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  • FIRST POST
    Stezzy
    Santander Pension Query
    • #1
    • 17th Jul 14, 12:18 PM
    Santander Pension Query 17th Jul 14 at 12:18 PM
    I worked at Girobank/Alliance and Leicester for 21 years until 2001. The company has since been taken over by Santander.

    On 27th May 2011 I received a letter complete with Santander logo from the then administrators Mercer. I was told that if I completed an early retirement request I would be entitled to a lump sum of £33,369.73 plus £5,005.44 p.a. in October 2011. I was also informed that if I waited until December 2014 (my 60th birthday) the estimated payment would be £43,677.69 plus £6,551.70 p.a.

    I decided to be prudent and wait.

    After a change of circumstances in early 2013, I contacted Mercer again for another quote. I was informed that if I completed the documentation I would be entitled to a lump sum of £40,314.52 plus £6,047.40 p.a. It would be £44,030.51 plus £6,604.58 on my 60th birthday. Pretty much in line with the previous figures I again decided to wait.

    JLT took over as Alliance & Leicester Pension Scheme administrators in March 2014. I received a letter from them yesterday stating that I can expect a lump sum of only £35,910.15 when I am 60, with an annual pension of just £5,386.52.

    It would seem to me that either Mercer or JLT has made a miscalculation somewhere along the line. If Mercer has made the errors am I entitled to some form of compensation from them, Santander or both? All of my big financial decisions for the last three years have been on the basis of the quotes that they have provided me with, My lump sum is apparently to be more than £8k less than I have been lead to believe, and I will be getting £1.3k less every year! Had I cashed in on either of the early retirement settlement figures I was quoted I would be considerably better off - and it seems to me that I have been misled at best!

    I also wonder whether any other ex-Girobank/Alliance & Leicester staff have been let down in this way.

    Can anyone offer any advice on what options may be open to me?
Page 2
  • dart999
    Santander Girobank Deferred Pension
    I am in eaxctly the same boat as many of the previous posts. I have been in discussions with JLT and via the Pensions Advisory Service about the whole mess and appaling treatment by both Santander and JLT for the last 18 months. I have all previous documentation referring to my deferred pension including the Girobank Scheme Rulesa Booklet. It all goes completely against what Santander via JLT are now trying to do.
    I understand there was a meeting of the Trustees on 2nd July 2015 to review their decision to reduce the benefits payable. I am awaiting the outcome with interest.
    • xylophone
    • By xylophone 6th Jul 15, 12:19 PM
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    • 12,009 Thanks
    xylophone
    It would be interesting to hear how this develops.
  • Dell007
    Rules around GMP
    I'm still in communication with JLT trying to get some kind of clarification around how the GMP part of my pension is being calculated, and what will happen at age 65.

    JLT have quoted my details as follows (I've rounded the figures for simplicity sake):

    My pre 1997 Excess Pension is £3,000
    My pre 1988 GMP is £750
    My post 1988 GMP is £250

    Total £4,000

    In their letter JLT state that the pre 1997 excess pension will be increased by RPI, and that results in a revaluation figure of 1.9793.

    The letter goes on to say that "As previously advised the GMP does not receive any increases therefore your pension at your normal retirement date, 11th February 2015 is £6,937 (Pre 97 excess 5,937 + pre 88 GMP £750 + Post 88 GMP £250)."

    I'm still struggling to get a clear answer from JLT about how the GMP is treated when I reach age 65. They seem to favour opaque incomplete answers, over clarity and conciseness. JLT also seem to provide slightly different answers (and quotations) between different letters, which one suspects, suggests that their application of the rules have not been clearly worked through relating in incomplete guidelines.

    My questions outstanding with JLT at this time are:

    What calculation will be used to revalue my GMP to age 65.

    What will that figure(s) be compared with.

    What will be the likely change in my pension at age 65.

    I find it astonishing that a company like JLT, and their client Santander don't have in place clear concise guidelines detailing how pensions will be calculated. The other conclusion I could draw is that JLT's training is not fit for purpose and that is the reason behind the confusion.

    I'll post any news I get, though the turnaround time for correspondence is not very good, which I suspect is caused by the training issue I mentioned previously.
    • xylophone
    • By xylophone 7th Jul 15, 2:42 PM
    • 20,938 Posts
    • 12,009 Thanks
    xylophone
    Was age 60 the NRA in your section of the scheme?

