BAE Systems Pension Scheme: Contacting deferred members and Options to exchange benefits for a lump sum
The Trustees of the BAE Systems Pension Scheme are working with Xafinity, a leading pensions consultancy, to re-establish contact with deferred members. A deferred member is someone who has left employment, yet still retains a benefit entitlement in the scheme, although they have not yet put their pension into payment.
Unfortunately not all members remember to notify their pension scheme when they move address. The Trustees have therefore asked Xafinity to use a specialist address tracing provider to identify potential new addresses for deferred members who may have moved since leaving the Scheme and not been in contact with us.
These new addresses now need to be verified with our deferred members. This involves Xafinity writing to deferred members to ask them to verify that this is their new address. Should you receive such a communication from Xafinity, it is genuine and not a pensions scam.
Options for exchanging benefits for a cash lump sum
In addition the Trustees have asked Xafinity to contact deferred members who have either small retained benefits in the Scheme, or whose only benefit is a Protected Rights Account, to offer them the option of exchanging benefits for a lump sum.
Small benefits: trivial commutation
Where a member has a relatively small pension in a scheme and is above the minimum pension age, it may be possible to exchange that pension for a one-off cash lump sum. This is known as trivial commutation. The taxation rules for pension schemes have always allowed trivial payments as an option for members, but the limits up to which it applied were quite low. These limits have now increased which means more members may be eligible to trivially commute their benefits.
If you are identified as potentially eligible, Xafinity will contact you directly about this and provide you with further information. Consequently, please note that should you receive such a communication from Xafinity, it is genuine and not a pension scam. Further information on this topic is available at this dedicated website: Xafinity Trivial Commutation.
Protected Rights: refund
Xafinity will also be contacting members whose only retained benefit in the Scheme is a Protected Rights Account. The vast majority of these members had less than two year's service within the Scheme and previously received a refund of their contributions. As these members were contracted out, legislation used to require that their Protected Rights (which are associated with being contracted out) were retained within the Scheme until retirement. However, following changes, members can now be offered a refund of the value of their Protected Rights Account. Consequently, please note that should you receive such a communication with an offer of a refund of your Protected Rights Account from Xafinity, it is genuine and not a pensions scam.
At this stage, the communication programme will only include deferred members of the BAE Systems Pension Scheme. In future, a similar exercise may be considered in respect of other BAE Systems pension schemes.Back to all stories