Lloyds bank No2 illustration basis

Noodling · 18 June 2018 at 11:51AM

I have a small DB pension in Lloyds Bank No2 scheme that has an NRA of 60, which is in 3.75 years for me.

I have just used the calculators on the website to
1. Request an up to date deferred annual pension figure. The answer was ~£1335.
2. Request an illustrative annual pension figure for NRA. The answer was ~£2215.

Roughly half of my current annual pension, is I believe, now GMP (post 1988) due to the 7.5% annual increase. However, to get from £1335 to £2215 in under 4 years (my NRA) I calculate requires an annual uplift of over 17% - which can’t be right.

I fully accept I may well have got my calculations wrong, but can anyone please shed any light on the basis of estimate they use for growth over the < 4 year timeframe.

Thanks.

Marcon · 18 June 2018 at 12:25PM

Could it be that you've entered a request for early retirement i.e. taking your pension now, 3.75 years before the NRA, which would mean an early retirement reduction factor has been applied to the illustration?

xylophone · 18 June 2018 at 12:48PM

https://www.lloydsbankinggrouppensions.com/assets/scheme_docs/no2/scheme_summary-8f266fc6e4340534d5ec3ce525499fd3ef3bb1547ab50f45c67a25b167731468.pdf

https://www.barnett-waddingham.co.uk/comment-insight/blog/2012/07/24/revaluation-for-early-leavers/

https://www.nao.org.uk/wp-content/uploads/2016/03/The-impact-of-state-pension-reforms-on-people-with-Guaranteed-Minimum-Pension.pdf

Are you male or female?

Have you obtained a new state pension statement?

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

Do you have statement of deferred benefits from when you left Lloyds which shows

pre 88 GMP (if any)
post 88 GMP
excess?

It is possible that you have been quoted a figure for taking your deferred pension four years earlier than NRA which as the first link explains would involve an actuarial reduction.

Noodling · 18 June 2018 at 4:57PM

Hi - thanks for replies.

The £1335 is definitely not an early retirement quote. Here's a cut and copy from output

Lloyds Bank Pension Scheme No. 2 Thank you for requesting an update of your deferred pension benefits in the Lloyds Bank Pension Scheme No. 2.
Your deferred pension in the Scheme at 18 June 2018 is £1,334.12 a year payable from normal retirement age.

I am Female. My new State Pension forecast is that with tax year 2018:2019 under my belt, I will have the maximum of ~£164 per week.

Original GMP at date of leaving was £145.08 and excess was £539.84. I left in 1992. (No pre 88 gmp)

Marcon · 18 June 2018 at 6:39PM

Probably best to contact the scheme and ask them.

xylophone · 18 June 2018 at 7:13PM

The GMP revalues at 7.5%, the excess at the statutory rate.
See Barnett Waddingham link above for changes since 1992.

SCHEME BENEFITS SUMMARY LLOYDS BANK PENSION SCHEME NO.2
says

If you leave then you will be entitled
to a deferred pension. This will be
based on your Pensionable Service
and Final Pensionable Pay at the
date you leave the Scheme. Your
deferred pension would then
increase, for each full year until you
retire, broadly in line with annual
increases in a National Inflation
Index called the Consumer Prices
Index (subject to a maximum of 5%
a year).
These increases are required under
legislation and have changed in the
past. This means that some of your
pension which you have already
built up for earlier Pensionable
Service may increase at a different
rate.

Check your personal situation with the scheme administrator.

https://www.lloydsbankinggrouppensions.com/further_information/contacts

Noodling · 19 June 2018 at 9:50AM

Hi, thanks again. I have written to them to ask their projection assumptions and how they expect to increase the amount so much in such a short timeframe.

Noodling · 15 July 2018 at 1:54PM

I thought I would update this thread with the replies I received. The first response I got was was a load of twaddle which, thanks to this forum, I was able to spot as such - EG it said GMP was uprated in deferment by a max of 3%!

The second response I got after querying the first, it copied word for word below. What do we think?

[FONT=&quot]Thank you for your e-mail dated 2/7/2018.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]Please see below information confirming the increases that will apply to your benefits in deferment, when calculated at Normal Retirement Date[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]Guaranteed Minimum Pension will be revalued at a fixed rate per annum, for each complete tax year from date of leaving to GMP age (which is age 60 in your case and is also your Normal Retirement Date under the Scheme).[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]Pension in excess of the GMP will be revalued by statutory revaluation orders.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]The reason for the apparent !!!8220;low!!!8221; increase in your current deferred pension figure (GMP & Excess) is that the calculation to current date is based on a single rate from date of leaving to the calculation date. Therefore the current revalued annual deferred benefit of £1,334.12 pa (payable at Normal Retirement Date under the Scheme) will reflect this. The reason for this is that we are unable to predict fluctuations in the factors used and do not wish to raise members expectations.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]When you reach your Normal Retirement Date under the Scheme your benefits will be recalculated in accordance with the Trust Deed and Rules to ensure they meet any minimum requirements you are entitled to and to ensure that any fixed rate revaluation has been applied to the GMP element.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]We trust that this resolves your query.[/FONT]
[FONT=&quot]
[/FONT]
[FONT=&quot]Can I rely on the higher figure for planning purposes?
[/FONT]

Lloyds bank No2 illustration basis

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free