    Are you currently in receipt of the pension?

    You reach male GMP age (65) in February 2020 but state pension age in February 2021?

    Have you seen this http://forums.moneysavingexpert.com/showthread.php?t=4736856&highlight=cod+gmp&page=9

    post 165.

    Have a look at these figures from Towers Watson for a deferred pensioner of the Barclays Scheme who becomes 65 after the introduction of the new state pension.

    If you are in receipt of your pension, how will it increase in payment until age 65?

    Will the GMP portion be revalued at age 65?

    The Scheme has no obligation to increase your pre 88 GMP or your post 88 GMP above 3% after age 65 so presumably won't do so.

    Have you received a new state pension forecast?

    Is there any clawback under your scheme at 65/State Pension Age? http://www.web40571.clarahost.co.uk/archive/saga/2000_and_before/990202.htm
  • Dell007
    My NRA in the scheme was 60.

    I'm not currently receiving any pension from the Girobank/A&L, Santander scheme.

    I reach 65 in 2020, and my OAP date is 2021

    The frustration from my part (other than being quoted higher pension figures in 2011 on which I based my financial planning), is that JLT seem unable (or unwilling) to clearly state what is likely to happen to my pension payments when I reach age 65.

    I did call JLT last Friday, the lady I spoke to agreed the situation was not a good one and promised to try and get it resolved, as soon as possible - not received anything yet :-(
  • dart999
    Hi
    Just a quick update. Santander had their meeting on 2nd July to discuss the change of pension payments and low and behold did not reach a decision. They are apparently meeting again in a months time. How long can they drag this out? I'll let you know if and when I hear something.
    • xylophone
    • By xylophone 24th Jul 15, 11:12 PM
    • 20,938 Posts
    • 12,009 Thanks
    xylophone
    Have you yet obtained a new state pension statement?

    https://www.gov.uk/state-pension-statement
    • meantime
    • By meantime 13th Apr 16, 3:47 PM
    • 52 Posts
    • 3 Thanks
    meantime
    Resurrecting this thread to ask if anyone knows of any movement from Santander on this?
    • xylophone
    • By xylophone 13th Apr 16, 6:22 PM
    • 20,938 Posts
    • 12,009 Thanks
    xylophone
    You are now in receipt of your scheme pension?

    Presumably there has been at least one increase since you started receiving the pension?

    How was that increase applied?



    Have you obtained a statement showing your starting amount for new state pension?
    Last edited by xylophone; 03-06-2016 at 1:35 AM. Reason: typo
    • meantime
    • By meantime 14th Apr 16, 12:22 AM
    • 52 Posts
    • 3 Thanks
    meantime
    You are now in receipt of your scheme pension?
    Originally posted by xylophone
    No. I now have a new quote for taking my pension from my 62nd birthday next month. I've also unearthed my "statement of deferred benefits" issued when I left employment in 1995. I'll try and post all three sets of figures (1995, 2014, 2016) sometime in the next few days - along with a few related questions.

    Have you obtained a statement showing your starting amount for new state pension?
    I've accessed it online via the beta service.
    • meantime
    • By meantime 2nd Jun 16, 12:23 AM
    • 52 Posts
    • 3 Thanks
    meantime
    Have you obtained a statement showing your starting amount for new state pension?
    Originally posted by xylophone
    If starting amount = "Estimate based on your National Insurance record up to 5 April 2016", then it's £139.61 (£152.95 if I continue to contribute)
    • meantime
    • By meantime 3rd Jun 16, 1:16 AM
    • 52 Posts
    • 3 Thanks
    meantime
    Well it's been more than a few days, but here are my figures...

    Statement of deferred benefits issued on leaving service in 1995

    Normal Retirement Date: 13th May 2014 (oddly enough the day before my 60th birthday)

    GMP at date of leaving: £1699.88

    Revalued GMP: £8058.96

    Deferred pension at date of leaving (including GMP of £1699.88): £4639.55

    Deferred lump sum at date of leaving: £13918.65 (= 3 x pension)

    Notes:

    - GMP will be increased by 7% for each complete tax year between date of leaving and State Pension Age

    - excess over initial GMP, and the deferred lump sump will be increased in line with the cumulative rise in RPI from date of leaving to normal retirement date

