Back-indexed pension at "retirement age"?

[clockworks]

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.

[clockworks]

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 ?

[clockworks]

Thanks. I'll give them a call

[clockworks]

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]

Sheepshanks said:

Good luck with Mercers - have you seen their Trustpilot reviews? 96% 1 star!

That doesn't inspire confidence!

[clockworks]

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.

[clockworks]

Thanks. Just got to wait for Mercer to get their act together then

[clockworks]

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]

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.

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]

Thanks for all the replies. Re-reading the paperwork from Mercer 12 years ago, after reading the replies on here, I finally understand (I think) what the score is:

I will effectively have 4 pensions (or, amounts that are treated differently) once I reach state retirement age in 12 months.

A pre-1988 GMP income of £5140 which will never increase
A post-1988 GMP income of £3348, which will increase by up to 3% with CPI

A further DB pension, currently £3216, which will increase by up to 5% with CPI

The maximum Basic State Pension, currently projected to be £9660, which will increase by whatever the government see fit.

Oh, and there's another DC pension, currently valued at around £10k, that will probably get left alone until I need to cash it in.

That's a total gross income of £21364, 75% of which is protected to an extent against inflation.
Not too shabby, especially if I continue with a bit of self-employment.



The reason why I'm trying to find out my exact position is because I'm considering releasing some equity from my house. That's a real minefield!

[clockworks]

Had a phone call from Mercer just before 5pm.

Pension will be £8629 from 1st June, but I won't actually get the increased payment until 1st July because they have already processed the June payments.