Deferred pension

Stevesam64
Stevesam64 Posts: 9 Forumite
in Pensions, annuities & retirement planning
Hello,
Hope that someone can just give me some advice please.
I will be 55 soon and I have a Xerox final salary pension but they say I don't have enough pension to meet the GMP.
I joined the pension in 1991 and left in 2002.
Deferred pension when I left was £3526.80.
Pension in 2017 was £5912.56 so that's about a 70% increase in 16 years.
The transfer value is £101960.
Will it be better just to keep the pension in the Xerox scheme and just wait until I can receive it, and do you know how many more years I will have to wait?.
Or do I just take the pot and buy a annuity with it.
If I do go down the second route I do know that I will need to get some finance advice.

Thanks for any help.
Steve.
«13

Comments

  • hyubh
    hyubh Posts: 3,531 Forumite
    First Anniversary Name Dropper First Post
    Stevesam64 wrote: »
    Hello,
    Hope that someone can just give me some advice please.
    I will be 55 soon and I have a Xerox final salary pension but they say I don't have enough pension to meet the GMP.

    This means, the Guaranteed Minimum Pension the scheme must pay at GMP age will be higher than if you took your pension now, early (and therefore with an 'actuarial reduction'), and received ordinary scheme increases to GMP age. So, the scheme won't allow you to take the pension early.
    I joined the pension in 1991 and left in 2002.

    If you left before 6th April (maybe) and the scheme uses the so-called 'fixed rate' method of revaluing GMP between leaving and GMP age (likely, as a private sector scheme), the GMP would have been increasing at 6.25% pa, and will continue to do so to GMP age.
    Will it be better just to keep the pension in the Xerox scheme and just wait until I can receive it, and do you know how many more years I will have to wait?

    GMP Age for a man is 65. At that point the GMP will stop revaluing at 6.25% or whatever, and instead increase by CPI capped to 3%.
    Or do I just take the pot and buy a annuity with it.

    If you want a regular income in retirement, the sticking with the scheme would very probably be the better option. If you were to transfer out, it would be to draw the pension flexibly rather than buy an annuity (which isn't to say you should do that).
    If I do go down the second route I do know that I will need to get some finance advice.

    Yes, legal requirement since the transfer value is over 30K.
  • Audaxer
    Audaxer Posts: 3,508 Forumite
    First Anniversary Name Dropper First Post
    Looking at the Xerox Final Salary Scheme website, the Normal Retirement Age is 65, so if you take your pension at 55 it is likely to be reduced significantly. The figure of £5,912.56 is I assume the estimated pension you will get if you take it at your Normal Retirement Age of 65.
  • campbell19925
    campbell19925 Posts: 203 Forumite
    First Anniversary First Post
    Your final salary will pay an annuity - and a good one by the seems of it.
    Your scheme will have a retirement date. Look for that on paperwork or ring the scheme. Thats when you will receive the benefits. You could retire earlier and get a % of this as long as over 55.

    Transfer value of 100k giving a £6k per year annuity. Thats very good.
  • Stevesam64
    Stevesam64 Posts: 9 Forumite
    Thanks for all the information so far
    But can anyone give me a idea of when I can get my pension if I stop in the Xerox scheme, just a guide will be great
    Thanks
    Steve
  • Bimbly
    Bimbly Posts: 483 Forumite
    First Anniversary Name Dropper First Post Combo Breaker
    Stevesam64 wrote: »
    Thanks for all the information so far
    But can anyone give me a idea of when I can get my pension if I stop in the Xerox scheme, just a guide will be great
    Thanks
    Steve
    This was answered above. It seems that the normal retirement age for your scheme is 65, so you can access your pension then.

    Most schemes, and I assume yours is the same, will let you take it early from age 55. But the earlier you take it, the more the yearly amount you recieve will be reduced. Eg, if it reduces by 4% per year then you will get 40% less pension at 55.

    But you should check with your scheme, as schemes differ. This should be easy for them to answer.
  • campbell19925
    campbell19925 Posts: 203 Forumite
    First Anniversary First Post
    Stevesam64 wrote: »
    Thanks for all the information so far
    But can anyone give me a idea of when I can get my pension if I stop in the Xerox scheme, just a guide will be great
    Thanks
    Steve

    I've just told you. Your scheme will have a retirement date - when you can start drawing money as an annuity + lump sum if you want. Look for that on the paperwork or contact;

    Conduent HR Services
    Conduent HR Services
    Temple Circus House
    Temple Way
    BRISTOL
    BS1 6HG
    United Kingdom

    They manage your scheme (found this on the findpensions.gov.uk website) and will know more than us on here. They will explain when you can draw the benefits should you want to access them earlier than scheme retirement date. There's nothing more to tell you.
  • Stevesam64
    Stevesam64 Posts: 9 Forumite
    The age is 65 but I can't get it at 55 because it's under the GMP, so what I'm asking is if I just keep it with Xerox do you think I may get it at say 57, I know that there will be a % drop if I take it early
  • Brynsam
    Brynsam Posts: 3,643 Forumite
    First Anniversary Name Dropper Combo Breaker First Post
    campbell19925 wrote: »
    You could retire earlier and get a % of this as long as over 55.

    Not if early retirement means that the GMP won't be covered when it becomes payable.

    OP, I presume you are asking for the earliest date at which your GMP would be covered by your pension if paid before age 65. If you ask the administrators, they may or may not be able to give you an indication, but in the absence of a crystal ball won't give you a definitive answer. It's not something anyone here can answer, because it depends entirely on how your pension built up (i.e. how much of it is GMP/how much is 'excess over' GMP).
  • Stevesam64
    Stevesam64 Posts: 9 Forumite
    Hi all they said was try again if a few years time
  • Silvertabby
    Silvertabby Posts: 9,021 Forumite
    First Anniversary Name Dropper Photogenic First Post
    Stevesam64 wrote: »
    Hi all they said was try again if a few years time


    Try again at 60. That said, you may still fail the GMP test (ie, your actuarily reduced pension can't be below your GMP) so assume 65 to be on the safe side.

    I don't know if your scheme offers commutation (smaller pension, bigger tax free lump sum) but trying to do that could also lead to a GMP test 'fail'.
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