    ---------------------------------------------------------------------------

    60th Birthday quotation (2014)

    max pension £6,688.21 with sump sum of £20,064.63
    min pension £5,673.45 with lump sum of £37,822.99

    estimated increase at 65: £2,384.99

    (so max pension at 65 = £6,688.21 + £2,384.99 =£9,073.20,
    min pension at 65 = £5,673.45 + £2,384.99 =£8,058.44)


    estimated pre-88 GMP £4,493.84
    estimated post-88 GMP £3,564.60

    "these figures will be confirmed to the Scheme by HMRC shortly before your 65th birthday and are therefore not guaranteed"

    ---------------------------------------------------------------------------

    62nd Birthday quotation (2016)

    max pension £7,565.28 with lump sum of £26,051.26
    min pension £6,595.32 with lump sum of £43,968.17

    estimated increase at 65: £4,923.11

    (so max pension at 65 = £7,565.28 + £4,923.11 =£12,488.39,
    min pension at 65 = £6,595.32 + £4,923.11 =£11,518.43)


    estimated pre-88 and post-88 GMP same as at 60th birthday quotation

    Note: "In order to meet the GMP requirements, the maximum tax-free lump sum quoted has been restricted" (this note didn't appear in the 60th birthday quotation, but that was set out in a different format)

    ---------------------------------------------------------------------------

    My musings

    - why do GMP "estimates" need to be confirmed by HMRC at age 65 if the scheme uses fixed revaluation?

    - minimum pension at 65, retiring at 60 = estimated GMP. The excess completely disappears. Isn't this (illegal) franking?

    - since the change in Santander's GMP revaluation practice in 2014, GMP is not revalued in deferment. GMP at age 60 therefore = GMP on leaving service = £1699.88. Excess at age 60 therefore = (maximum pension at 60 - £1699.88) = (£6,688.21 - £1699.88) = £4,988.33. Increase in excess from 60 -> 65 may be franked, so maximum pension at 65, retiring at 60, should be (Excess at 60 + GMP at 65) = (£4,988.33 + £8058.96) = £13,046.77? Not the £9,073.20 in the 2014 quotation?

    - minimum pension at 65, retiring at 60, should be (£13,046.77 - maximum commutable) = (£13,046.77 - (£6,688.21 - £5,673.45)) = £12,032.01? Not the £8,058.44 in the 2014 quotation?

    - max pension at 62 = unrevalued GMP + excess at 60 + RPI increase in excess + late retirement increase in excess?

    - max pension at retirement increases by about 13% between the two quotations, but max pension at 65 increases by about 38%. Why is the post-65 increase so much higher?
    • xylophone
    • By xylophone 3rd Jun 16, 12:09 PM
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    • 12,009 Thanks
    xylophone
    - why do GMP "estimates" need to be confirmed by HMRC at age 65 if the scheme uses fixed revaluation?
    This was HMRC practice - the pensioner too received a letter from HMRC confirming the amount in question.

    However, this has been overtaken by events - see

    https://www.barnett-waddingham.co.uk/media/filer_public/6b/af/6baf547b-4772-4680-bf3a-ce77808e2455/gmp_reconciliation_briefing_note.pdf

    If you type JLT GMP Reconciliation into Google you will be able to pick up the JLT memo about this.

    Re franking etc see https://ompensions.co.uk/media/255935/kb-franking.pdf



    and did you have a look at this (post 165)?

    http://forums.moneysavingexpert.com/showthread.php?t=4736856&highlight=cod+gmp&page=9

    Remember that from GMP age (65 for a man), the Scheme is not obliged to pay any inflation linked increases on your pre 88 GMP or anything above 3% on post 88 GMP.

    The excess will be inflation linked according to scheme rules.

    Note: "In order to meet the GMP requirements, the maximum tax-free lump sum quoted has been restricted"
    See https://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/06/what-is-commutation/

    but max pension at 65 increases by about 38%. Why is the post-65 increase so much higher?
    I cannot see the answer to this - you can ask JLT or try a PM to Snowman who is very knowledgeable about GMP.

    http://forums.moneysavingexpert.com/member.php?u=647217
    • SnowMan
    • By SnowMan 5th Jun 16, 12:14 PM
    • 3,085 Posts
    • 5,708 Thanks
    SnowMan
    I cannot see the answer to this - you can ask JLT or try a PM to Snowman who is very knowledgeable about GMP.
    Originally posted by xylophone
    Not very clear to me but my best stab is (I'm working off statutory minima rather than higher amounts paid under scheme rules):

