Money purchase underpin
Posted: April 9th, 2022, 11:09 pm
Hi, I'm pretty well versed in how DC pensions work but I've turned my attention to a non-public sector DB scheme I was in for the first 7 years of my working life.
My statement of leaving benefits in 2002 outlines the following ( I started working there in 1995):
Post April 5,1998 GMP = £91 pa
Excess Portion (Fixed Addition) = £446 pa
Balance of Formula Pension (pre April 6, 1997) = £480 pa
Balance of post April 5, 1997 Formula Pension = £3240 pa
Total = £4258 pa.
However underneath this it says my money purchase underpin is £7134. And the notes say if the first section of numbers is lower than the underpin (after RPI increases), then I'll get the underpin figure at retirement (age 65 for this scheme).
So seems like I'm guaranteed a max of £7134 pa.
Is that right?
However, when I requested a transfer value in 2016, the letter did not mention the money purchase underpin. And only says that my deferred pension will be worth £4128 pa. If I leave it where it is.
Does that mean my money purchase underpin has been "removed" or, being a cynic, are they only quoting the lower number in an effort to encourage me to transfer out?
The transfer value offered in 2016 was £146k.
I've chosen to leave the pension where it is given the guaranteed nature of it, but I wonder if anyone has a view on the transfer value? I acknowledge the value on offer may be quite different now we are 6 years on from that offer though.
Thanks in advance.
My statement of leaving benefits in 2002 outlines the following ( I started working there in 1995):
Post April 5,1998 GMP = £91 pa
Excess Portion (Fixed Addition) = £446 pa
Balance of Formula Pension (pre April 6, 1997) = £480 pa
Balance of post April 5, 1997 Formula Pension = £3240 pa
Total = £4258 pa.
However underneath this it says my money purchase underpin is £7134. And the notes say if the first section of numbers is lower than the underpin (after RPI increases), then I'll get the underpin figure at retirement (age 65 for this scheme).
So seems like I'm guaranteed a max of £7134 pa.
Is that right?
However, when I requested a transfer value in 2016, the letter did not mention the money purchase underpin. And only says that my deferred pension will be worth £4128 pa. If I leave it where it is.
Does that mean my money purchase underpin has been "removed" or, being a cynic, are they only quoting the lower number in an effort to encourage me to transfer out?
The transfer value offered in 2016 was £146k.
I've chosen to leave the pension where it is given the guaranteed nature of it, but I wonder if anyone has a view on the transfer value? I acknowledge the value on offer may be quite different now we are 6 years on from that offer though.
Thanks in advance.