Guaranteed Minimum Pension increase problems

xylophone

"The "notional" figure increases annually, but at what inflation criterion I've yet to establish"

In deferment the Notional ASP is revalued by S148 Order (usually announced in the previous December) every new tax year before the GMP is deducted thereby inflation proofing it.
The Occupational Pension would be revalued minus the GMP thereby preventing double inflation proofing of the GMP.http://www.ariespensions.co.uk/public/analysis/02032011.htm

After SPA the ASP increases by CPI.

yabbadoo

Thanks, xylophone, that info adds to the spreadsheet's ability to forward-calculate the ASP (Additional State Pension). I'm subject to Marginal Age Allowance for tax, so it helps in calculating total income for next tax year's code. I will also assume the same factor applies to the Graduated Contributions element of my State pension.

Note that in SECOND Scenario above (effect of split GMP on retirement pension at SRA) I used the same GMP figures as if retired early (i.e. the GMP at age 60, with post-1988 figure increased by 6.25% for 5 years)
Whilst the EFFECT is correct, (the Co. pension attracting 5% capped increase is reduced by the sum of the GMP's) for active contributors up to SRA, the post-GMP is probably increasing at a lesser rate within the Co scheme. Perhaps you can expand on this?

The whole scenario raises a question. Given that pensioners who paid into a so called 5% scheme all their working lives (and our salaries scales took into account this future benefit) WHY was it necessary for Governments to enact legislation to water down the benefits we paid for in full? No political bias in the question - the relevant pensions Acts span several decades!

xylophone

http://www.opalliance.org.uk/increases.htm - the situation pre George Osborne.

Since Osborne did his bit, the post SPA additional state pension increases by CPI.


http://www.thisismoney.co.uk/money/experts/article-1590223/Paltry-pension-rise.html - somebody else has noticed....

As to why benefits have been watered down.......cost to the government?

bewin

yabbadoo wrote: »

EARLY RETIREMENT - HOW GMP AFFECTS "ADDITIONAL STATE PENSION" at SRA

I've tested/proved the "early retirement" data via spreadsheet using actual figures - it's self-checking in that the calculated results are identical to the actual numbers issued by both my pension administrator and the Pensions Service. Unfortunately it's not possible to "post" spreadsheets - it's much easier to understand numeric data rather than text descriptions! If anyone wants the spreadsheet, I'll give it, no charge.

I retired early at age 57 and am 65 next year. Your explanation of GMP is excellent - I'd really like a copy of your early retirement spreadsheet - thanks

yabbadoo

Bewin, thanks for your comment and interest (more in your private folder). I'm older than you (tho was in same position) so your State pension qualifying age will not be 65. Be interesting to see what (if any) difference that makes, translating the calculations to your own, when you qualify for State pension. Approaching my 71st birthday, I still await the "Additional pension" mentioned on my State Pension notice! (Spreadsheet explains that, as advised by the Pensions Service).

xylophone

State pension qualifying age will not be 65.

If born before 6 12 53 it will be 65? http://www.pensionsadvisoryservice.org.uk/state-pensions/state-pension-age-calculator

yabbadoo

Mea culpa - slightly confused with the ladies date movements (my wife got caught with it)
My spreadsheet is therefore still relevant (SRA at age 65)

Would re-iterate that the link provided by xylophone a year ago
http://dl.dropbox.com/u/452108/20110217094333898.pdf
is still valid - a detailed explanation from the Pensions Service as to how GMP's are calculated.

Speadsheet shows exactly how this works in practice for 5 years after age 65 to date (and is a tool for DIY calculating your own situation)

bewin

yabbadoo wrote: »

Bewin, thanks for your comment and interest (more in your private folder). I'm older than you (tho was in same position) so your State pension qualifying age will not be 65. Be interesting to see what (if any) difference that makes, translating the calculations to your own, when you qualify for State pension. Approaching my 71st birthday, I still await the "Additional pension" mentioned on my State Pension notice! (Spreadsheet explains that, as advised by the Pensions Service).

Thanks Yabbado, I've PM'd you with info required (in your private folder)