Pension Reduction Warning

[Read em and weep]

As some of you will know, those who served before 1980 and are drawing their service pension will have a service pension reduction when they reach state pension age. I was not aware of this and so it came as a surprise that my pension was being reduced by £741. I telephoned Equinity Pay Master to ask why and was told that it was because I had reached state pension age and it was to do with NI contributions made while serving between 1948 and 1980 (I joined in 1976). Bugger, I thought and put it down to sods' law. However, during a boring period in my new employment I decided to do some research. I discovered that there are 2 ways in which your pension can be reduced at state pension age, One was for service prior to 1975 (which didn't apply to me and was ignored) and the other was: are you ready for this? A reduction based on 87.03 p for each year of service prior to 1980, which in my case came to £2.61. To further complicate the issue, this new sum (£2.61 in my case) is quietly increased by inflation (more or less) for each year that you draw your service pension prior to state pension age. For me this complex arrangement meant that I should expect a pension reduction of about £4 not the £741 that had been made.

Are you still with me? I called Equinity again and asked for an explanation and a copy of the mathematics that they had used to arrive at their figure. They correctly explained that the calculations are carried out by the Pensions folk and they simply pay out what they have been told to. They raised a query and passed my problem to the Pensions folk. A week later I received a call from the Pensions folk The very helpful chap agreed that the £4 figure was correct and couldn't understand where the £741 had come from. He passed this information back to Equinity and told me that they were raising the issue to senior level and that they would get back to me.

A very nice lady from Equinity called me shortly afterwards and explained that there had been a keying in error and that my reduction should have been £4 and not £741. She assured me that this was simple human error and not a software glitch.

Throughout this adventure everyone I have spoken to have been extremely helpful and cooperative, but the lesson is, I think, clear. Check the figures that Equinity send, they are only human and can make mistakes. I'm glad I checked - I'm £737 better off than I would have been had I accepted my lot (minus tax, of course).

By the way, next year I'm looking forward to a less than inflation increase in my service pension due to the Government Minimum Pension rules. Enjoy Googling that one.

[Thomas coupling]

Well done that man and thank you for your due dilligence in this matter - I am in that same time frame as you. Good spot!
I wonder - should this be a sticky as more and more relevant people get wind of this post?

[MPN11]

Interesting, which inspired me to look at my RAF Pension file (Service 1965-2004). And yes, there just after my 65th birthday (2009) was a Paymaster notification saying "Pension reduced from birthday under National Insurance modification rules". I obviously didn't register the change, as it only meant a reduction of £0.58 per month!

[Chugalug2]

My forecast RAF Pension reduced to zero when I PVR'd in 1973 with 13.5 years service. You youngsters...

[Basil]

My forecast RAF Pension reduced to zero when I PVR'd in 1973 with 13.5 years service. You youngsters...
I left in '73 but had, a couple of years earlier, inquired re the effect of PVR on my gratuity. The answer was not acceptable but, in recognition of my offer to save the MoD a couple of years salary, I was awarded a ground tour :rolleyes:

Re the OP, some years ago I was asked to make a civil & state pensions enquiry and our complicated query was dealt with accurately and to my entire satisfaction by a very knowledgeable and helpful lady in HMRC.

[Thomas coupling]

But surely by then your Boar War pension had already kicked in:ouch:

[Gulf Flyer]

But surely by then your Boar War pension had already kicked inhttps://www.pprune.org/images/smilies/shiner.gif


Good one, that really did make me chuckle.

[Chugalug2]

Ct :-
But surely by then your Boar War pension had already kicked inhttps://www.pprune.org/images/smilies/shiner.gif

Nope, they'd all been hunted to extinction by the Boers. :E

[Heathrow Harry]

I have a pension forecast from my first employer of £ 12.75 a year..........

[Onceapilot]

My wife has a State pension forecast from about 6 years ago that includes full, earned contributions. She now has a real State pension expectation that:....starts 8 years later, is now less than full earned contributions and loses her approx £60,000 by age 68 (not life expectancy loss, BY age 68 loss!!). F.ers!
OAP

[Onceapilot]

REAW! Great post!! Thank you so much for your post. I have logged it away in my brain cell for 2023,... if we get that far!

