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  • FIRST POST
    • paul hannah
    • By paul hannah 15th Mar 17, 2:48 PM
    • 14Posts
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    paul hannah
    Whose paying for my GMP?
    • #1
    • 15th Mar 17, 2:48 PM
    Whose paying for my GMP? 15th Mar 17 at 2:48 PM
    reached 59, and asked for figures on my company pension, been paying in for 37 years, and at one point, we were bought out in the late 1970's and given a "special transfer credit" (STC)to invest in a choice of investments, and worded as " to provide an extra annuity depending on investments"
    Fast forwards to 2017, my figures for this STC is £103,000, sounds great! especialy as this is on top of my company pension.
    However, the scheme we are with are deducting £66,000 to fund my Guaranteed minimum pension GMP)? Leaving me with a "Pension savings" (PS)of £37,000
    A guy i work with is in the same scheme, and joined later than me, so missed out on the STC, but his figures are only slightly less than mine. Ive asked the scheme why, and have been told they cant discuss another members details.
    I also asked that as the STC was my choice of investment and could have easily gone belly up returning nothing, or very little, how the GMP would have been financed?
    No reply yet, but it seems that by having the GMP , it has reduced my pension pot by £66,000.
    I just cant see that by having an extra pot of cash worth £103,000 more than my workmate, doesn't show up as an extra few grand on my annuity figures?
Page 1
    • xylophone
    • By xylophone 15th Mar 17, 3:41 PM
    • 22,881 Posts
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    xylophone
    • #2
    • 15th Mar 17, 3:41 PM
    • #2
    • 15th Mar 17, 3:41 PM
    You are now 59 and say that you have been contributing to a pension scheme for 37 years, so since you were 22. You were 22 in 1980?

    The GMP system didn't commence until 1978-79.

    You were working for the company from the time you were 16/18 but weren't permitted to join the scheme until you were 22?

    You say that the "STC" related to a late seventies takeover?

    Can you explain the date discrepancies?

    Are you a member of a scheme contracted out from 1980-2016?

    Have you obtained a new state pension statement?

    https://www.gov.uk/yourstatepension?utm_source=Mail-Online&utm_medium=Partnership&utm_campaign=GTKY

    Is a COPE shown?

    Is the booklet for your scheme on line?
    Last edited by xylophone; 15-03-2017 at 4:19 PM. Reason: typo
    • paul hannah
    • By paul hannah 15th Mar 17, 4:43 PM
    • 14 Posts
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    paul hannah
    • #3
    • 15th Mar 17, 4:43 PM
    • #3
    • 15th Mar 17, 4:43 PM
    Sorry, the document in front of me was regarding an earlier takeover, the actual takeover that triggered the special transfer credit was on 1st December 1988, and yes, i joined the pension scheme at 21, just out of my apprenticeship. (37 years and 8 months)
    I am a member of a contacted out scheme from 1988-2016.
    my state pension says i need another 7 years to reach the full state pension, although i have paid my NI since starting work in 1974.
    COPE is not on any paperwork i have.
    dont know if the scheme booklet is online, but i fear i wouldn't fully understand it anyway!
    • xylophone
    • By xylophone 15th Mar 17, 5:37 PM
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    xylophone
    • #4
    • 15th Mar 17, 5:37 PM
    • #4
    • 15th Mar 17, 5:37 PM
    COPE is not on any paperwork i have.
    It should be shown on the State Pension Statement.

    What is shown as your "starting amount" as at 6 4 2016?

    http://www.scottishwidows.co.uk/Extranet/Literature/Doc/FP0587 would be worth a read.

    You will be working and paying NI up to state pension age?

    In 1988, did the pension scheme at the "original" employer close and were your benefits "bought out" by an insurance company?



    You then started to contribute to the "new "employer's contracted out pension scheme?
    • paul hannah
    • By paul hannah 15th Mar 17, 6:16 PM
    • 14 Posts
    • 1 Thanks
    paul hannah
    • #5
    • 15th Mar 17, 6:16 PM
    hello
    • #5
    • 15th Mar 17, 6:16 PM
    Found my COPE estimate, its £125.58
    in 1988, we were simply sold to another company who had their own pension scheme.
    I only glanced on the government site, and the figures were 7 more years contributions to reach the full new state pension, so yes, id be paying NI for another 7 years up to 65 years of age.
    I had intended to work after taking my company pension.
    im currently paying in to a CARE scheme, which the company tried to close last year stating excessive administration costs, and wanted us to leave the CARE scheme and join the Stakeholders scheme.
    To "entice" us into the Stakeholders, they increased my percentage contributions from 6.5% to 12%, and reduced the benefits.
    Last edited by paul hannah; 15-03-2017 at 11:24 PM.
    • xylophone
    • By xylophone 15th Mar 17, 9:40 PM
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    xylophone
    • #6
    • 15th Mar 17, 9:40 PM
    • #6
    • 15th Mar 17, 9:40 PM
    Is it the case that your original DB scheme closed and was bought out in a S32 arrangement as here?

    http://www.financialadvice.net/s32_buy_out_plan/zone/1288

    All your pre 88 GMP would be within the S32 if so.

