Stepped Pension

ray4221

xylophone said:

The scheme guide just says a stepped pension will increase your AA usage..."...and you should consider this prior to choosing this option...

Have you tried googling BAE Systems Triggering the Annual Allowance?

Hi, yes ..."...Please note this also applies if you are a deferred member, as even though you are not otherwise contributing to the scheme, the increase in your pension by taking the Stepped pension option is tested against your AA when you retire.

The DB scheme administrator can provide a quotation of the estimated Pension Input Amount that would arise..."

So yes it is 'tested against your AA' have asked Aptia for a 'quotation of the estimated Pension Input Amount' should get an answer from them in about 5 weeks.....

Their answer may or may not help with this.

ray4221

xylophone said:

Have you obtained a state pension forecast? What exactly does it show?

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

Yes full state pension, fortunately.

xylophone

Do keep us updated with progress.

squirrelpie

Could you also request a tax-free sum (25%), either as an alternative or in addition to asking for a stepped pension? How does that affect your overall pension payments over your assumed lifetime? [ The BAE Systems website seems poorly organized, referring to a "Stepped Pension Guide" but seemingly providing no way to access it! ]

xylophone

I am wondering whether taking the stepped option means that a PCLS is not available.

squirrelpie

No it doesn't according to the website, anyway. It's specifically mentioned as an option to choose both.

QrizB

ray4221 said:

The DB scheme administrator can provide a quotation of the estimated Pension Input Amount that would arise..."

So yes it is 'tested against your AA' 

I might be hopelessly niave, but if it's a PIA and tested against the AA it's going to be like an employer contribution? And the £3600 limit on tax relief isn't relevant? And unused AA for the past three years should be available, of which the OP has plenty?

Secret2ndAccount

 QrizB said:

...but if it's a PIA and tested against the AA it's going to be like an employer contribution? And the £3600 limit on tax relief isn't relevant? And unused AA for the past three years should be available, of which the OP has plenty?

Correct

Marcon said:
You're missing the fact that OP has no earned income in the current tax year, so can't use carry forward:

Incorrect

ray4221

squirrelpie said:

Could you also request a tax-free sum (25%), either as an alternative or in addition to asking for a stepped pension? How does that affect your overall pension payments over your assumed lifetime? [ The BAE Systems website seems poorly organized, referring to a "Stepped Pension Guide" but seemingly providing no way to access it! ]

Yes , the tax-free sum is the same for the standard pension and the stepped pension but thats a very good point if the 'pension pot' has seemly increased by 112k then why has the 25% tax-free cash not also increased for the stepped pension, I will try and ask Aptia.

ray4221

Conclusion

After many months of banging my had against the brick wall of Aptia it was concluded that as I had left the pension scheme before the Annual Allowance legislation came into force (April 2006) I had not accrued any pension benefits in the scheme after this date therefore the annual allowance would not have been breached by taking a stepped pension – because there were no contributions after April 2006.

Speaking with Money Helper & Pension Wise was useful to a point and to the Pension Ombudsman (who I have limited faith in).

...Ironically as it has taken a year to sort out the stepped pension option has been removed so I can’t have it anyway! But being deferred the normal pension has improved and is now the better option so an acceptable outcome.

Lessons learnt

Obtain a copy of the scheme rules and understand them.

Be fully aware when you can take your pension and implications if you defer.

Make notes of any communication you have regarding your issue – (Tedious but worth it).

Raise an Internal Dispute Resolution Procedure (IDRP) with the company. The Trustees will be made aware of this and the managing companies don’t like that.

Keep asking questions and don’t give up.

Aptia do seem to be trying to improve but it has been a difficult journey with them.

Thank you for all your thoughts in helping me with this.