Can having T2 increase a Company pension?

[jay hay-char]

This is a serious question, before anyone starts taking the mick.

I have a deferred final salary pension (lucky me) from a previous employer, with whom I had over 20 years' service. I haven't taken it yet, because the normal retirement age under the Plan Rules is 65, and I'm not there yet. It's possible to take it earlier, subject to HMRC Rules, which basically means that you have to be over 55 (guilty, M'Lud ). However, for every year early that you take the pension, there is a 4% reduction in what's payable to you, on the basis that it will have to be paid for longer. I am seriously thinking about taking this pension at the age of 60, which means that they will calculate the pension due, based on my years of service and salary when I left, plus an "inflationary" uplift for the intervening years, and then apply the reduction. This means that the final figure will be reduced by 20% against what I would receive were I to wait until the age of 65. Hope this makes sense; it's just background.

There are various exceptions to this rule, and one of the most interesting, from my perspective, is that it's sometimes possible to claim an "Ill health early retirement" pension from the Plan. In effect, this means that, if I were deemed eligible, I could take an immediate pension at 60 - or whenever - without the 20% early retirement penalty. The rules governing this are quite vague (I should know, my staff used to administer the scheme) but applications have tended to succeed, either because the person concerned is unable to work because of a disability, or because they have a life-limiting condition: the most obvious use of this rule is for people with serious chronic illnesses (such as incurable cancer, emphysema, etc) but I'm just wondering if anyone on here has ever been able to make a case for being paid an early, undiscounted pension on the grounds that they have a potentially (I stress, potentially) life-limiting condition? Alternatively, has anyone ever been able to get an enhanced annuity from an insurer, on the basis that T2 is likely to have an effect on the number of years they will have to pay it for? (Perhaps I should add that I have absolutely no intention of having my life expectancy reduced, but they're not to know that, are they?)

I realise that you'd need a set of the specific Plan rules in front of you to provide an informed opinion on this, but all I'm really interested in is finding out whether anybody has been able to get an increased pension from an employer or an insurer, because they have T2.

Sorry - slightly depressing subject, but I sweated blood for this company over the years and I want to make sure that I get my pound of flesh out of them

TIA.

 

[Squire Fulwood]

Sorry, I only know of one cancer case and one motor neurone case. These were obvious cases in my opinion and I am not sure that T2 will easily be classed as such. Presumably you will need an opinion from your doctor stating that it is so bad that you are going to fall off your perch soon. This would set a dangerous precedent in my opinion what with three million diabetics in the country.

Have you got a redundancy clause in the scheme???

 

[janeliz]

I am in a similar scheme and of sick long term with pancreatitis and it's complications and type 1 diabetes on insulin. I am off sick as deemed too ill to work but occupational health doctors say I am not eligible for pension ill health retirement. I have to show that all avenues of treatment have been exhausted with no effect or cure, or that I have only 6 -12 months left to live.
You could pursue it but unless your desperate for the money it may be wise to leave it until 65.

 

[LittleGreyCat]

Probably easier to take up smoking, as that used to qualify for impaired health.
Alternatively look at pension providers sites - I do have a feeling that T2 is not included unless there are already major side effects.

Frankly I'd be happy to have a normal life expectancy and less cash.

Edit:

http://www.which.co.uk/money/retirement/guides/annuities-explained/enhanced-annuities/

"
Who qualifies for an enhanced annuity?
According to industry figures, around 20%of all annuities sold as enhanced. But industry sources say that 60% of all annuity applicants could qualify for some degree of enhancement – so it’s always worth checking with providers.

The main conditions that qualify for an enhanced annuity are:

• Smoking
• Diabetes
• High blood pressure
• Heart disease
• Cancer
• Kidney failure

Other conditions, such as asthma, high cholesterol, obesity and rheumatoid arthritis also qualify for increased rates, depending on their seriousness.

The uplift you’ll get depends on the seriousness of the condition. For example, multiple heart attacks could get you 31% more income, type 2 diabetes 30% more, asthma 21% more and even being overweight could secure a 15% increase.
"

 

[jay hay-char]

Frankly I'd be happy to have a normal life expectancy and less cash.

Don't get me wrong - that is exactly my position, as well, but I'm just doing a bit of market research. Interesting about annuities - thanks for that - but I suspect no insurer would offer as generous a pension as the Company scheme, as a starting point, for the transfer value that would be made available, so it would probably be a swings/roundabouts interface situation

(Edit: I'm glad to say that I suspect the chances of getting my doctor to write a letter saying I'm at death's door are somewhere between slim and none - and slim is outta town, right now ) .

 

[AndBreathe]

Don't get me wrong - that is exactly my position, as well, but I'm just doing a bit of market research. Interesting about annuities - thanks for that - but I suspect no insurer would offer as generous a pension as the Company scheme, as a starting point, for the transfer value that would be made available, so it would probably be a swings/roundabouts interface situation

(Edit: I'm glad to say that I suspect the chances of getting my doctor to write a letter saying I'm at death's door are somewhere between slim and none - and slim is outta town, right now ) .

I would doubt very much you would qualify for an ill-health retirement, unless you have significant, life-limiting complications. I really hope you don't.

Your stated alternative to this is to purchase an annuity, in the hope of enhanced terms. Only by understanding the full scope of your condition and medications would anyone be able to sensibly comment on this aspect. Each condition (hypertension, diabetes, hyper-cholesterolaemia, for example) will carry a weighting score, which are then totalled to assess the impairment to your life. But, a word of warning - it is highly unlikely any transfer value (to purchase an annuity) would be sufficient to assure matching, never mind enhanced benefits. I also believe that the rules for transferring from a defined benefits (final salary) scheme are changing in April, but I haven't double, double checked that before writing this.

Personally, I think this is one of those occasions where you may just have to accept the penalty, on the basis you already understand, although I guess you have nothing to lose by trying, provided your application is without prejudice and you can withdraw your application if you are unsuccessful.

 

[jay hay-char]

Personally, I think this is one of those occasions where you may just have to accept the penalty, on the basis you already understand.

I think that's probably right - I just want to make sure I have explored all the possibilities because it will be too late once everything's set up and payment has started. For the avoidance of doubt, I don't have anything much wrong with me, just T2 which, at the moment, anyway, is quite well under control and long may it remain so....

 

[AndBreathe]

Nothing to stop you enquiring though.....