    If the NRA is definitely 60, and the scheme separately revalues excess and GMP in deferment, even though they provide a separtae lump sum, then statutory increases in deferment would give

    Pension from age 60:

    1699.88 (unrevalued GMP)
    + 2,939.67 (excess at leaving) x 1.628

    = 1,699.88 + 4,785.80
    = 6,485.70

    (where the statutory revaluation % of 62.8% is obtained from here and I've assumed it is the 18 year figure of 62.8%, that is assuming leaving date in 1995 is after 15th May)

    And lump sum from age 60 of

    4639.55 (pension at leaving) x 3 x 1.628 = 22,660

    So £6,485.70pa pension + £22,660 LS, which is equivalent to £6,634pa pension and 20,064 lump sum (allowing for the £17.50 per £1 of pension conversion rate used in the min/max figures)

    So we are comparing the actual (max) quote of £6,688pa + £20,064 with our estimate of £6,634pa + £20,064.

    So fairly close.

    Under anti-franking legislation then the pension at GMP age (65) would have to be increased to £8,058 (revalued GMP) + £4,988 (their figure for statutory excess at 60) = £13,046pa.

    So their figure for pension from age 65 looks wrong in the age 60 quote as they don't allow for anti-franking, and that looks like the most confusing part of their figures, although everything is far from clear.


    Age 62 quote

    It is more complicated on late retirement at age 62 (relative to NRA 60) but before GMP age of 65. I am not sure what anti-franking test would then apply at age 65.

    You would expect the pension to be at least £13,046pa from before at age 60 (assuming lump sum of £20,064 taken). But as the age 62 (max) quote shows a lump sum of £26,051.26 is taken, then this would mean, allowing for a £26,051.26 lump sum (using rate of £18.4718 per £1 used in age 62 quote) a minimum anti-franked pension of about £12,722pa (= 13046 - ((26051.26 - 20064.63)/18.4718)) which compares with their age 65 figure of £12,488pa.
    Last edited by SnowMan; 05-06-2016 at 12:35 PM.
    I came, I saw, I melted
    • meantime
    • By meantime 10th Mar 17, 11:10 PM
    • 52 Posts
    • 3 Thanks
    meantime
    Revisiting this after some months...

    Which says "At present it is not possible to commute GMP except on the grounds of triviality. Therefore only pension in excess of GMP can be commuted and if there is insufficient excess pension to provide the full GMP then the lump sum may need to be restricted accordingly."

    But if the max lump sum has been restricted to protect the GMP, shouldn't the minimum pension at 65 equal the GMP? (whereas in my age 62 quote, which says that the max lump sum has been restricted, the minimum pension from 65 is £3460 above my GMP)

    Edit: I've now discovered that my max lump sum meets the simple check that (residual pension * 20) = (max lump sum * 3) to within a few pence, so despite what my statement says, the lump sum hasn't been restricted.
    Last edited by meantime; 10-03-2017 at 11:25 PM.
    • meantime
    • By meantime 11th Mar 17, 12:21 AM
    • 52 Posts
    • 3 Thanks
    meantime
    Revisiting this while psyching myself up for a difficult conversation with JLT....

    Age 62 quote

    It is more complicated on late retirement at age 62 (relative to NRA 60) but before GMP age of 65. I am not sure what anti-franking test would then apply at age 65.

    You would expect the pension to be at least £13,046pa from before at age 60 (assuming lump sum of £20,064 taken). But as the age 62 (max) quote shows a lump sum of £26,051.26 is taken, then this would mean, allowing for a £26,051.26 lump sum (using rate of £18.4718 per £1 used in age 62 quote) a minimum anti-franked pension of about £12,722pa (= 13046 - ((26051.26 - 20064.63)/18.4718)) which compares with their age 65 figure of £12,488pa.
    Originally posted by SnowMan
    Do you have any idea why the minimum LS at age 62 should be higher than the scheme minimum of 3 x max pension? Plugging in 3 x (age 62 pension, £7,565.28) = £22,695.84 in place of 20064.63 in your calculation increases the min anti-franked pension to £12,864, diverging slightly further from their figure.

    Is it reasonable to expect that pension at 65 having retired at 62 would be higher than at 65 having retired at 60 (therefore higher than what should have been £13,046)?
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