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  • FIRST POST
    • Stevesam64
    • By Stevesam64 9th Aug 18, 7:43 AM
    • 9Posts
    • 1Thanks
    Stevesam64
    Deferred pension
    • #1
    • 9th Aug 18, 7:43 AM
    Deferred pension 9th Aug 18 at 7:43 AM
    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.
Page 1
    • hyubh
    • By hyubh 9th Aug 18, 8:30 AM
    • 2,271 Posts
    • 1,744 Thanks
    hyubh
    • #2
    • 9th Aug 18, 8:30 AM
    • #2
    • 9th Aug 18, 8:30 AM
    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.
    Originally posted by Stevesam64
    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
    • By Audaxer 9th Aug 18, 9:46 AM
    • 1,333 Posts
    • 804 Thanks
    Audaxer
    • #3
    • 9th Aug 18, 9:46 AM
    • #3
    • 9th Aug 18, 9:46 AM
    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
    • By campbell19925 9th Aug 18, 9:51 AM
    • 146 Posts
    • 181 Thanks
    campbell19925
    • #4
    • 9th Aug 18, 9:51 AM
    • #4
    • 9th Aug 18, 9:51 AM
    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
    • By Stevesam64 9th Aug 18, 10:16 AM
    • 9 Posts
    • 1 Thanks
    Stevesam64
    • #5
    • 9th Aug 18, 10:16 AM
    • #5
    • 9th Aug 18, 10:16 AM
    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
    • By Bimbly 9th Aug 18, 10:25 AM
    • 137 Posts
    • 120 Thanks
    Bimbly
    • #6
    • 9th Aug 18, 10:25 AM
    • #6
    • 9th Aug 18, 10:25 AM
    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
    Originally posted by Stevesam64
    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
    • By campbell19925 9th Aug 18, 10:28 AM
    • 146 Posts
    • 181 Thanks
    campbell19925
    • #7
    • 9th Aug 18, 10:28 AM
    • #7
    • 9th Aug 18, 10:28 AM
    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
    Originally posted by Stevesam64
    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
    • By Stevesam64 9th Aug 18, 10:49 AM
    • 9 Posts
    • 1 Thanks
    Stevesam64
    • #8
    • 9th Aug 18, 10:49 AM
    • #8
    • 9th Aug 18, 10:49 AM
    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
    • By Brynsam 9th Aug 18, 10:50 AM
    • 1,676 Posts
    • 1,230 Thanks
    Brynsam
    • #9
    • 9th Aug 18, 10:50 AM
    • #9
    • 9th Aug 18, 10:50 AM
    You could retire earlier and get a % of this as long as over 55.
    Originally posted by campbell19925
    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
    • By Stevesam64 9th Aug 18, 11:04 AM
    • 9 Posts
    • 1 Thanks
    Stevesam64
    Hi all they said was try again if a few years time
    • Silvertabby
    • By Silvertabby 9th Aug 18, 11:32 AM
    • 3,342 Posts
    • 4,931 Thanks
    Silvertabby
    Hi all they said was try again if a few years time
    Originally posted by Stevesam64

    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'.
    • Stevesam64
    • By Stevesam64 9th Aug 18, 11:46 AM
    • 9 Posts
    • 1 Thanks
    Stevesam64
    Ok
    Thanks for all the information looks like I may be stuck with it unless I can transfer it out, just seams mad to me I got 100k in there and get to 55 and can't have any of it because of the GMP
    • sandsy
    • By sandsy 9th Aug 18, 12:04 PM
    • 1,389 Posts
    • 846 Thanks
    sandsy
    Ok
    Thanks for all the information looks like I may be stuck with it unless I can transfer it out, just seams mad to me I got 100k in there and get to 55 and can't have any of it because of the GMP
    Originally posted by Stevesam64
    You don't have 100k in there, you have a promise a lifetime inflation linked income from age 65 and the trustees have assets of 100k notionally earmarked to pay your benefits on which they will earn investment returns over the next 10 years.