    You then contributed to the new company's DB scheme ( contracted out until April last) and are still contributing? This scheme will hold your post 88 GMP.

    Your contributions to your DB CARE scheme have increased partly as a result of contracting out change and partly as a result of a business decision by the company.
    Last edited by xylophone; 17-03-2017 at 11:56 AM.
    • paul hannah
    • By paul hannah 16th Mar 17, 1:08 PM
    • 14 Posts
    • 1 Thanks
    paul hannah
    • #7
    • 16th Mar 17, 1:08 PM
    • #7
    • 16th Mar 17, 1:08 PM
    I do appreciate the reply's, but im still at a loss as to how im paying £66,000 to fund the GMP through the special transfer credit, as the investments could have depleted due to stock market conditions, what would fund the GMP if i 'have this STC?
    As for my friend who has paid into the same scheme as me all these years but didnt have the STC, how come his figures are almost as high as mine?
    • xylophone
    • By xylophone 16th Mar 17, 2:06 PM
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    xylophone
    • #8
    • 16th Mar 17, 2:06 PM
    • #8
    • 16th Mar 17, 2:06 PM
    Is this STC in a S32 arrangement as described above?

    Is it in effect a separate pension arrangement from the scheme to which you are currently contributing?

    You were contracted out into the DB/FS Scheme of X Co starting in 1979/80.

    Because you were contracted out and you and your company paid lower NI contributions, the scheme had to promise to pay you a pension at least as great as you would have received had you been contracted in to SERPS.

    This is your GMP.

    I am guessing (can you confirm) that in 1988, when your company was taken over by Y Co, your pension rights in the X Co scheme were bought out,their value being whatever the "STC" was at that time.

    Because you had a GMP, the "STC" arrangement, whatever it is, had to guarantee to protect and revalue your GMP in deferment.

    The value of the "STC" arrangement has grown over the years - it must pay at least your revalued pre 88 GMP at GMP age (65 for a man).

    It has been estimated that £66,000 of the fund must be set aside to fund the revalued pre 88 GMP in payment while the rest, the "excess" can fund other pension benefits, PCLS etc.

    Your current pension (to which you have contributed since 1988) was contracted out until last April.

    It contains your post 88 GMP (up to 1997) and an excess.

    Your company must pay you at least your post 88 GMP at GMP age - of course you are likely to be receiving considerably more than this.

    I stress, however, that I am only making an educated guess at your situation.

    Who is the administrator of the STC and your existing company pension scheme?


    Your New State Pension "starting amount" has taken your GMPs into account - what is your "starting amount"? Is it around £119.30?
    Last edited by xylophone; 16-03-2017 at 2:19 PM. Reason: add bold
    • paul hannah
    • By paul hannah 16th Mar 17, 4:25 PM
    • 14 Posts
    • 1 Thanks
    paul hannah
    • #9
    • 16th Mar 17, 4:25 PM
    • #9
    • 16th Mar 17, 4:25 PM
    Here is a transcript from Portland pensions dated 1997
    "The pension accrued in the H&P scheme prior to the 1st December 1988 was transferred to the NabCo retirement plan and subsequently the JaCo scheme as a money purchase account. The special Transfer credit you were granted on transferring to the NabCo retirement plan was also transferred into a JaCo money purchase account."


    Please excuse my lack of understanding,
    perhaps i should have put more details in my first post.
    Once our company had been taken over, the pension was transfered into the new scheme, anyone with 5 years in the old scheme was given the STC.
    i simply needed to understand that as my Special transfer, which i was always told was my "Share" of the old scheme once it was wound up, was invested in stock market shares or building society (my choice) would provide "extra pension" should investments be favourable, but what would have funded my GMP if stock market had dropped?
    Our funds were with Portland pensions, but have been with JLT benefit solutions for quite a few years now.
    Other people who had not been granted the STC are with the same company and dont seem to be needing £66,000 to fund their pension?
    Last edited by paul hannah; 16-03-2017 at 5:58 PM. Reason: extra details
    • hyubh
    • By hyubh 16th Mar 17, 8:26 PM
    • 1,887 Posts
    • 1,400 Thanks
    hyubh
    what would have funded my GMP if stock market had dropped?
    Originally posted by paul hannah
    The insurer/scheme - see link xylophone previously gave, half way down.

    Our funds were with Portland pensions, but have been with JLT benefit solutions for quite a few years now.
    More likely JLT are just the administrator.

