scheme Trustee/Administrators provided Tri-ennial statements, with the next one due in 2024. 

Buy in has not yet reached full Buy out status (taking a bit longer than initially indicated).

Tri-ennial statement would have been due in April 2024, but was never produced. 

Administrators are stating deferred members statements have not/will not be produced. Is this usual? Is deferred member entitled, by legislation, to anysuch statement? If yes, I am struggling to find the relevant legislation and would appreciate direction to it. 

Thanks for any assistance offered.

Batch_2

Deferred members of a Defined Benefit (DB) pension scheme typically have a right to receive certain information about their benefits, but the frequency and format of such statements depend on scheme rules and regulatory requirements.

Under current UK pension legislation, there is no statutory requirement for trustees or administrators to provide annual or triennial benefit statements to deferred members. However, schemes often choose to do so as a matter of policy or in accordance with their own governing documents. If the scheme previously issued triennial statements but has ceased doing so following the buy-in process, this could be a decision based on administrative changes rather than a breach of legislative requirements.

For statutory entitlements, the Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013 set out the information that must be provided to deferred members upon request. Specifically, Regulation 6(4) states that a deferred member is entitled to request a statement of their benefits, which must be provided within two months of the request. However, there is no requirement for automatic periodic statements unless specified in the scheme rules.

Given the ongoing buy-in process and the fact that full buyout has not yet been completed, the scheme may still be transitioning its administrative processes. If you are looking for definitive guidance on whether the previous triennial statements were a legal requirement or discretionary, it may be useful to review the scheme’s trust deed and rules.

I hope this helps clarify the position.

Marcon

butterflymum said:

does a deferred member of a Defined Benefits pension scheme usually have rights to a statement/ongoing statements during this stage?

Before a 2023 Buy In was secured, the scheme Trustee/Administrators provided Tri-ennial statements, with the next one due in 2024. 

Buy in has not yet reached full Buy out status (taking a bit longer than initially indicated).

Tri-ennial statement would have been due in April 2024, but was never produced. 

Administrators are stating deferred members statements have not/will not be produced. Is this usual? Is deferred member entitled, by legislation, to anysuch statement? If yes, I am struggling to find the relevant legislation and would appreciate direction to it. 

Thanks for any assistance offered.

No. It's unusual for deferred members of schemes in the private sector to receive benefit statements at all, and there is no legal requirement to do so.

butterflymum

Thanks, both, I had thought that might be the case but was not sure, hence asking. I shall relay the info.

On a separate matter, but worth asking as I am here at moment  would either/both of you be aware if there is any legislation governing a deferred member of a defined benefit pension scheme (be that still under control of Trustee, or in Buy Out, or in Buy In stage), being able to request a full calculation/breakdown of how a figure/figures supplied to them have been arrived at (be that on an Annual or otherwise statement, or, more helpfully, at stage of a NRA (or later) Pension Quotation benefits? 

I have been reading the Pension board here on MSE for a few years now, especially when trying to assist family members, and thought I had recently seen some such legislation mentioned but can't seem to find it again (if it even did exist in first case). I usually screenshot and/or bookmark anything I might want to refer back to, but haven't in this instance (hence me wondering if I have just imagined reading it).

A recent experience of a pension provider sending someone out an Early Retirement guaranteed quotation last year, that on closer inspection and subsequent querying, was found to contain numerous errors, has made me think it would be useful to know if such full calculation breakdowns can be requested as standard.

Tommyjw

https://www.legislation.gov.uk/uksi/2013/2734/regulation/16 -  
If you request it and havent been provided the same within the last 12 months, then within two months after asking you should be given as a deferred member of a DB Scheme certain information outlined in Part 2 and Part 3 of Schedule 5 (below)

https://www.legislation.gov.uk/uksi/2013/2734/schedule/5 
1. A summary of the method for calculating the member's benefits and any survivors' benefits
2. The amount of the member's benefits and survivors' benefits payable from the date benefits are payable.

So in very short word,if you ask for it, you have to be given an updated statement within 2 months.

Also if you ask for it, you have to be given a breakdown of how it's calculated. However, as you can see, 'a summary' is quite vague. "Your benefits would increase in line with statutory revaluation and then an Early Retirement reduction as applied" technically fits the requirements. Some will be more helpful than others as to what level of breakdown they give, and how quickly they give it.

butterflymum

The old chestnut of legislation saying a 'summary' should be provided, resulting in those the requirement is placed on doing their best to see how vague their response can be, yet still 'technically' meeting the requirement.

It sounds from initial requests that I am aware have been made to Administrators, that 'vague' will be the best that they say those calculating the Pension Quotations will provide.

