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.

37% they say for me or in real terms I lose £216 per month from my £490 final salary pension.

Sadly no lowly clerk on lowly money

So are you still working?

I’m convinced I read paperwork given. I understood taking early pension would be a reduced pension - not hugely discounted once I reached 66. I actually thought working from the age of 17 no break and having a civil service pension and a corporate pension and the delayed (WASPI) state pension was fairly good planning but obviously not. As I said before I was just a clerk who turned up each day. . Certainly didn’t have the money to pay for independent pension advice,

Someone else further up the thread said if was state pension offset - and that does appear to be to do with SERPS.

Why isn’t this to do with that? Is it too much money being taken?

if it's like my DB pension it wasn't SERPS. Mine was that I had a higher amount of private pension between 60 and 66 which then went down when I received my SP. I had a choice though and I chose this, the figures were all written down in the pension details so I could make a choice to suit my circumstances. I don't think everyone gets a choice though, it depends on your pension scheme. This was a DB pension from a large company. OP needs to read the details thoroughly as hers may be completely different to mine. Mine was called levelling. My SP and private pension is about £18k so we are not talking huge amounts here, probably similar to OP.

SERPS is what caused me to have 43 years of contributions and still manage to get £50 a year less than full state pension.

SERPS relates to the second state pension where many people were opted out of paying into second state pension. They paid less in national insurance and money was diverted to a private or workplace pension. That's different from what OP has.
She has a DB pension which has written into the rules that a higher amount is payable until state pension age. Many schemes had this and it may have been called different things such as a pension supplement. It is designed to help tide over the years between stopping work and reaching state pension age if someone chooses to retire early.

If you are due to receive the full New state pension of around £230 a week then chances are you will also be paying some tax on your DB pensions as it will take you over the personal allowance.

Thanks. I have a LGPS pension and wasn’t aware of the deduction the OP has had. I’ll need to check the policy. Is this only an issue if you choose to take the pension early as I don’t think you can do that with the LGPS pension.

It's likely to be nothing to do with SERPS. More likely DB pension clawback where you have a higher starting pension and because of this the DB pension is reduced at State Pension Age.

LGPS doesn’t offer what the OP is describing, which is called levelling. You can take an LGPS pension early (from 55) but it will be reduced.

My DH opted to take a higher company pension until he reaches state pension age, at which point it will reduce.

I don’t think this applies to me, but I will ask the questions when I’m next doing pension planning.

I agree that it should be made absolutely clear to future pensioners how their schemes will work, so they can make informed choices before it’s too late to make a difference.

Great, thank you.

I thought they had stopped you from being able to take it early but it’s not something I’m interested in yet so hadn’t paid too much attention.

Itvis very unlikely in an LGPS pension and it o lying applies if you are taking it before state retirement age. If you plan to work until then you wouldn't be impacted even if it was.

Thank you.

It is. In all the paperwork and correspondence that you receive when starting a pension. It is also likely to be in any annual statement. If you read the terms and conditions when starting a pension then all the info you need is there.
Too many people just dont bother to read the information they are given and if they do read it and dont understand it they dont bother to ask at the time. It is crazy how little thought the majority of people give to what is probably the most important financial decision they will make.

I’ve asked the company for clarification / the letter I got was matter of fact and sparse with info. Once I get that I will post back. (My state pension itself is reduced because of SERPS so can’t believe the Company one is as well) one of my friends is also checking with her company pension scheme (vodaphone). Will post back when I have the info.

No … £198 per week because “ in the past you paid into a workplace pension instead of the Additional State Pension”

I’ve read into this a bit and it does seem to be a levelling process as was suggested by others.

I’m sorry this has come as a shock to you though.

Even at £198 per week added to your adjusted DB pension gives you £13,611 per year which takes you over the personal allowance so you will have some tax to pay. You also mention a corporate pension so you would need to add that to the above figure. You will pay tax on any income over £12,570. This will usually be deducted at source from the DB / corporate pension.

Does this apply to local government DB schemes too? I have never heard of this.

No

Sounds like yet another pensions scam.... i doubt very much this "clawback" was highlighted along side all the so called benefits the scheme is supposed to give the member.

It’s not a scam because how levelling works is that the OP has been receiving a higher amount on early retirement than she would otherwise have done, which is offset by a reduction once she can receive state pension. DB pensions are usually massively reduced by taking them early, so this offered a way to bridge the gap until proper retirement age.

It should absolutely be clearly explained to people so they know what they’re getting into though.

A scam in what way? Id be very surprised if a large accountancy firm supplied the members of its pension scheme with rules that deliberately lied about the features. What's your basis for suggesting that?