OAP

[Wander00]

Chug - don't want to interfere, but worth checking with FPS that there is not a preserved pension for that period lurking somewhere.

[Chugalug2]

Wander00, not interfering at all, on the contrary thanks for your concern. I'll look at it again but I think it was all in QR's at the time; non contributory scheme, insufficient years served, etc. The clincher ISTR was the 38/16 cut-off, and I left well beforehand. No regrets in hindsight though, I enjoyed every minute (well, almost) that I served, mainly because it had all been (well, almost) flying. The RAF sought to spoil my fun by insisting I do a ground tour, followed I suspect by another and yet another. Carried on flying instead, and enjoyed every minute of it (well, almost).

[Thomas coupling]

It's easy looking back and being an armchair judge but why did people leave at their 12 year break point, if, while waiting another 4 more years, they got an index linked pension for the rest of their lives?
Over on another forum in pprune I am defending the baby boomer years, I think it was an element of luck, timing and determination that we earned our gold plated pensions.

Why should I be made to feel ashamed I have 2 civil servant gold plated pensions after my committment to the country and for putting myself in harms way? But talking to some youngsters today it's like I stole the crown jewels and was directly responsible for the state we are in now.

[Not a Crew Chief]

REAW - thanks for this and happy you got it all sorted. Just planning my retirement next year and have checked my AFPS docs. My actual OAP is 6 months after my 65th so will check on which date changes are effective. Will only lose £16 pa some of which will be returned in state pension graduated pension adjustment but now ready for any 'keying errors'.

[MightyGem]

This has been round before, but a good reminder.
https://www.pprune.org/military-aviation/458763-service-pension-reduction.html

Post #16 confirms what REAW says about the reduction.

[Krystal n chips]

Just to add to this topic, when you start drawing the state pension, and become fully retired, do keep an eye on your tax code change.

HMRC are adept at sending the wrong code to pension providers. When asked who was responsible for providing the tax code in the first place, the immortal answer was "well it's not your fault and it's not our fault " ( work that one out ! ) . This "unfortunate administrative error ", to use the current term of the moment, may also come with a tax demand for allegedly unpaid tax.

The remedy is very simple of course, it's just time consuming and a ball ache having to do their job for them.

[CapnPaddy]

@chugalug2 You were RAF I was Army. Your service ended right about when mine started. Otherwise, other factors are quite similar. You mentioned 38/16. That was also very similar to the Army. Immediate, but reduced, pension after 16 years reckonable service, full, immediate pension after 38 years reckonable service.

Under that rule neither you, nor I, would get a pension.

However, after some minimum number of years of reckonable service (which for the life of me I cannot remember) there was a Preserved Pension payable at age 60. @Wander00 is quite probably correct.

Reckonable service, for an officer, is counted from age 21. For a serviceman, from age 18. My reckonable service was from 1974 to 1984 and would have been around 9.5 years. My total service was from 1971 to 1984 - 13 years. I have been receiving a Preserved Pension lo, these last 5 years. (Not a lot but I am not complaining!)

Given our era, there could easily be differences in pension rules between the services. There's also a difference in when our respective service occurred. There could also be differences in the type of engagement - I was a Regular. Despite my last posting being Paymaster to an infantry battalion, I am no expert on pensions, but I would urge you to enquire about any potential Preserved Pension.

[CapnPaddy]

One post and I have proved my words. I am indeed no pension expert!

I did some more digging and found a document entitled ARMED FORCES PENSION SCHEME 1975 (AFPS 75) LEGACY ISSUES FACT SHEET 1 –PRE-1975 PENSION ISSUES

The very first sentence of this document reads "Prior to 1975 there were no rights to preserved pensions in any public or private pension schemes." Since chugalug2 PVR'd in 1973, the probability of an unclaimed, preserved pension is vanishingly small. My apologies if I might have raised your hopes.

[Basil]

CapnPaddy, the RAF reference to 16/38 was age 38 or 16 years service whichever was the later. In my case, having joined at age 23, I'd have been age 39. I left at my first option, which was 8 years, with a gratuity which paid for my instrument rating. If only I'd had the option at 5 years . . . (I'd probably have joined the 'wrong' airline ;) )

p.s. Know an Army officer who's just got his crown.