At ParaPlan Pro, we support advisers with a wide range of technically complex retirement planning cases — and one recent example serves as a clear reminder of why attention to detail really matters when working with defined benefit (DB) pensions.

A client approaching retirement had received two illustrations from their DB scheme — one in October, the other the following January. On review of the January quote, the adviser spotted a clear discrepancy: it showed both a lower tax-free lump sum and a reduced scheme pension.

They asked us to take a closer look.

At first glance, the change didn’t stack up. The retirement date was unchanged, there was no reference to updated commutation factors or actuarial assumptions, and nothing publicly available to suggest any shift in the scheme’s funding position.

Defined benefit schemes are typically stable. Benefits are typically revalued upwards in deferment, carry statutory protection, and don’t usually fall by this kind of margin unless there’s a clear and documented reason.

Once we reviewed the illustrations properly, the issue became clear.

The client had a money purchase AVC (MPAVC) attached to the scheme. Under the scheme rules, this could be used to fund all or part of the pension commencement lump sum (PCLS) — allowing the member to take tax-free cash without commuting any of their scheme pension.

This had been factored into the October illustration, which showed a higher lump sum and an unadjusted pension. But in the January quote, the AVC wasn’t included. The illustration had defaulted to funding the PCLS by commutation — significantly reducing the scheme pension and leaving out a substantial portion of the available lump sum.

There hadn’t been any change in the client’s entitlement — just a missing element in the quote.

It’s a technical detail, but one with real impact. The client was understandably concerned that their benefits had dropped. And for the adviser, it could have easily led to the alteration of their recommendation, or worse, gone unnoticed.

This is exactly the kind of case we’re brought in to support with. Not just producing suitability reports but carrying out detailed technical reviews — spotting inconsistencies early, and helping advisers deliver advice that’s not just compliant, but complete.

If you’re working with clients who have complex pension arrangements — including defined benefit schemes (public or private), legacy buyouts, deferred annuities, or AVCs/FSAVCs — and you'd like experienced technical paraplanning support behind the scenes, we’d be happy to help.