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  • FIRST POST
    • Parking Trouble
    • By Parking Trouble 30th Jun 17, 12:06 PM
    • 543Posts
    • 132Thanks
    Parking Trouble
    CETV worth transferring?
    • #1
    • 30th Jun 17, 12:06 PM
    CETV worth transferring? 30th Jun 17 at 12:06 PM
    I have a small deferred DB pension from Glaxo Smith Kline (GSK). I worked for Smith Kline and French for 5 years back in the 80's.

    I finally got around to making sure they had my contact details as hadn't heard from them for many years. I got a CETV from them.

    NRD is 2023. I am 59. Projected annual pension is £1,388.
    CETV is £106k.

    I have my main DB pension with NRD 2018 which I can easily live on.

    Seems like a no brainer to me to take 25% TFLS and put the rest in some sort of drawdown arrangement but not for day to day living expenses. I only need it to last for 10-15 years after which my spending sprees should subside.

    What is an IFA likely to charge to support the transfer out?

    Where can I find somewhere safe to put the money without incurring heavy charges? I am happy to self manage the investments.
    Mr Straw described whiplash as "not so much an injury, more a profitable invention of the human imagination—undiagnosable except by third-rate doctors in the pay of the claims management companies or personal injury lawyers"

Page 2
    • Parking Trouble
    • By Parking Trouble 1st Jul 17, 10:48 AM
    • 543 Posts
    • 132 Thanks
    Parking Trouble
    Thanks Xylophone. That has definitely helped me get my head around it and enable me to ask the right questions.

    I don't know why they don't provide a more easily understood calculation and an accurate figure of what has been accrued to date.

    I think this could change my plans, especially if I can get this pension at 62.

    I also have a Midland Bank DB pension from when I left in 1981 with a GMP of £153.92 I'll look into that one too.
    Mr Straw described whiplash as "not so much an injury, more a profitable invention of the human imagination—undiagnosable except by third-rate doctors in the pay of the claims management companies or personal injury lawyers"

    • xylophone
    • By xylophone 1st Jul 17, 11:08 AM
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    xylophone
    I also have a Midland Bank DB pension
    Hm.....

    http://forums.moneysavingexpert.com/showthread.php?t=3886143

    Have you kept you scheme booklet and statement of deferred benefits on leaving employment?
    • Parking Trouble
    • By Parking Trouble 5th Jul 17, 6:57 PM
    • 543 Posts
    • 132 Thanks
    Parking Trouble
    Thanks Xylophone. Been away for a few days, hence the delay.

    The only scheme documentation I have is what I recently downloaded from the Willis Towers Watson website.

    I was employed by Midland Bank from 08/74 - 10/81

    I had very little contact with them but recently got access to the WTW site.

    Normal Retirement age was 60 but increased to 65 in 2010 however it look like I can take it at 60.

    Extract from booklet:

    If you joined the Midland Section after 1974, your pension will be calculated to take into account a single person’s basic state pension. When you reach State Pension age, your pension is reduced
    by an equivalent amount. The State deduction does not apply to benefits
    built up after 30 June 2009.


    Normal retirement age is the age that you would normally retire from the Scheme. Currently it is age 60, but from 1 April 2010 it will increase to age 65. This increase in normal retirement age only affects your pension rights that relate to your pensionable service from 1 April 2010. This means that you can still retire at age 60, but the proportion of your pension that has built up after 1 April 2010 will be subject to an early retirement reduction (unless you choose to contribute an additional 3% of pensionable salary – see page 11 for more details).


    I assume I can take my revalued entitlement from age 60 even though they have my NRA as 65?

    GMP and Pension at date of leaving is the same - £153.92
    It seems there is no excess.

    I assume It will be revalued at 8.5% pa for 37 years ?? Assume NRD in 2018
    There is nothing about revaluation calculations in the booklet.

    Can I therefore expect around £3,000 pa ? They are only offering £15,300 transfer value.

