DB Statement Explained
Your Defined Benefit (DB) Statement Explained
Please note: It is likely your DB Statement will not look exactly like this, but should include some or all of the key points outlined below.
Click here to view our example DB Statement. Each section has been allocated a number, please see the definition below.
- This is the date that you can retire and receive your full benefits with no penalty. If you retire earlier than this, the scheme may impose a penalty and reduce your annual income.
- This is the date on which you left this pension scheme.
- This is the lump sum that the scheme is offering you, in replacement of the guaranteed annual income.
- Cash Equivalent Transfer Value – after receiving your statement, you will have 3 months to carry out the transfer from the date the value was calculated, if appropriate. If you miss this deadline, you will have to request a new CETV and you may have to wait a year to do this or pay a fee. Please note that the transfer process is lengthy so make sure you have enough time to transfer.
- This is the guaranteed income amount that was calculated on your date of leaving the scheme. It states the amount you may receive on an annual basis however this will be revalued once you start to take the benefits. It is most likely that this will increase each year in line with certain indices or with inflation, meaning that the income will retain its value and will not be subject to inflation risk.
- This is the total amount of contributions you have made to your plan. This is important as some schemes pay out a return of contributions if you pass away before the scheme’s retirement age.
- This indicates the amount your spouse may receive if you were to die before reaching the normal retirement date. This is typically 50% of your annual income amount, however this varies between schemes so please make sure you check and understand.
- This details your normal retirement age but in age format instead of date.
- Many schemes provide an option of taking the benefits before the normal retirement date. Unless you have a protected pension age, the minimum age you can take your benefits is 55. Please note that you may incur a penalty, normally a reduction in annual income, for taking the benefits early. The earlier you take the benefits, the bigger the penalty.
- If you were to die before your normal retirement age, your surviving beneficiaries may receive a refund of your contributions, a 50% spouse’s pension or if you have a financial dependant and no spouse, a dependants’ pension.
- If you die within the guaranteed period (normally between 5 & 10 years) your beneficiaries may receive a lump sum payment. They may also receive a 50% spouse’s or dependants’ pension. There are other variants on the pensions available, such as civil partner or children’s. Please check the scheme rules detailed on the statement to see what options you have available.