# Transition 66 abolished: Must occ db integrated pension scheme pay full pension?



## wok20 (18 Jun 2011)

As most company pensions are state integrated and will be reduced when you are getting state pension at age 65. Now that the government want to change the pension age to 66 and i fall into that catgory and retired at 62 can my company pension be reduced at 65 as i will not be getting any state pension for another year,this will apply to a lot of people who are allready retired


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## ajapale (18 Jun 2011)

wok20 said:


> my company pension states that at age 65 state integration will reduce my pension when state pension is due to me.as i now will not get my state pension until i am 66 can my company be reduced at age 65




Hi wok20 and welcome to AAM.

Does the following reflect your situation?:

_You are in receipt of an occupational defined benefit pension from your former employers scheme.

The scheme has written to you stating that since the scheme is integrated with state social welfare COAP the amount paid to you will be reduced when you reach age 65.

You have checked with social welfare and you are not entitled to any state pension until you are aged 66.

Your question therefore is: *Must the pension scheme continue to pay your full pension for a full year until the state old age pension kicks in at age 66?

*_This is an important question for members of DB (integrated/coordinated) schemes in light of government plans to progressively increase the age at which the OAP becomes payable.

If you do not already have the scheme rule book you should write to the pension scheme administrators and ask them for a copy of the scheme rule book as it applies to you.
aj
moderator


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## wok20 (18 Jun 2011)

As i will not be 65 until oct 2014 and was born 1949 i have been told i wll not get state pension until age 66 as transition year will have been abolished. I will be retireing at end of june and was wondering if the company should continue to pay full pension until age 66 as will not have any state pension.i am 62 at present


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## ajapale (18 Jun 2011)

A lot will depend on how the rules of the scheme is phrased. Can you get a hold of the rule book for the scheme?

On the face of it and not having seen the rule book I would say that the scheme would have to pay your full pension until the state pension kicks in.

In recent years while the COAP was increasing years such schemes gained as the COAP was deducted from the scheme pension payment. But now if the pension was reduced (in the worst case to €0 for 12 months) then I would expect the scheme not to deduct anything.


But check the rule book!

aj


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## ajapale (18 Jun 2011)

Ive updated your title.


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## wok20 (18 Jun 2011)

thanks for the help as far as i know the rule is on reaching 65 and in receipt of state pension company pension will be reduced by a 49th for every year of service from 1979 on single persons state pension


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## JoeRoberts (19 Jun 2011)

I don't think the rule book will shed any light on the subject. Many rule books are similar i.e. your pension will be based on final pensionable salary less x times the state pension.
Rule books were written before the new retirement age was proposed. They are based on the Deed. So unless they Deed was amended for the new retirement legislation then the booklet won't give a definitive answer. This is another grey area in the pensions arena that the Govt has not properly legislated for. 

I don't see that the scheme would deduct zero pension in year 1 or 2 until the sate pension becomes payable. Currently, the offset amount is the pension rate ruling at retirement date and is not changed in subsequent yrs when the state pension changes. So I don't see any requirement on the pension fund to change this practice.
Therefore I believe they can legitimately deduct x times the prevailing state pension at retirement date even though the state pension it is not in payment.

But this also brings into question the OP's contractual retirement date - like many contracts of employment it may not state the actual retirement date - often this has been assumed to be the retirement date stated in the pension trust deed or the date of the old age pension. So, OP may be entitled to remain in employment until the state pension is payable.

If employer does not want this then the trade-off may be to supplement the occ pension until the state pension is payable but this may not be feasible due to funding position of the plan. In such case the employer may pay the difference directly.

This whole issue seems to have been kicked to touch and there is little guidance available. But pension funds are not funded to pay for it and this is a problem. Trustees cannot automatically decide to pay it as they may disadvantage the scheme.

It needs proper legislation to cover all the above issues. 

I understand Ajapale's point about employers gaining from increased state pensions in recent yrs but an increase in pensions has always been factored into actuarial valuations. While the increase in the state pension during Berties period in office was probably more than this factor, the increase in actual salaries in this period has also been generally more than the assumed salary increase in actuarial valuations. So the implication that employers have some sort of buffer to pay for the state pension delay is not so clear cut.


( I have not been following this area for a while so feel free to correct me on the new retirement age legislation)


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## wok20 (20 Jun 2011)

Thank you for the reply joe you are right no one knows what is to happen as one can read the rules anyway that suits.i will be retired at month end age 62 and will have to wait and see  what is to happen.at present normal rule states 65 as normal retirement date on our book


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## ajapale (20 Jun 2011)

What does the rule book say about the method of integration with SW?


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## wok20 (20 Jun 2011)

the rule states that from 1974 to normal retirement age 65 for every year of service a 49th will be deducted for every year of service from single persons allowance from the the state pension.hope i am wording this correct


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## ajapale (20 Jun 2011)

JoeRoberts said:


> Therefore I believe they can legitimately deduct x times the prevailing state pension at retirement date even though the state pension it is not in payment.



Unfortunately for you, it appears to me that Joe is correct.

The reason I asked the questions is that I am aware of "co-ordinated" DB schemes which operate differently - a slightly reduced contribution (based on the prevailing OAP) is made throughout the working career and then the no matter how long the service the full prevailing OAP is subtracted from the pension. Every time the COAP is changed the pension payment is recalculated.


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## wok20 (20 Jun 2011)

*reading trust deed rules*

i am back trying to find out if i am reading trust deeds right as i have seen the proper wording on them.i will not qualify for state pens on until i reach 66 according to the new pensions framework.i am retireing and it states on my paper work that i will receive a temp supplement to age 65 so i will have a year on reduced pension.
  on the trust deed rules it states that "such supplement shall terminate on the first of month next following state qualfying date" no mention of any dates.will i receive supplement to 66


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