    I have spoken to Equiniti about the revalued figure for the SKF pension and also challenging their error where they think I worked for Beechams.
    That should bring NRA to 62 rather than 65.

    I may work for a year or so after age 60.

    My aim is to take AVCs as lump sum to pay off remaining mortgage and other smallish debt and take my main DB pension non-reduced, plus the Midland bank pension.

    I know I will pay a lot in tax but I really want to raise my disposable income for a year or so.
    Last edited by Parking Trouble; 05-07-2017 at 7:01 PM.
    Mr Straw described whiplash as "not so much an injury, more a profitable invention of the human imagination—undiagnosable except by third-rate doctors in the pay of the claims management companies or personal injury lawyers"

    • xylophone
    • By xylophone 5th Jul 17, 10:09 PM
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    xylophone
    I'd contact TW and ask the questions.

    It seems that your NRA would be 60 - check.

    It is likely that Fixed Rate would be used to revalue the GMP.

    Note what is said about reduction at SPA - check what this will mean in your case.
    • xylophone
    • By xylophone 5th Jul 17, 10:37 PM
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    xylophone
    And another thought, if this is all pre 88 GMP, there is no obligation on the scheme to inflation link the pension in payment after GMP age.

    Check this with TW.
    • Parking Trouble
    • By Parking Trouble 6th Jul 17, 8:43 AM
    • 543 Posts
    • 132 Thanks
    Parking Trouble
    Thanks. The questions have been asked so let's see what they come back with.
    Mr Straw described whiplash as "not so much an injury, more a profitable invention of the human imagination—undiagnosable except by third-rate doctors in the pay of the claims management companies or personal injury lawyers"

  • jamesd
    When you get the numbers it's worth comparing those pensions to how much state pension increase you could get by deferring claiming that. It's increased by 5.6% per year of deferral, pro-rated for parts of a year.
    • Parking Trouble
    • By Parking Trouble 6th Jul 17, 9:25 PM
    • 543 Posts
    • 132 Thanks
    Parking Trouble
    When you get the numbers it's worth comparing those pensions to how much state pension increase you could get by deferring claiming that. It's increased by 5.6% per year of deferral, pro-rated for parts of a year.
    Originally posted by jamesd
    Thanks, I will look into that.
    Mr Straw described whiplash as "not so much an injury, more a profitable invention of the human imagination—undiagnosable except by third-rate doctors in the pay of the claims management companies or personal injury lawyers"

    • Parking Trouble
    • By Parking Trouble 17th Jul 17, 11:52 AM
    • 543 Posts
    • 132 Thanks
    Parking Trouble
    Update from Glaxo pension administrator . My retirement age is indeed 62 not 65. Waiting for revaluation figures.

    Update from Midland Bank administrator.

    1. I can confirm that as you have GMP only benefits which are payable from age 65, you are unable to retire earlier than the GMP entitlement age of 65.
    2. I can confirm that GMP is increased using the Section 148 factors set by the government. Your GMP is payable from age 65 and will be calculated when you reach this age.
    3. Your pension in payment will not receive increases from the scheme.
    4. No reduction will be applied to your GMP benefit from the scheme when you start drawing your state pension.
    Mr Straw described whiplash as "not so much an injury, more a profitable invention of the human imagination—undiagnosable except by third-rate doctors in the pay of the claims management companies or personal injury lawyers"

    • Silvertabby
    • By Silvertabby 17th Jul 17, 12:00 PM
    • 1,386 Posts
    • 1,627 Thanks
    Silvertabby
    Update from Midland Bank administrator.

