Hi all,



Background:



I was employed by Lucas Engineering & Systems between 1990 and 1996, during the later stage of that period the majority of IT staff were outsourced to CSC Computer Sciences LTD, and they also took over the final salary pension scheme via TUPE.



When i joined L E & S in 1990, i transferred pension from my previous employer into L E & S scheme, it is treated as an AVC scheme.



The here and now :



I received a deferred statement in September 2015 ( will request another one soon )



When i left CSC my deferred pension amounted to £718.32 p.a

Made up of following components:



(1) £304.72 p.a is your estimated GMP and approx corresponds to the amount you would have earned in SERPS. This will be increased by the Scheme by 7% for each complete tax year from leaving date up to Normal Pension Date.



(2) £413.60 p.a. is that part of your pension which will be increased by the scheme in line with the prices index to a max of 5% for each complete year from leaving date till normal pension date. ( They switched from RPI to CPI in 2011 )



I understand all that stuff, but i am a bit puzzled about how my AVC fund is being treated ?



Most recent valuation ( as of July 2016) was just under £ 12 K.



I have asked about transferring or otherwise accessing this " pot",but i have received following seperate answers :



" Further to your recent query in respect of transferring your AVC fund,the scheme actuaries have confirmed that it serves as an underpin to your GMP and pre 1997 amount, it cannot be transferred out seperately from your Scheme benefits "



and



" When you decide to retire your AVC fund will be used to purchase the accrued GMP in the CSC Computer Sciences LTD pension scheme. The pension you receive will be at least this value with any remaining fund being used to buy a Pre 97 pension "



NB: These replies were from 2014, obviously before George Osbornes's recent pension changes.



I know i am most probably mis-understanding all this, but it sounds to me that the sum of money i transferred to LUCAS from previous employer is being used to pay for something i should be getting anyway ?



Appreciated input from the experts on here

“

When i joined L E & S in 1990, i transferred pension from my previous employer into L E & S scheme, it is treated as an AVC scheme.
Originally posted by deejaybee

”
Were either or both of (a) the Lucas/CSC scheme (b) the previous employer's scheme contracted out, i.e. from what period(s) of service does the GMP relate...? (Most private sector final salary schemes back in the day were contracted out, but not all.)




“

NB: These replies were from 2014, obviously before George Osbornes's recent pension changes.

”
I'd be pretty confident that hasn't changed things, as the scheme still needs to cover the GMP.

Before you joined Lucas in 1990, you were working for a company which offered an occupational pension scheme.



From when to when did you work for this company and what kind of pension scheme was it?



See here http://www.mycompanypension.co.uk/Types-of-Pension-Scheme

Thanks for replies both



Regarding the company i worked for before L E & S :



The period was from 1983 or 1984 to 1990



It was a small firm with probably 50-100 employees - Wright Air Conditioning LTD.



I cant remember any details about the pension scheme, i may have binned any paperwork i had for it once it had been transferred to L E & S, but will check through my folders just in case i do have any info.

When i transferred from previous employer to L E & S scheme - it went into a " TRANSFER ACCOUNT "



How does the account work:



Your transfer value is allocated to your own account.



The account is adjusted year by year, fully in line with the investment performance of the Lucas Pension Scheme.



When you retire:



# Your account is first used to provide any Guaranteed Minimum Pension from State Pension Age, any balance is then converted into a lifetime pension and added to the pension you have earned as a member of the Scheme.



# If your total pension exceeds the minimum level required by the State, the excess can be used on the Scheme's retirement options. These options are :



# Tax free cash



# A temporary pension to State Pension Age - if you retire early.



# Spouse's additional pension.

FRom reading the link that xylophone provided :



My understanding is that an "underpin" serves as an alternative to your "main pension" and the one that gives the best end result is selected - so you do not receive both..



My " underpin" ( The AVC fund ) originated from money i transferred from a previous employer, so if the above dfinition is correct, then if this AVC fund was not as good as the "main pension" then what happens to the AVC fund ? It cannot just vanish into thin air can it ?



regards - confused.com :-)



Think i will have to write a letter to the scheme trustees ( Mercer )

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/372354/CA14_Termination_of_Contracted-out_Employment_Manual.pdf







https://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/18/what-is-a-gmp/



Looking at the details you have given I think that the situation must have been that you had a contracted out occupational pension with Wright - if so, you would have pre and post 88 GMP.



If so, Chapter 9 of the first link refers.



When Lucas accepted your transfer in, I think it must have been on the basis that at age 65, the Wright Pension must in the first instance be used to cover your revalued GMP.



With regard to




“

Tax free cash



# A temporary pension to State Pension Age - if you retire early.



# Spouse's additional pension.

”
the information here seems relevant



http://www.trwpensions.co.uk/deferred/your-options-on-retirement/



After TUPE, CSC became responsible for your pension.



I am assuming that when you left CSC, you had a statement which showed your deferred pre 88/ post 88 and excess pre 1997 DB pension.



(In 1997 the GMP system for COSR schemes ended in favour of the Reference Scheme Test).



As far as I can make out, you cannot access the so called AVC because it must first be used to pay you your revalued GMP at age 65.



However, this is only a best guess from a non-expert - Mercer should be able to clarify.



Have you obtained a new state pension statement?

“

As far as I can make out, you cannot access the so called AVC because it must first be used to pay you your revalued GMP at age 65.
Originally posted by xylophone

”
I get it if this is with respect to the transferred-in GMP, but how does it effectively frank the Lucas/CSC scheme pension which (it seems?) includes its own GMP? (Genuine question - I'm not 100% familiar with the possible ins and outs of private sector DB, and my first thought was that the Lucas/CSC plan must have been contracted-in.)

Thanks again for further replies both



Will draft a letter to Mercer asap asking them for an explanation ( in non-technical terms if possible )



And at same time will request an updated statement of main pension.



( They are happy to send these, as long as no more than one request per year, but tends to be a bit of a delayin me receiving them )



I get seperate statements for the " AVC" component, which shows the size of pot, where it is invested, etc. - had that one very recently which showed position as of July 2016.

Had a look at the Revaluation i had done in 2015.



At time of leaving CSC ( 1996 )



Post 88 GMP - £304.72



Pre 97 Excess - £413.60



Revaluation ( 19/08/15 )



Post 88 GMP - £1179.17



Pre 97 Excess - £681.61



This is for " main " final salary pension of course.



Does this help to explain how they are treating the " AVC" fund ?



Apologies, i should have posted this info in first post, it was stapled on the back of another letter, and i didnt notice it till now