Final Salary Scheme.. Restricted TFLS...advice

Smygo

I have a deferred Company FS pension which will be payable on my 60th birthday next month

I have been advised the following...
"..under current Govt legislation, after 60 the X Group Pension scheme must guarantee to provide you with a pension at least equal to that which you would have received in the SERPs for the period which you have been contracted out with the Co.The equivalent SP is known as GMP and I estimate that this will be approx £3075pa.
In order to cover this GMP it has been necessary to totally restrict your tax free cash..."

1)Can anyone advise if this is correct as I understood there was an amount in my Co scheme which related to their contributions AS WELL AS an amount to cover GMP....they now appear to be amalgamating these.

2) I also obtained a transfer valuation last year clearly stating a "total transfer value" and a "value of GMP"...both different with the former some £24000 greater.
The trustees are also now saying , since it is a final salary scheme , there is no transfer value option...contrary to previous correspondence (incl annually received, pension income projections)

3) The figure I am being quoted ( without TFLS) as a pension is less than the figure (£3075 ) above..which they state is to be "covered"?

Any guidance as to the correctness and my understanding ( in simple terms please! ) would be appreciated.

Cheers

Zelazny

Smygo wrote: »

1)Can anyone advise if this is correct as I understood there was an amount in my Co scheme which related to their contributions AS WELL AS an amount to cover GMP....they now appear to be amalgamating these.

This is correct. The total figure will be made up of a certain amount of GMP and a certain amount of Excess. Suppose for example your pension was £1,000 a year, made up of £800 GMP and £200 Excess. Your total cash available would be calculated based on the total pension (£1,000) but you would not actually be able to commute more than £200 of it. As such, the GMP may cause the tax free cash to be restricted. If the cash were based only on the Excess amount, it would be a lot smaller.

This is compounded in the case of early retirement, as an early retirement factor applies to both GMP and Excess, but the GMP must still be provided in full. So if the penalty for early retirement was 15%, then the new total pension would be £850 but you'd only be able to commute £50.

Smygo wrote: »

2) I also obtained a transfer valuation last year clearly stating a "total transfer value" and a "value of GMP"...both different with the former some £24000 greater.
The trustees are also now saying , since it is a final salary scheme , there is no transfer value option...contrary to previous correspondence (incl annually received, pension income projections)

You are entitled to take a transfer up until you are 1 year from your normal retirement date within the scheme. As you retire next month, you cannot take a transfer. (source: http://www.pensionsadvisoryservice.org.uk/workplace-pension-schemes/final-salary-schemes/transfers)

Smygo wrote: »

3) The figure I am being quoted ( without TFLS) as a pension is less than the figure (£3075 ) above..which they state is to be "covered"?

The scheme may have a certain allowance for increases which will be provided between now and your GMP payment age. For males this is usually 65, so if the pension is payable from 60 they may pay an amount that is less than your GMP, as long as they pay at least the GMP amount from age 65.

xylophone

You might find this thread,post 14, of interest.https://forums.moneysavingexpert.com/discussion/3663731