    1. I can confirm that as you have GMP only benefits which are payable from age 65, you are unable to retire earlier than the GMP entitlement age of 65.
    2. I can confirm that GMP is increased using the Section 148 factors set by the government. Your GMP is payable from age 65 and will be calculated when you reach this age.
    3. Your pension in payment will not receive increases from the scheme.
    4. No reduction will be applied to your GMP benefit from the scheme when you start drawing your state pension.
    That's normal for any pension scheme when the total pension equals/is less than the GMP. You'll not be able to commute (ie, take 25% tax free cash in lieu of pension) for the same reason.
    Last edited by Silvertabby; 17-07-2017 at 1:37 PM.
    • xylophone
    • By xylophone 17th Jul 17, 1:00 PM
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    • 12,883 Thanks
    xylophone
    S148 Orders = Full Rate revaluation not Fixed Rate ( unusual in non - public service type schemes).

    https://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/18/what-is-a-gmp/
    • Parking Trouble
    • By Parking Trouble 20th Jul 17, 8:32 PM
    • 543 Posts
    • 132 Thanks
    Parking Trouble
    I am starting to think that IFA's deserve their commission

    So GSK have come back with a projected annual pension of £2,704.92 at age 62.

    They seem to have moved the goal posts on the GMP revaluation.

    In a document from 2000 they clearly state 8.5% pa for leavers before 6th April 1988. £314.60 @ 8.5% compound over 32 years is £4,280.66 - is that a correct calculation?

    Now they say:

    Your Guaranteed Minimum Pension (GMP) must revalue in line with National Average Earnings, subject to a maximum of 5% per annum (compound) for each complete tax year between your date of leaving and your GMP age, then by 1/7th of 1% for each week between after your GMP age.

    For the Excess they say:

    Your Excess pension earned since 1 January 1985 must revalue in line with the increase in the Retail Prices Index (RPI) between your date of leaving and 31 December 2010.

     Your Excess pension earned since 1 January 1985 must then revalue in line with the increase in the Consumer Prices Index (CPI) between 1 January 2011 and your Normal Retirement Date.


    For the Excess Pension the May 2000 document has conflicting information. It says only the Excess which accrued after 1st Jan 1985 is revalued at 5% pa. Elsewhere it says SKF leavers before 1st May 1990 have a guaranteed Non-GMP revaluation of 5% pa.

    Even if I assume zero increase for the Excess it should add another £536 pa to the revalued GMP.

    How do I determine exactly how the calculation should be made?

    Is £4,800 pa realistic figure?
    Last edited by Parking Trouble; 20-07-2017 at 9:00 PM.
    Mr Straw described whiplash as "not so much an injury, more a profitable invention of the human imagination—undiagnosable except by third-rate doctors in the pay of the claims management companies or personal injury lawyers"

    • xylophone
    • By xylophone 21st Jul 17, 2:24 AM
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    • 12,883 Thanks
    xylophone
    Your Guaranteed Minimum Pension (GMP) must revalue in line with National Average Earnings, subject to a maximum of 5% per annum (compound) for each complete tax year between your date of leaving and your GMP age, then by 1/7th of 1% for each week between after your GMP age.

    Limited Rate Revaluation?

    http://www.pruadviser.co.uk/content/nav/about/26674/pghome/49880/53732/53759/53768/53789/

    Limited Rate Revaluation
    This is not available to leavers after 5 April 1997. The GMP is revalued each year by RPI up to a maximum of 5%. The Scheme pays a Limited Revaluation Premium to the DSS, who then take responsibility for any additional revaluation needed if RPI is greater than 5%. (The Limited Revaluation Premium will be refunded on later transfer to a personal pension plan.)


    See page 44 of
    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/372354/CA14_Termination_of_Contracted-out_Employment_Manual.pdf


    It is all rather odd - you seem to have retained old SKF NRA and yet the basis on which GMP was revalued changed to SKB (?) GSK (?) and excess revaluation has also changed?

    You'll need to query with the Administrator.
    • Parking Trouble
    • By Parking Trouble 21st Jul 17, 9:53 AM
    • 543 Posts
    • 132 Thanks
    Parking Trouble
    Thanks again. I have already gone back to Equiniti.