This has also thrown up another question. As you have both been very helpful thus far, which is appreciated, if either of you (or anyone else reading), might have any idea of what is usual/allowed in following situation, then comments would be welcome as I am not as familiar with all the ins and outs of Bulk Purchase Annuities (although I am reading, as I find it somewhat interesting, and, slowly, learning),  and finding it more difficult to help find answers.

My rough understanding so far, is that at Buy-In stage, the usual situation is that the Insurer then becomes responsible for calculating and paying sums to the Scheme Trustees to enable the Trustees and/or their Administrators to administer the Pensions.  The scheme Trustees/Administrators would, however, still be responsible for calculating individual members' Pension Benefits  and paying them out. 

Would it be unusual but allowed, for the Insurer to also be responsible for producing the individual Pension calculations for Scheme members during the Buy-In stage? Administrator has apparently stated the Insurer is doing such calculations. Have I misunderstood in my interpretation of what I was reading, and this is in fact the normal situation? I had believed from reading that only at Buy-Out stage would the Insurer then become responsible for calculating individual Pension Benefits and paying same (as Scheme would be wound up and no longer exist per se).

As far as I am aware, the original (and for the time being during Buy-In stage), scheme Administrators have sent out Retirement Quotations under cover of their own headed paper, with the existing Scheme title etc., still shown,  and absolutely no indication on either the quotes or associated acceptance paperwork,  that the figures offered have been provided by the Buy-In Insurer (a passing comment in relation to a question raised in another letter is, it seems, how the deferred member came to know that this was the case). 

Buy-Out stage is now much further away than was originally expected, and potentially towards end of 2026. 

Tommyjw

butterflymum said:

The old chestnut of legislation saying a 'summary' should be provided, resulting in those the requirement is placed on doing their best to see how vague their response can be, yet still 'technically' meeting the requirement.

It sounds from initial requests that I am aware have been made to Administrators, that 'vague' will be the best that they say those calculating the Pension Quotations will provide.

This has also thrown up another question. As you have both been very helpful thus far, which is appreciated, if either of you (or anyone else reading), might have any idea of what is usual/allowed in following situation, then comments would be welcome as I am not as familiar with all the ins and outs of Bulk Purchase Annuities (although I am reading, as I find it somewhat interesting, and, slowly, learning),  and finding it more difficult to help find answers.

My rough understanding so far, is that at Buy-In stage, the usual situation is that the Insurer then becomes responsible for calculating and paying sums to the Scheme Trustees to enable the Trustees and/or their Administrators to administer the Pensions.  The scheme Trustees/Administrators would, however, still be responsible for calculating individual members' Pension Benefits  and paying them out. 

Would it be unusual but allowed, for the Insurer to also be responsible for producing the individual Pension calculations for Scheme members during the Buy-In stage? Administrator has apparently stated the Insurer is doing such calculations. Have I misunderstood in my interpretation of what I was reading, and this is in fact the normal situation? I had believed from reading that only at Buy-Out stage would the Insurer then become responsible for calculating individual Pension Benefits and paying same (as Scheme would be wound up and no longer exist per se).

As far as I am aware, the original (and for the time being during Buy-In stage), scheme Administrators have sent out Retirement Quotations under cover of their own headed paper, with the existing Scheme title etc., still shown,  and absolutely no indication on either the quotes or associated acceptance paperwork,  that the figures offered have been provided by the Buy-In Insurer (a passing comment in relation to a question raised in another letter is, it seems, how the deferred member came to know that this was the case). 

Buy-Out stage is now much further away than was originally expected, and potentially towards end of 2026. 

Insurer would do the calculations . The administrator would just say "Hey give us a quote for this guy at age 60". Partly, because the Trustee has paid them a lot of money and likely done a lot of data work to make sure things will be done correctly so that will sit with the insurer who will in many cases have your calculations automated in a way and to such a degree of accuracy your original administratort may not have had (pretty much due to the benefit sof economies of scal of what they can do), but also because any factors involved in the calculations such as Early Retirement factors are now the insurers choice (rather than the Trustee/Actuary, given to the normal administrator) so it makes sense for them to do the full calculation ratehr than Truste the administrator has done it right even if they give them all the factors to use.

It provides a further barrier to giving people details on how the calculations of their benefits work, specifically if you want exact numbers, as you ask Administrator who has to ask Insurer who gives it to Administrator who gives it to you with each step having a timeframe and an opportunity for it to be missed e.g. Insurer incorrectly logs the request so it doesnt get dealt with.  

But again, it's very easy (largely, depending on how complex your benefits are) for the original administrator to work out the benefits themselves based on values given by the Insurers as you can work backwards to work out the factors involved, but thats back to the point of how helpful will they be..

