DB pension forecast - what assumptions to ask for when requesting a forecast

SarahB16

By way of background once a year I request my DB pension forecast from a workplace (private sector) I left in c.2008.  They are willing to forecast up to five years’ away (i.e. if I request the forecast in November 2025 they will forecast my pension as though I commence drawing it in November 2030). 

The DB pension comprises of two tranches (both are definitely DB and not DC) and both tranches must be taken at the same time.  One tranche has a normal retirement age (NRA) of 60 and the other has a NRA of 65. 

I have kept all the correspondence I received when working for that company but don't receive a personalised annual benefit statement.  I do receive more general correspondence from them in terms of the assets of the pension fund, etc.  

In November 2030 I won’t have reached the age of 60 but I am requesting this pension forecast so that I can see the trend re the increasing pension (due to the lower actuarial reduction with each subsequent year) and can query any anomalies with the assumptions they have used from one year to the next. 

To be able to do this I wish to know the underlying assumptions they have used and this is what I am kindly requesting your help with. 

What do I need to include in my email when requesting my pension forecast?

Requests I think I need to ask for in respect of both tranches are:

·        What is the actuarial reduction that you have applied to each tranche due to taking it before its normal retirement age. 

·        Can you confirm how the annual increase is being calculated for each tranche (e.g CPI, RPI, fixed 5% etc) ahead of drawdown.    

What other factors do I need to request please? 

PensionsStuff

Breakdown of your pension at your leave date (if you dont already have it), revaluation used for each pension tranche until NRA , escalation rates for each one once in-payment, assumption used for future inflation when providing future projections, full list of current factors (early/late/commutation) for all applicable ages. Alongside then just any actual projections you want

Whether you get all depends on how good the administrator of your pension is, depsite it all being very easy information i wouldnt hold much hope judging by the many comments people here make about how helpful some can be. 

DRS1

It sounds like you have been asking for these forecasts for a while.  Have you asked these questions for each forecast or is this new?

Early retirement factors can change so yes ask about them but the increases in deferment will tend to be consistent from year to year (unless you are asking what the actual RPI figure is this year).  So maybe that is a once and done question.

Actually there may well be a table of early retirement factors at various ages with different factors for the age 60 and age 65 parts of the pension.  Maybe you could ask to see that table (and ask to be notified if it is going to be changed).  Saves asking the same question every year.

Do your forecasts have figures for GMP in them?  Maybe ask if there has been a GMP reconciliation exercise?  Or maybe only do that if the GMP figures change.  If they do a GMP equalisation exercise you'll get separate letters about that so no need to ask.

Do the forecasts talk about lump sums.  So is there a base pension figure with an alternative pension plus lump sum figure?  If so maybe ask what commutation factors they use and whether they can be changed.  Not changed by you but by the trustees.

Do people asking for forecasts really ask this sort of thing?  Isn't some of it included as a matter of course in the forecast or in the statement you got when you left?

And how comes you aren't expected to wait until you are within 5 years of NRA to get such a forecast?

Cobbler_tone

It always surprises me just how much people are left in the dark with their DB pensions.
On ours you can see any date live. We also have NRA’s of 60/65 and can ask to take them separately, along with a slider on the lump sum and bridging option.
If you have the scheme details to show things like the two parts having to be taken together, I’m surprised it doesn’t detail what increases are based on. You could find there are different caps for each section.

You could ask about the impact of a lump sum, i.e the max or a lower one of your choosing.