Revaluation of GMP

xylophone

There is also the fact that the pre 88 gmp remains fixed - see calculation in letter.

Judesman

Thanks for all your help, I think I have got the hang of all this now.

xylophone

Judesman wrote: »

Thanks for all your help, I think I have got the hang of all this now.

Must be one of the few....;)

Seriously though, it is something that you don't really think about until it is borne in upon you that you might be personally affected.

Another thought, even those with the RPI link "hard wired" into the Scheme rules could be adversely affected by the change from RPI to CPI linking if they have GMPs - even those who don't will soon come to realize that the 'triple link' does not apply to their ASP.

Judesman

None of this occurred to me when I had to take early retirement. I think employers and the state have a duty to make all this clear at the time of leaving employment.

Thanks for your input.

xylophone

Yes indeed - some employers seem to be very good at giving information to their pensioners but others seem to muddy the waters somewhat.
Did you have a look at the pensions ombudsman determination?
It was also clear from the "This is Money" article that the gmp situation wasn't made clear to that particular pensioner.

Judesman

Yes, It is a pity the Ombudsman didn't make Barclays disclose the number of pensioners affected. I asked my employer and I was just told that I am a anomaly. The Pensions Advisory Service told me that I am one of many. I have asked many of my pensioner colleagues but can't find anyone with a similar problem but none of them understands GMP.

xylophone

Judesman, I don't know whether you'll see this but I thought I would just mention a conversation I had today with a family friend who took an early pension from her contracted out Final Salary Scheme but who will draw her state pension one year from now.

I said something along the lines of "Ah, you'll be affected by the gmp rules then .."

Answer? You've guessed- "GMP? Who he?" or words to that effect.:)

Judesman

Hi Xylophone, I am going to write to my pension scheme trustees and follow the appeals procedure when I see what the new state pension advice letter looks like. My MP is also interested in what is going on but he doesn't understand GMP any more than anyone else and he votes on the legislation!! We will see what happens.

xylophone

The parliamentary briefing note I mentioned has
"Members are often approached by constituents who find out that their additional state
pension (SERPS/State Second Pension) has been significantly reduced, or removed
altogether by a “contracted-out deduction” (COD). The Pensions Act 2008 contains
measures to simplify CODs. This note looks at how CODs work and discusses some of the
issues raised in connection with them."
and

"However, the percentage of men aged 65 in receipt of net additional State Pension is
falling because of the increase in excess Contracted Out Deduction cases due to the
interaction between the gross additional State Pension and Contracted Out Deduction
calculations. There are two reasons for this. The first reason is that there are more
early leavers with fixed revaluations coming into retirement. These revaluations were in
the past far higher than the current revaluations meaning that more people have
excess Contracted Out Deductions than in the past and these excess Contracted Out
Deductions themselves are larger. The second reason is that there are relatively low
post award upratings experienced in the last few years, which means that it takes
longer to reduce the excess Contracted Out Deductions and for the gross additional
State Pension to exceed the Contracted Out Deductions."

However, what it does not cover ( and what you'd need to explain to your MP(?), is the fact that until the ASP is greater than the COD, you will not receive any inflation linked increases on that part of your pension which equates to your pre 88 gmp or anything above a maximum of 3% on that part of your pension which equates to your post 88 gmp.

The explanation lies in the fact that when the state guaranteed to apply the inflation increase to pre 88 gmp, and the excess of 3% on post 88 gmp, the gmp it had in mind was the amount of SERPS you would have earned (revalued by S 148 orders in deferment) had you not been contracted out.

You were contracted out and as your gmp, having been revalued by the "fixed rate" is greater than the 'official' figure , referred to in the letter as the "notional ASP" the state regards itself as under no legal obligation to apply the increases until the notional ASP is greater than your "real" gmp (COD).

Oh dear, are we becoming "GMP nerds/ anoraks"?:)

Judesman

I saved the Parliamentary Briefing Note and will quote it when I contact my MP again. It seems to me that all this is going to be made worse by the change from RPI to CPI. Thanks for all your input.