    I agree it is odd. Unclear if it is poor administration or some changes to the scheme during the two mergers sine I left 30 years ago. I guess there would have been notification of any changes to the scheme during that time but they won't have had my change of address until I asked in 2000. They lost my address after that although I haven't moved since then.

    I have sent them a copy of the May 2000 transfer statement and asked them what the right method of calculation is and more detail behind their calculation.

    I think they should provide all of the detail for their calculations.
    Mr Straw described whiplash as "not so much an injury, more a profitable invention of the human imagination—undiagnosable except by third-rate doctors in the pay of the claims management companies or personal injury lawyers"

    • xylophone
    • By xylophone 21st Jul 17, 12:35 PM
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    • 12,883 Thanks
    xylophone
    Let us know the outcome.

    You have read through both of these?

    https://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/18/what-is-a-gmp/

    https://www.barnett-waddingham.co.uk/comment-insight/blog/2012/07/24/revaluation-for-early-leavers/

    Your employer in 1982 was Smith Kline French (Beckman).

    https://en.wikipedia.org/wiki/Smith,_Kline_%26_French

    You left in 1987 with a deferred DB pension.

    You should have received a statement of deferred benefits at that time but either the company did not supply it or you lost it.

    That said, it would seem that at that point, your GMP revalued at FiR - with regard to the revaluation of the excess, it is unclear whether the Scheme's own rules applied or statutory rules applied.

    Smith Kline Beckman (formerly French) merged with Beecham in 1989, two years after you left their employ.

    It is conceivable that some change to deferred pension arrangements was made in connection with the merger.

    Smith Kline Beecham merged with Glaxo in 2000, creating Glaxo Smith Kline.

    Again, it is conceivable that some change to deferred pension arrangements occurred with that merger.

    You received your last pension statement in 2000 and the details on this seem to bear little relation to the figures you gave in your first post or those in the latest communication from GSK's administrator.

    It is rather a pig's breakfast.

    https://www.pensionsadvisoryservice.org.uk/pension-problems/avoiding-problems/what-you-must-be-told
    • Parking Trouble
    • By Parking Trouble 8th Aug 17, 4:30 PM
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    • 132 Thanks
    Parking Trouble
    Equiniti have provided a copy of my 1987 Certificate of Leaving Benefits from SKF.

    So this is driving the figures they have provided and the revaluation method or so it seems.

    £314.60 GMP - revaluation will be based on national average earnings max 5%

    £536.38 Excess - revaluation RPI, max 5%

    1st Payment due 1st June 2023 (I will be 65 the month before)

    In 1987 they projected the highest rate of revaluation and came up with £4841.85 but that is clearly no going to happen.

    Doesn't match the revaluation method alluded to in the letter I had in 2000

    A lot of conflicting and confusing information in the 1987, 2000 and current correspondence. Very frustrating.
    Mr Straw described whiplash as "not so much an injury, more a profitable invention of the human imagination—undiagnosable except by third-rate doctors in the pay of the claims management companies or personal injury lawyers"

    • xylophone
    • By xylophone 8th Aug 17, 6:34 PM
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    xylophone
    In which case it would appear that the GMP revaluation is "Limited Rate"

    see BW link

    and the excess "Limited Price Indexation" (see BW link).


    http://adviser.royallondon.com/technical-central/rates-and-factors/national-average-earnings-index/

    http://www.swanlowpark.co.uk/retail-price-index.jsp

    Are they now saying that Scheme Pension Age ( when you can take your pension without reduction) is in fact 65 and not 62?

    When your pension comes into payment, the scheme will have no obligation to escalate the GMP portion as it is all pre 88.

    You can check this with Equiniti.

    How will the excess escalate in payment?

    If you should choose to commute part of your pension for a lump sum, what factor would be used?

    At least you now have the facts to lay before a Pensions Transfer Specialist should you choose to explore a transfer out.
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