DB pension query .

alfmurph

My wife and 5 of her retired friends go for dinner occasionally . They have all worked for the same company for many years . In conversation it came up that four of them who took the big lump sum a few years ago have received a cheque as some kind of a top up while the two who took the 25% tax free lump sum and the monthly pension received nothing . The pension provider was taken over last year . Can someone tell me why please . My wife is one of the two who received nothing .

Brie

My guess is that the 4 who got the cheques were allowed to transfer out of the DB scheme and because that's rarely good advice they have received compensation.  Your wife and the other will have better guaranteed benefits.

DRS1

Why didn't your wife ask that question of the people who got the payment?  It would probably have been accompanied by a letter explaining it.

xylophone

When you say "took the big lump sum" what exactly do you mean?

For example, did they transfer out as suggested above?

Or did they take the maximum pension commencement lump sum possible using commutation (accepting a lower monthly pension in return for

a higher lump sum)?

Either way, was there a miscalculation at the time they took the money?

Or is there a possibility that the extra payment has nothing to do with the lump sum but relates to some other aspect of the scheme?

alfmurph

Why didn't your wife ask that question of the people who got the payment?  It would probably have been accompanied by a letter explaining it. No one volunteered the answer so it seemed a bit rude to ask .
As far as we are aware they took the lump sum instead of a pension .
Ai on google said it must be because they have been on emergency tax code but in some cases that would have been for 5 years .

Dazed_and_C0nfused

alfmurph said:

Why didn't your wife ask that question of the people who got the payment?  It would probably have been accompanied by a letter explaining it. No one volunteered the answer so it seemed a bit rude to ask .
As far as we are aware they took the lump sum instead of a pension .
Ai on google said it must be because they have been on emergency tax code but in some cases that would have been for 5 years .

How you think AI could possible answer this is beyond me.

Lots of people are on the emergency tax code, currently 1257L, their whole lives.  It's utterly irrelevant to this.

DRS1

alfmurph said:

Why didn't your wife ask that question of the people who got the payment?  It would probably have been accompanied by a letter explaining it. No one volunteered the answer so it seemed a bit rude to ask .
As far as we are aware they took the lump sum instead of a pension .
Ai on google said it must be because they have been on emergency tax code but in some cases that would have been for 5 years .

Surely it would just be natural to say "I never got that. How comes you did?"

I think you can tell that we are all a bit confused about the "big lump sum" bit.  Without more to go on I doubt anyone here can explain what has happened.

Marcon

alfmurph said:

Why didn't your wife ask that question of the people who got the payment?  It would probably have been accompanied by a letter explaining it. No one volunteered the answer so it seemed a bit rude to ask .
As far as we are aware they took the lump sum instead of a pension .

If they all worked for the same company for years, and were in the pension scheme for the whole time, they couldn't have taken a lump sum instead of a pension - the amounts involved would have been too high. They could have transferred 'the big lump sum' to another pension scheme and the cheques received might have been in relation to something called Guaranteed Minimum Pension Equalisation - but that's pure speculation based on close to zero relevant information! Has your wife had any correspondence about this topic?

The only way your wife can satisfy her curiosity is to ring up one of her chums and ask.

Marcon

Brie said:

My guess is that the 4 who got the cheques were allowed to transfer out of the DB scheme and because that's rarely good advice they have received compensation.  Your wife and the other will have better guaranteed benefits.

'Allowing' doesn't come into it. Just to clarify (yet again) that nobody can prevent someone with a statutory right to transfer out of a DB scheme from doing so, provided that:

• they have received regulated advice if the transfer value is £30K or more;
• they are transferring to a receiving scheme which will accept the transfer;
• the transfer process doesn't raise any amber flags which remain unresolved; or red flags, which will block the transfer.

chapea

I got a lump sum in November tho only £145 plus pension raised £65 per year due to the GMP equalisation DB pensions were reevaluated from 2022 in my case but I did get a letter showing the breakdown 

David_Watts2

chapea said:

I got a lump sum in November tho only £145 plus pension raised £65 per year due to the GMP equalisation DB pensions were reevaluated from 2022 in my case but I did get a letter showing the breakdown 

Obviously only a guess given the information provided but that was my initial take, with "taking the big lump sum" meaning transferring out of the scheme as opposed to taking the pension.

Several of my ex colleagues transferred out of our scheme around the same time and some of them have received such payments but by no means all.

Different outcomes for those who transferred out v those who took the pension could mean there is no issue with the pension payments or that the transfer values have been reviewed first and pensions in payment will follow.