    What they are saying is that to pay you early would cost more than 100k, even after the early retirement factors are applied, as payment of the GMP would cost more than this. At some future point, the situation may change and at 65, they have to pay it irrespective.
    • Stevesam64
    • By Stevesam64 9th Aug 18, 12:14 PM
    • 9 Posts
    • 1 Thanks
    Stevesam64
    I'm lost now, it says transfer value 100k
    But you say I don't have that
    • Silvertabby
    • By Silvertabby 9th Aug 18, 12:32 PM
    • 3,342 Posts
    • 4,931 Thanks
    Silvertabby
    I'm lost now, it says transfer value 100k
    But you say I don't have that
    Originally posted by Stevesam64
    No, you only have a promise of 6K per year from age 65. The 100K is just the sum of money the pension fund will pay you for taking yourself off their books.

    100K for an index linked pension of 6K is extremely poor value. Any reputable IFA would be reluctant to approve such a transfer based on the information you have given thus far.
    • Stevesam64
    • By Stevesam64 9th Aug 18, 12:39 PM
    • 9 Posts
    • 1 Thanks
    Stevesam64
    Can you explain a bit more why it's poor value and I don't understand the part about the transfer
    Sorry if I'm being a bit thick
    • xylophone
    • By xylophone 9th Aug 18, 12:54 PM
    • 26,851 Posts
    • 16,000 Thanks
    xylophone
    Hi all they said was try again if a few years time
    See

    https://forums.moneysavingexpert.com/showthread.php?t=1439747

    I joined the pension in 1991 and left in 2002


    You left with a deferred DB pension.

    Your Scheme was contracted out of the State Earnings Related Pension Scheme.

    You were a member between 1991 and 2002 and will have built up post 1988 GMP.

    This meant that from age 65 (GMP age), your scheme had to guarantee to pay you a pension at least equal to what you would have received from the State Scheme.

    When you left service, you should have been given a statement of deferred benefits showing your GMP (all post 1988) and your excess over GMP.

    It is very probable that your scheme uses "Fixed Rate" revaluation of your GMP.

    See https://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/18/what-is-a-gmp/

    The excess too must revalue in deferment.

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

    You can request early payment of your deferred benefits (which would be actuarially reduced for early payment).

    Because you have a GMP, the GMP test must be carried out.

    The purpose of this test is to ensure that if the request is approved, the Xerox pension that would remain in payment at GMP age would be at least as much as you would have received had you not been contracted out of the State Second Pension.

    If the GMP test is not met Xerox cannot allow you to receive early payment of benefits

    https://www.plsa.co.uk/Policy-and-Research-Defined-Benefit-GMPs



    FAQ may be of interest.

    Have you obtained a State Pension Statement?

    https://www.gov.uk/check-state-pension
    • Silvertabby
    • By Silvertabby 9th Aug 18, 12:56 PM
    • 3,342 Posts
    • 4,931 Thanks
    Silvertabby
    Can you explain a bit more why it's poor value and I don't understand the part about the transfer
    Sorry if I'm being a bit thick
    Originally posted by Stevesam64

    If you were to take the 100k and put it into, say, a SIPP, it could go down in value as easily as up. If the value level pegged, and you took 6K per year as income, then your fund could be exhausted in less than 20 years. Your final salary pension, however, will only go up in value and is payable for the rest of your life.
    • xylophone
    • By xylophone 9th Aug 18, 1:15 PM
    • 26,851 Posts
    • 16,000 Thanks
    xylophone
    Can you explain a bit more why it's poor value
    How much capital do you think it would take to purchase a 6000 a year index linked annuity, particularly with widow's pension?

    http://www.sharingpensions.co.uk/annuity_rates.htm

    I don't understand the part about the transfer
    The value of your DB benefits is greater than 30,000 therefore you would require the advice of a Pension Transfer Specialist (for which you would have to pay and it would not be cheap) before transfer out of your DB Scheme to a personal pension.

    https://www.royallondon.com/Global/documents/GoodWithYourMoney/COMPANY-PENSIONS-FIVE-REASONS-TO-TRANSFER-OUT-AND-FIVE-REASONS-NOT-TO.pdf
    • xylophone
    • By xylophone 9th Aug 18, 1:22 PM
    • 26,851 Posts
    • 16,000 Thanks
    xylophone
    Do you have your statement of deferred benefits from when you left service?

    What does it show?

    Does the Scheme use "Fixed Rate"?

    When exactly did you leave?
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