Stepped Pensions...

[Hawkey99]

Saw this on a forum and wondered if this is something RM would ever consider and whether its helpful to many?

Any thoughts ?

Comment 1

"After taking 25% from the pension as a lump sum I will be left with around 11k per year with annaul cost of living rises. One of the offers with the pension is to "step" it. The approximate figues I have been given are £3064 PA increase in the pension from 11k until state pension age when it will then reduce by £4761 plus any changes that have been made to the state pension amounts by then.

I think as a percentage. I take this to mean if the state pension has incresed by £1000 by the time I am 65 then the £4761 will go to £5761. Just to see if I understand the idea of the stepped system. Assuming no increase in state pension etc. If my total state pension is £7000 a year at 65 and I have accepted the step htne I will start off at 11,000 + 3064 = 14,064 till 65 then I would get (14,064 - 4761) + 7000 = 16,303.

Reply

Hi, in the same position myself i.e. taken a step pension. I think you'll find that when you are 65, the pension you are receiving drops by the actual state pension at that time. So for you, the £14500 drops by £7000 as you suggest, but then you receive your state pension of £7000 or whatever it is at the time, so nothing should alter, except your money is coming in from two sources instead of one.

[RobertT]

Some employer DB pensions do offer things like this, it will be part of their scheme rules if they do.
RM don't, and I can't see them changing the rules of a scheme that is closed to future accrual and will presumably close completely when CDC comes in.

Although you could say that for section C members something fairly similar is already in place – it's called the pension supplement, but that's obviously an integral part of the scheme rather than an option.