Company pension reduced

[Mcandrew]

confused re company pension and state pension. I took my company pension at 55 knowing it was reduced payments as taken early. The company is PwC. I get my state pension in October (age 66) and today I got a letter from the people dealing with the PwC pension to say this pension will be reduced by 37% because of the state pension. Has anyone else ever heard of this. I thought company and state pensions were completely separatw.

Assuming it’s DB this is relatively common and will be detailed in the scheme rules.

Thank you - what is DB?

Defined benefit

I don't know if this is the same thing, but I took my NHS pension early. As soon as my state pension started at age 66, my NHS one dropped by around £150 a month. I assumed I was being taxed at source as it pushed me slightly over the limit.

Yes defined benefit - eg final salary.
it’s called a state pension offset

It may be that your combined state and works pension have taken you over the tax threshold. State pension is always paid gross, so any tax is collected from your occupational pension .

HSBC do this, they call it a “state deduction” and reduce the pension they pay to you as soon as you reach State Pension age, as the original scheme based your “final salary pension” on including the state pension- but didn’t make it very clear to any of the employees at the time. There is a massive campaign to fight this clawback- see https://www.midlandclawbackcampaign.co.uk/

Thank you all - it makes it a lot clearer to me. It is the defined benefit. I’ll follow the links above now. Thank you again.

Yes mine was, l knew about it though, I think it was called levelling, Private company, DB pension

I never even knew about clawback, sorry to hear this.

I've never heard of this either. What a nightmare if you had been planning based on keeping your full private pension.

I never knew this either crap was also looking at early retirement with state at 67

I didn't know about this either. will look at mine now too. Sorry this is happening to you.

Check the terms of your DB pension csrefully. It may well not be the same for you. Both DH and I have DB pensions (mines TPS), neither include clawback. It's not standard.

If you’d been planning sensibly you’d be reading the terms of your pension and this wouldn’t be a surprise. It’s not some unavoidable nightmare that is ruining plans.

Also remember the tax!

way it works is they pay more than you should receive prior to state pension age then less than you would have once you receive state pension to even it out.

Is this deduction for the people who contracted out around 20 years ago?

“Why is money being deducted from my state pension?” – new LCP guide answers ‘the most commonly asked question in pensions'

My db pension decreases once by 1000 pa once I hit state retirement. It's about 10%?

No, nothing to do with that.

Is this only for final salary pension schemes, not one where I pay eg 10% of my salary each month? At my previous three companies they were all large and had a dedicated pension person and I don't recall this ever coming up.

If you were affected it would be in your pension documents. A defined benefit scheme isn't always final salary and you may or may not pay contributions. It is unusual nowadays to have a defined benefit ischeme that you dont pay contributions to so that would not really be an indicator. Best to check the individual pensions. It will be somewhere in the paperwork.

Is this just for private db pensions or are civil service pensions affected by this?

No

Most civil service shouldn't be but if you read your pension documents it will give you any information that is relevant to you.

I wouldn't rely on a random answer from here, always best to read the actual rules of your scheme so you know what's corrent