Aptia DB pension - different valuations

mrklaw

I have an old Nokia pension. coming up on 55 so looking for an illustration. The scheme administrators sent me a rebaselined figure of £17800 in todays numbers at NRA of 65. this was in February this year. They also provided the early retirement factor table - 0.82x at 5 years early, 0.70x at 10 years early. 

From that I’ve estimated aabout £14500 at 60 - (£17800*0.82). and this is what I’ve used for planning.

Aptia online has recently unlocked the ‘retirement illustrator’ for me - perhaps because I’m nearly 55? This shows you a figure ‘in todays money’ and lets you play with the retirement date and size of lump sum to give you calculations. nice.

except.. it gives a figure of £23k at 65 ‘in today’s money’ which is clearly not £17800. ok. (it does roughly line up with £17800 plus 10 years of indexing at 2.5% cap so perhaps its actually nominal?) 

also by changing the date, it gives a whole set of different numbers. If I try 60, it shows £17300 - but thats not £23000 * 0.82… for 55 it shows £12700 which isn’t 0.7x £23000. 

so not only is the NRA number different than the one the scheme managers sent me in February (and more than just a single year’s reindexing would suggest), but the early retirement factors don’t line up either. 

any thoughts? I’ve emailed them for an illustration at 60 to see if they agree with the website or not, and whether thats nominal or real (I’m guessing thats probably where the differential is coming from.)

mrklaw

from the members booklet: 

Appendix B – Early Retirement Factors

Factors are interpolated for complete months early.

Years before NRD Factor

0 1.000

1 0.961

2 0.924

3 0.890

4 0.858

5 0.827

and for calculation

which soundsl ike they calculate forward to NRA (capped at CPI for future years) and then apply ERF. 

so the 17800 they gave me would be 14500 ish at 60. but then why is 23000 not 19000 at 60? if its some GMP nonsense I have no idea how to decode that, I don’t think I had much if any of that

QrizB

mrklaw said:

except.. it gives a figure of £23k at 65 ‘in today’s money’ which is clearly not £17800. ok. (it does roughly line up with £17800 plus 10 years of indexing at 2.5% cap so perhaps its actually nominal?) 

The £17800 is in today's money. The £23000 is a projection to what you'll get when you're 65.

mrklaw said:

also by changing the date, it gives a whole set of different numbers. If I try 60, it shows £17300 - but thats not £23000 * 0.82

But is it £17800*0.82 then indexed from the date on your illustration until your 60th birthday?

mrklaw

I think the website is using the wrong wording. They say ‘in todays money’ but it has to be nominal.

if I take 17800 and apply eg CPI capped at 2.5% (I do have a little bit which is capped at 5% but can’t work it out right now) - that gives around 23000 at 65. so looks like they’re the same figure but just factoring in inflation or not.

If I use 17800 and mulitply by 0.827 I get £14700 which woudl be for 60. if I take that 14700 in todays money and project it forward to 60 (about 5.5 years) its around 17000

so from a planning pov for now I’ll stick to the 14700 figure (14300 net). Wish they were more careful with phrasing..

edit: is this not confusing language? 

DontRiskIt

I am not sure if you are a member of the hybrid Nokia Money Purchase/DB pension scheme and looked at taking a transfer value - not that this would be straight foward; however, I did take a look at this for my wife and on face value it looked favourable e.g. the value of pension was well below what could be purchased on the open market. I haven't pursued this as yet as I am still trying to get some questions answered by Aptia.

Albermarle

as I am still trying to get some questions answered by Aptia.

Good luck with that..........