    Other people who had not been granted the STC are with the same company and dont seem to be needing £66,000 to fund their pension?
    If they have pension benefits for employment before 1988, then presumably they still have pensionable service for that period (with a GMP attached), rather than (as you do) a money purchase account (with a GMP attached). Surely you aren't expecting to have the pre-88 GMP 'for free'? GMP won't be something colleagues get in addition to their scheme pension, rather it will be an element of it.
    • paul hannah
    • By paul hannah 16th Mar 17, 10:11 PM
    • 14 Posts
    • 1 Thanks
    paul hannah
    Gmp?
    "Surely you aren't expecting to have the pre-88 GMP 'for free'? "
    honestly, i wouldnt know?
    what benefit is it anyway?

    To be honest, i still don't understand a thing about pensions, who does except the few? But i honestly didn't see why im footing the bill for my company opting out of the SERPS, it wasn't a choice offered to me, and now the GMP is being funded by my investments.
    Other guys i work with have exactly the same pension as me, except they were not in the old pension scheme for the required 5 years to obtain the Special transfer credit ( they were apprentices that had no previous pension) and this is what i fail to grasp,
    Weve all asked for quotations for early retirement at 55, (i'm now 59, but used my own aged 55 quotes for comparrison) and their lump sum and annual pensions are very close to mine with my £103,000 STC (were all on the same salary, very little overtime involved)
    Last edited by paul hannah; 16-03-2017 at 10:15 PM.
    • hyubh
    • By hyubh 16th Mar 17, 11:29 PM
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    hyubh
    "Surely you aren't expecting to have the pre-88 GMP 'for free'? "
    honestly, i wouldnt know?
    Originally posted by paul hannah
    Indeed, which is why you posted here. Basic point: if you had not transferred, the GMP would still be due, only as part of your final salary pension benefits.

    what benefit is it anyway?
    It's a defined benefit pension.

    But i honestly didn't see why im footing the bill for my company opting out of the SERPS
    You aren't 'footing the bill'. The company pension scheme was contracted out to help fund it; the funding involved for your own pension, including that for the GMP, was then transferred into this money purchase-with-GMP account, whatever it was/is exactly. If you hadn't contracted-out in the first place, there would have been no GMP, and therefore your money purchase account would have been much smaller.

    it wasn't a choice offered to me
    Right, because providing a GMP was a statutory requirement for a scheme to be contracted-out back in the 80s.

    and now the GMP is being funded by my investments.
    Where did the money come from in the first place...?

    Other guys i work with have exactly the same pension as me, except they were not in the old pension scheme for the required 5 years to obtain the Special transfer credit ( they were apprentices that had no previous pension)
    You've got the additional money purchase benefits! If they weren't in the scheme back in the early 80s, then presumably they've also got a much lower/no pre-88 GMP. (I doubt any excess [i.e. DB pension beyond the GMP] from early 80s they have will be much.)
    • xylophone
    • By xylophone 17th Mar 17, 1:53 AM
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    xylophone
    See https://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/18/what-is-a-gmp/

    Looking at the transcript from Portland, I think that your original pension was transferred into a Money Purchase with Defined Benefit underpin - part of the DB underpin is the GMP.

    http://www.mycompanypension.co.uk/What-is-a-Money-Purchase-Scheme-with-a-Defined-Benefit-Underpin-Pensioner-Members-DB

    JLT will be the pension administrators - they should be in a position to provide a full explanation of your benefits under the scheme but a couple of other posters have experienced some difficulties with administrators in this respect.
    • paul hannah
    • By paul hannah 17th Mar 17, 11:10 AM
    • 14 Posts
    • 1 Thanks
    paul hannah
    This is my first time on any such forum.
    ive spent weeks with JLT asking questions and never fully understanding the answers.
    Pensions for the average guy like me are so complicated, and not until you are in a position to take early retirement do all these facts land in your lap, and you have to try and make sense of it all, so thanks to you all for taking the time to explain things in simpler terms.
    i have three options on my pension estimates,
    Option 1 is Combined tax free lump sum and a reduced annual pension.(Includes pension savings)
    Option 2 is defined benefit tax free lump sum,a reduced annual pension and pension savings in addition.
    Option 3 full defined benefit pension and pension savings in addition.
    Im not sure its wise to put actual figures up online, so its difficult to ask for an opinion as to what seems the best of the three options, but the "Pension savings" part if taken in addition is available as 25% tax free, not sure what you would do with the rest? no investment options on my papaerwork.
    • xylophone
    • By xylophone 17th Mar 17, 12:02 PM
    • 22,881 Posts
    • 13,236 Thanks
    xylophone
    If you are completely at sea, you might benefit from taking qualified, independent financial advice.

    https://directory.moneyadviceservice.org.uk/en

    You will pay a fee ( ring round several to establish) but it would assist you to understand your options and choose the most appropriate option for your circumstances.

    If you are giving up paid work, you may wish to consider voluntary NI so as to bring your state pension up to NSP.
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