Back-indexed pension at "retirement age"?
Discussion
I took early retirement 12 years ago, aged 52. I'll be 65 in May this year.
I have two DB pensions. One is index linked, so just goes up every April.
The other has been paid at the same rate for 12 years, and I was told at the time that it would be back-indexed as soon as I hit retirement age. At the time, state retirement age was 65, but now I won't get my state pension until I'm 66.
My questions:
Will the pension fund managers stick to what they told me, and increase my payments when I reach 65, or will they go with the state pension age of 66?
How common is this back-indexing thing? Currently I'm getting £4.8k a year. The projected figure that I was given 12 years ago was £13k at 65.
I have two DB pensions. One is index linked, so just goes up every April.
The other has been paid at the same rate for 12 years, and I was told at the time that it would be back-indexed as soon as I hit retirement age. At the time, state retirement age was 65, but now I won't get my state pension until I'm 66.
My questions:
Will the pension fund managers stick to what they told me, and increase my payments when I reach 65, or will they go with the state pension age of 66?
How common is this back-indexing thing? Currently I'm getting £4.8k a year. The projected figure that I was given 12 years ago was £13k at 65.
Hopefully you have retained each of those promises in writing.
Cannot trust anyone now.
EG. The government introduced a revised State Pension with higher level of payments and lower years of qualification.
Do you think the latest arrangements apply to existing recipients of the State Pension?
I'm guessing the odd pension is mainly (if not all) Pre 1988 Guaranteed Minimum Pension (GMP). It's level in payment and only due for males from age 65. Often it's revalued at a fixed rate, which could be as much as 8.5%pa if you left the scheme before April 1988.
Schemes are only obliged to ensure you have at least that GMP minimum amount of income from age 65 when the GMP becomes due, so that's when they'll apply the revaluation in full.
Sometimes a scheme will decline early retirement if the early retirement pension will not be big enough to satisfy the GMP requirement at 65 and other times they'll give you a bridging pension only revalued to when you started it by a lower statutory amount but then step up your pension at 65 to meet the revalued GMP.
If my assumptions are correct it'll carry on being a level payment and the increase will occur at 65, not linked to the state pension.
Stating the obvious here, have you actually asked the pension scheme these questions as that's where you'll get the right answers!
Schemes are only obliged to ensure you have at least that GMP minimum amount of income from age 65 when the GMP becomes due, so that's when they'll apply the revaluation in full.
Sometimes a scheme will decline early retirement if the early retirement pension will not be big enough to satisfy the GMP requirement at 65 and other times they'll give you a bridging pension only revalued to when you started it by a lower statutory amount but then step up your pension at 65 to meet the revalued GMP.
If my assumptions are correct it'll carry on being a level payment and the increase will occur at 65, not linked to the state pension.
Stating the obvious here, have you actually asked the pension scheme these questions as that's where you'll get the right answers!
Edited by PistonHead007 on Tuesday 22 February 14:42
I joined the scheme in question in 1978, left at the end of 1997 when the employer offered voluntary redundancy, and I wanted to relocate to Cornwall.
The company is still in business (US based multinational), and still making top up payments into the fund.
I haven't spoken to anyone yet. I get payment slips each month from Mercers - is that who I should contact ?
The company is still in business (US based multinational), and still making top up payments into the fund.
I haven't spoken to anyone yet. I get payment slips each month from Mercers - is that who I should contact ?
Pre 88 GMP and post 88 GMP.
So, basically, all your GMP not just pre 88.
Other than that, that would also be my guess at what’s going on, especially as you retired very early.
And GMP remains payable from the old State Pension Ages of 65/60 so shouldn’t be affected by an increase in your actual SPA to 66.
So, basically, all your GMP not just pre 88.
Other than that, that would also be my guess at what’s going on, especially as you retired very early.
And GMP remains payable from the old State Pension Ages of 65/60 so shouldn’t be affected by an increase in your actual SPA to 66.
Finally got to speak to Mercers just now. They confirmed that my pension will increase when I am 65. They couldn't give me any figures, but the chap said that it was passed to someone who is currently working it out 2 weeks ago, and they would write to me soon. That would've been 3 months before my 65th birthday.
clockworks said:
Finally got to speak to Mercers just now. They confirmed that my pension will increase when I am 65. They couldn't give me any figures, but the chap said that it was passed to someone who is currently working it out 2 weeks ago, and they would write to me soon. That would've been 3 months before my 65th birthday.
Good luck with Mercers - have you seen their Trustpilot reviews? 96% 1 star!Well, I'm 65 today, and I still haven't had a reply from Mercer about this, so I just called the. Still "under review"!
I've found the original paperwork, dated December 2009
It states that as the early retirement pension does not cover the GMP, I will be paid the following:
A non-increasing pension of £4,735.68 which ceases when I reach 65
At 65, a GMP of £8,488.48.
It further splits the GMP into two:
£5140.20 accrued before April 1988
£3,348.28 accrued after April 1988
It talks about part of the GMP being increased "by the state", and part by the scheme?
I assume that this GMP is totally separate from the Basic State Pension, and that I will get the GMP figure from now on (plus any RPI increase going forwards), then the Basic State Pension on top of that from age 66?
My state pension forecast shows that I will qualify for the maximum Basic State Pension, as long as I contribute up until I reach 66.