Shimrod

Tommyjw said:

butterflymum said:

The old chestnut of legislation saying a 'summary' should be provided, resulting in those the requirement is placed on doing their best to see how vague their response can be, yet still 'technically' meeting the requirement.

It sounds from initial requests that I am aware have been made to Administrators, that 'vague' will be the best that they say those calculating the Pension Quotations will provide.

This has also thrown up another question. As you have both been very helpful thus far, which is appreciated, if either of you (or anyone else reading), might have any idea of what is usual/allowed in following situation, then comments would be welcome as I am not as familiar with all the ins and outs of Bulk Purchase Annuities (although I am reading, as I find it somewhat interesting, and, slowly, learning),  and finding it more difficult to help find answers.

My rough understanding so far, is that at Buy-In stage, the usual situation is that the Insurer then becomes responsible for calculating and paying sums to the Scheme Trustees to enable the Trustees and/or their Administrators to administer the Pensions.  The scheme Trustees/Administrators would, however, still be responsible for calculating individual members' Pension Benefits  and paying them out. 

Would it be unusual but allowed, for the Insurer to also be responsible for producing the individual Pension calculations for Scheme members during the Buy-In stage? Administrator has apparently stated the Insurer is doing such calculations. Have I misunderstood in my interpretation of what I was reading, and this is in fact the normal situation? I had believed from reading that only at Buy-Out stage would the Insurer then become responsible for calculating individual Pension Benefits and paying same (as Scheme would be wound up and no longer exist per se).

As far as I am aware, the original (and for the time being during Buy-In stage), scheme Administrators have sent out Retirement Quotations under cover of their own headed paper, with the existing Scheme title etc., still shown,  and absolutely no indication on either the quotes or associated acceptance paperwork,  that the figures offered have been provided by the Buy-In Insurer (a passing comment in relation to a question raised in another letter is, it seems, how the deferred member came to know that this was the case). 

Buy-Out stage is now much further away than was originally expected, and potentially towards end of 2026. 

Insurer would do the calculations . The administrator would just say "Hey give us a quote for this guy at age 60". Partly, because the Trustee has paid them a lot of money and likely done a lot of data work to make sure things will be done correctly so that will sit with the insurer who will in many cases have your calculations automated in a way and to such a degree of accuracy your original administratort may not have had (pretty much due to the benefit sof economies of scal of what they can do), but also because any factors involved in the calculations such as Early Retirement factors are now the insurers choice (rather than the Trustee/Actuary, given to the normal administrator) so it makes sense for them to do the full calculation ratehr than Truste the administrator has done it right even if they give them all the factors to use.

It provides a further barrier to giving people details on how the calculations of their benefits work, specifically if you want exact numbers, as you ask Administrator who has to ask Insurer who gives it to Administrator who gives it to you with each step having a timeframe and an opportunity for it to be missed e.g. Insurer incorrectly logs the request so it doesnt get dealt with.  

But again, it's very easy (largely, depending on how complex your benefits are) for the original administrator to work out the benefits themselves based on values given by the Insurers as you can work backwards to work out the factors involved, but thats back to the point of how helpful will they be..

That might be your experience, but certainly not how the process works for every pension.

Our pension is at buy-in stage, and with luck will have completed the buy-out in the next twelve months. At the buy-in stage, the pension administrators are still doing all the calculations for lump sums, early/late retirements etc, although since buy-in they are now using the insurer's factors for these calculations - which are more generous for the pension members. Monies are requested from the insurer to cover the pension payments,

We anticipate handing over the administration of pension to the insurer in the summer (this is driven by the insurer's timetable for taking on admin) at which point our current administration team will have no further involvement.

Marcon

Tommyjw said:

butterflymum said:

The old chestnut of legislation saying a 'summary' should be provided, resulting in those the requirement is placed on doing their best to see how vague their response can be, yet still 'technically' meeting the requirement.

It sounds from initial requests that I am aware have been made to Administrators, that 'vague' will be the best that they say those calculating the Pension Quotations will provide.

This has also thrown up another question. As you have both been very helpful thus far, which is appreciated, if either of you (or anyone else reading), might have any idea of what is usual/allowed in following situation, then comments would be welcome as I am not as familiar with all the ins and outs of Bulk Purchase Annuities (although I am reading, as I find it somewhat interesting, and, slowly, learning),  and finding it more difficult to help find answers.

My rough understanding so far, is that at Buy-In stage, the usual situation is that the Insurer then becomes responsible for calculating and paying sums to the Scheme Trustees to enable the Trustees and/or their Administrators to administer the Pensions.  The scheme Trustees/Administrators would, however, still be responsible for calculating individual members' Pension Benefits  and paying them out. 