I've found the original paperwork, dated December 2009
It states that as the early retirement pension does not cover the GMP, I will be paid the following:
A non-increasing pension of £4,735.68 which ceases when I reach 65
At 65, a GMP of £8,488.48.
It further splits the GMP into two:
£5140.20 accrued before April 1988
£3,348.28 accrued after April 1988
It talks about part of the GMP being increased "by the state", and part by the scheme?
I assume that this GMP is totally separate from the Basic State Pension, and that I will get the GMP figure from now on (plus any RPI increase going forwards), then the Basic State Pension on top of that from age 66?
My state pension forecast shows that I will qualify for the maximum Basic State Pension, as long as I contribute up until I reach 66.
clockwork said:
A non-increasing pension of 4,735.68 which ceases when I reach 65
At 65, a GMP of 8,488.48.
It further splits the GMP into two:
5140.20 accrued before April 1988
3,348.28 accrued after April 1988
It talks about part of the GMP being increased "by the state", and part by the scheme?
I assume that this GMP is totally separate from the Basic State Pension, and that I will get the GMP figure from now on (plus any RPI increase going forwards), then the Basic State Pension on top of that from age 66?
Thr GMP replacement is level in payment on the Pre 88 and CPI capped at 3%pa on the Post 88.
Separate from basic state pension.
PistonHead007 said:
clockwork said:
A non-increasing pension of 4,735.68 which ceases when I reach 65
At 65, a GMP of 8,488.48.
It further splits the GMP into two:
5140.20 accrued before April 1988
3,348.28 accrued after April 1988
It talks about part of the GMP being increased "by the state", and part by the scheme?
I assume that this GMP is totally separate from the Basic State Pension, and that I will get the GMP figure from now on (plus any RPI increase going forwards), then the Basic State Pension on top of that from age 66?
Thr GMP replacement is level in payment on the Pre 88 and CPI capped at 3%pa on the Post 88.
Separate from basic state pension.
lauda said:
Pre-88 GMP used to increase in payment, it's just that schemes weren't responsible for paying it, with the increases being paid by the state, along with your state pension. That changed in 2016 with the introduction of the new single-tier state pension so because you've reached state pension age after 2016, your pre-88 GMP won't increase.
Thanks.Is it likely that the GMP figure will have increased in the 12 years that I've been receiving the pension, or was it fixed in stone at the beginning of 2010, with any increases only applying from now on?
clockworks said:
Thanks.
Is it likely that the GMP figure will have increased in the 12 years that I've been receiving the pension, or was it fixed in stone at the beginning of 2010, with any increases only applying from now on?
It's like I told you in my reply.Is it likely that the GMP figure will have increased in the 12 years that I've been receiving the pension, or was it fixed in stone at the beginning of 2010, with any increases only applying from now on?
You will get paid Pre 88 level and Post 88 CPI 3%. The amounts of each you have been given.
Simples.
PistonHead007 said:
It's like I told you in my reply.
You will get paid Pre 88 level and Post 88 CPI 3%. The amounts of each you have been given.
Simples.
I understand the difference between level and CPI increase for the two figures.You will get paid Pre 88 level and Post 88 CPI 3%. The amounts of each you have been given.
Simples.
I was just wondering if the figures I was given in writing 12 years ago are the actual amount that I will be paid from next month, or if they were some kind of theoretical projection and what I get next month could be more or less?
From what Mercer have told me, they are still "working out the numbers", which suggests that what I get might be different to the figure given 12 years ago.
I haven't had anything in writing from Mercer (apart from monthly pay slips and P60s) since the deal was agreed 12 years ago.
clockworks said:
PistonHead007 said:
It's like I told you in my reply.
You will get paid Pre 88 level and Post 88 CPI 3%. The amounts of each you have been given.
Simples.
I understand the difference between level and CPI increase for the two figures.You will get paid Pre 88 level and Post 88 CPI 3%. The amounts of each you have been given.
Simples.
I was just wondering if the figures I was given in writing 12 years ago are the actual amount that I will be paid from next month, or if they were some kind of theoretical projection and what I get next month could be more or less?
From what Mercer have told me, they are still "working out the numbers", which suggests that what I get might be different to the figure given 12 years ago.
I haven't had anything in writing from Mercer (apart from monthly pay slips and P60s) since the deal was agreed 12 years ago.
I'm in the process of trying to get my GMP out of Mercers - must admit I can't quite belive it's £5K /yr from my first job where I was in the pension scheme for just 4yrs, over 40yrs ago.
As someone said earlier, it's got there based on increasing whatever the starting amount was by 8.5% per year but it's been made clear to me that the amount payable is fixed.
I'm still working and don't need the money, which is handy because a month past my 65th birthday I haven't had any, and I started the process four months ago.
Yes, it might be true that only a certain kind of person complains on Trustpilot, but there's an awful lot of that kind of person complaining about Mercer! I can't recall seeing any other company reviewed as badly. I've read industry articles where professional advisors are at their wits' end trying to deal with Mercer.
As someone said earlier, it's got there based on increasing whatever the starting amount was by 8.5% per year but it's been made clear to me that the amount payable is fixed.
I'm still working and don't need the money, which is handy because a month past my 65th birthday I haven't had any, and I started the process four months ago.
Yes, it might be true that only a certain kind of person complains on Trustpilot, but there's an awful lot of that kind of person complaining about Mercer! I can't recall seeing any other company reviewed as badly. I've read industry articles where professional advisors are at their wits' end trying to deal with Mercer.
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