Would it be unusual but allowed, for the Insurer to also be responsible for producing the individual Pension calculations for Scheme members during the Buy-In stage? Administrator has apparently stated the Insurer is doing such calculations. Have I misunderstood in my interpretation of what I was reading, and this is in fact the normal situation? I had believed from reading that only at Buy-Out stage would the Insurer then become responsible for calculating individual Pension Benefits and paying same (as Scheme would be wound up and no longer exist per se).

As far as I am aware, the original (and for the time being during Buy-In stage), scheme Administrators have sent out Retirement Quotations under cover of their own headed paper, with the existing Scheme title etc., still shown,  and absolutely no indication on either the quotes or associated acceptance paperwork,  that the figures offered have been provided by the Buy-In Insurer (a passing comment in relation to a question raised in another letter is, it seems, how the deferred member came to know that this was the case). 

Buy-Out stage is now much further away than was originally expected, and potentially towards end of 2026. 

Insurer would do the calculations . The administrator would just say "Hey give us a quote for this guy at age 60". Partly, because the Trustee has paid them a lot of money and likely done a lot of data work to make sure things will be done correctly so that will sit with the insurer who will in many cases have your calculations automated in a way and to such a degree of accuracy your original administratort may not have had (pretty much due to the benefit sof economies of scal of what they can do), but also because any factors involved in the calculations such as Early Retirement factors are now the insurers choice (rather than the Trustee/Actuary, given to the normal administrator) so it makes sense for them to do the full calculation ratehr than Truste the administrator has done it right even if they give them all the factors to use.

A buy in is simply an 'investment', and there's no reason the buy in provider would take on the administration at an early stage of the buy in/buy out process, unless that is part of the contract - which certainly isn't the case for all schemes, as you imply. That may be your experience, but like everything else in pensions....

OP, there is nothing to stop you contacting the trustees of your scheme directly to express your concerns and ask them what reassurances they can give/what information you can reasonably expect to be provided in due course. So often member enquiries are routed through the administrators and the trustees quite simply never get to hear of them - and many boards (sadly not all) are more than happy to assist once they know they have a worried member. 

butterflymum

Thanks for your input and take on the possibilities, @Tommyjw. I suppose that could be what is happening, but I would have thought if the Insurer was taking responsibility for the Pension Quotation, they would have 'owned' this responsibility (and any associated responsibilities should, for example, errors be found at any time and complaint be made), by the quotations mentioning them at least somewhere within the  paperwork. In this case, it doesn't. Only the Scheme is mentioned.

Your current and ongoing experience @Shimrod,  is more in line with what I was expecting, and is what I suggested to the deferred member when helping them. The original Administrator is still in place, and it is them that (until Buy-Out), would be facilitating paying the deferred member once they decide to start taking their benefits. 

Yes  @Marcon, I do wonder if the Administrator, being an extra layer of communication, is the issue in this situation. I had already suggested to the deferred member that direct contact with the Trustee might be their next step, so it is encouraging that you are suggesting the same (even if some boards might be more willing to engage than others).

Shimrod

butterflymum said:

Thanks for your input and take on the possibilities, @Tommyjw. I suppose that could be what is happening, but I would have thought if the Insurer was taking responsibility for the Pension Quotation, they would have 'owned' this responsibility (and any associated responsibilities should, for example, errors be found at any time and complaint be made), by the quotations mentioning them at least somewhere within the  paperwork. In this case, it doesn't. Only the Scheme is mentioned.

Your current and ongoing experience @Shimrod,  is more in line with what I was expecting, and is what I suggested to the deferred member when helping them. The original Administrator is still in place, and it is them that (until Buy-Out), would be facilitating paying the deferred member once they decide to start taking their benefits. 

Yes  @Marcon, I do wonder if the Administrator, being an extra layer of communication, is the issue in this situation. I had already suggested to the deferred member that direct contact with the Trustee might be their next step, so it is encouraging that you are suggesting the same (even if some boards might be more willing to engage than others).

Coming back to the original question, I would be very surprised if the administrator has taken the decision not to provide the statement, as that would be a decision for  the trustee. 
Are you sure that the administrator doesn't provide a portal  to access pension benefit statements? We used to provide annual benefit statements before enabling the online portal provided by the administrator. This allows members to see current pension benefits as well as get estimates for early retirement. However, only a small percentage (around 15% if I recall) of members have ever logged in. Possibly login details have been received and just filed away somewhere?

As an aside, if there is a portal, it may not be as useful as described above. My wife has a DB pension administered by Aptia (formerly Mercer), and it only gives benefits at date of leaving, over 20 years ago.