GMP, COD and Single Tier Pension

zagfles

Billopp wrote: »

hyubh

The reason I stuck in the IFS article is that on one of the pages it mentions that many people would have to live way beyond normal expected age of dying to be better off under the single-tier pension system even when using the more generous triple-lock on £155 under single tier and triple lock on just basic pension of £115. The only problem is with their figures they assume the Government will always use triple lock on the single-tier pension which I doubt they will do as they have done away with GMP increases with increases on GMPs so can't be trusted to do what they say.

The reason I mentioned the article is to bring to everyone's attention that the single-tier pension is going to be worse for almost everyone. A person of a low salary will be about £2,000 a year worse off a year and a higher payer about £3,000 worse off.

A it happens I put in a letter to the Committee of Public accounts and received a very interesting letter from Margaret Hodge the Chair of the Committee on 25 March 2015. In the letter they mentioned they had asked the National Audit Office to investigate my letter about the DWP and Government not telling anyone about the non payment of GMP increases with the state pension.

In her reply she said "However, under current arrangements there are scenarios where DWP funds, or part funds, GMP increases earned between 1978 and 1997" and then states in another paragraph "however recipients will lose indexation increases on GMP increases accrued between 1978 and 1997"
On the second page she says The National Audit Office (NAO) has noted there are no details or scenarios published in which an individual would receive less pension following the move to New State Pension, and that their are no scenarios, published that reflect the potential impact of the removal of GMP indexation increases on contracted- out pensions.

This is the first time I have had something in writing from a Government Organisation that the Government pay GMP increase and are not telling anyone about its removal.

The next paragraph then stated " The Nao has discussed with the DWP how the Department is communicating with the public about the implementation of the New State Pension. The DWP explained that it has a communicating strategy designed to explain that it has a communication strategy designed to explain key changes to individual entitlements for the new state pension in advance of April 2016. The NAO has recommended to DWP that it publish additional clear, communication and guidance regarding scenarios in which individuals could losew out following the move to the New State Pension. The DWP has agreed to review the information publicly available on this area and, in line with their developing communications campaign, rectify any Gaps in the information it provides to the public.


After receiving the letter I wrote to DWP under freedom if information act mentioning the letter from Margaret Hodge and asked them

Can you tell me how you are going to tell people who reach state
pension age under single-tier pension, who were contracted out
between 1978 and 1997 that they will not receive GMP increases
funded by the DWP.

and received the following reply on 20 May 2015

With regards to you enquiry about the funding of
Guaranteed Minimum Pensions (GMPs), the Department for Work and
Pensions does not fund GMP increases and have nothing further to add.

So as you can see they are still denying they fund GMP increases even though the NAO says they do.

As soon as the next Committee of Public Accounts is formed I am going to write to them sending a copy of the reply of letter from DWP stating the DWP don't fund GMP increases even though the letter from Margaret Hodge to me says they do.

Everyone effected by the loss of GMP increases should write to the Committee of Public Accounts.

I was told that mine was the first letter to them about DWP not mentioning to the public that they would not receive GMP increases under single-tier pension.


Everyone on this thread should now write to the Committee of Public accounts complaining that the DWP are not mentioning in any of their publications about the New State Pension that people who reach state pension on and after 6 April 2016 will not receive GMP increases normally paid with the state pension.

Have you read Steve Webb's somewhat evasive reply to this question in the HOC:

http://www.publications.parliament.uk/pa/cm201314/cmhansrd/cm140106/text/140106w0002.htm

Basically first stating that the DWP don't pay GMP increases, then describing the mechanism by which the DWP do actually (effectively) pay GMP increases!

And ends with "We estimate that those who hold GMPs are no more likely to have a lower outcome as a result of the reforms overall than the rest of the population", which is probably true because there are likely to be more winners than losers amongst those with contracted out service. Of course that's not much comfort to those who do lose out...

zagfles

Billopp wrote: »

When trying to get the Government to change legislation you must not look at the small picture ,you have to look at every one effected by the new single-tier pension.

In which case, like I said ages ago, you need to account for those who gain from the single tier, and this will include a lot of people who have GMPs. If you make it too broad and look at the overall impact you lose focus on the issue that matters and it gets wrapped up on the overall impact on a much larger group.

The important issue to focus on is the retrospective nature of the change for a small group of people who will lose out and won't be able to do anything about it. That's the real unfairness. Don't bury this in wider issues about people who'll lose out due to future accrual changes.

xylophone

Have you read Steve Webb's somewhat evasive reply to this question in the HOC:

See post 76

and post 14- I'm afraid SnowMan missed my attempt at irony..:)

Webb was about as much use to the constituent as a chocolate teapot!

Billopp

zagfles

When I put in my complaint to the Committee of Public Accounts it was only about the loss of GMP increases. It was the letter from Margaret Hodge that mentioned that the NAO had noticed their were no scenarios mentioning that people would receive less pension under single-tier or that they would not receive GMP increases funded by the DWP.

As loss of future pension affects many more people than loss of GMP increases I think that this will make them more likely to investigate why the Government and DWP are not telling people about loss of future entitlement under the new single-tier system.

That is why I think anyone affected by either the loss of GMP increases or future pension entitlement should write to the Committee of Public Accounts complaining that the Government are not giving advance warning about pending changes in legislation to what people will receive under single-tier pension.

I agree that loss of GMP increases is cliff edge and also agree that some people will gain from the single-tier pension who will be mainly people in the public sector as they won't receive a loss of future pension entitlement under their occupational scheme where it is likely that most in the private sector will see a reduction in their future pension accrual, change to money purchase or closed down because their employer are losing their NI rebate of 3.4%. This wont happen in the public sector as the Government have passed a law that there would be no further changes to public service schemes for 25 years that could make their pensions reduce.

I am only mentioning in my thread people who will receive less under single-tier pension than under the existing system.

Are you going to write to the Committee of Public Accounts?

hyubh

zagfles wrote: »

What is 'ridiculous' is for schemes have to pick up the cost and hassle

Unfortunate indeed.

for something caused by state discrimination

Personally I find considering gendered SPAs of the past 'discrimination' that need retrospective correction rather 'ridiculous', especially given the wider legal and social context when those SPAs were put in place was 'discrimination' in the other direction (marriage bars etc.). We are where we are however...

Stevekenny2000

Hi Martin51,

have received your 3 test messages

these did not have an email address

If you put one in it may have been skimmed , if so maybe code it something like

Martin51 the commercial at sign sky the letter dot com

Best

zagfles

Billopp wrote: »

zagfles

When I put in my complaint to the Committee of Public Accounts it was only about the loss of GMP increases. It was the letter from Margaret Hodge that mentioned that the NAO had noticed their were no scenarios mentioning that people would receive less pension under single-tier or that they would not receive GMP increases funded by the DWP.

As loss of future pension affects many more people than loss of GMP increases I think that this will make them more likely to investigate why the Government and DWP are not telling people about loss of future entitlement under the new single-tier system.

They are telling people in most cases. The white paper explains how the single tier works and covers most if not all future accrual scenarios. The loss of the GMP indexation is a technical issue which isn't covered in the WP and which affects past accrual not future accrual. Mixing that up with future accrual buries it and confuses something people are being told, about future accrual, with something they aren't being told, about past accrual.

Future accrual was always going to worse than the current system, the last Labour govt planned to move to flat rate by freezing the UAP (upper accrual point), which would also have resulted in lower future accrual for most people. It wasn't a secret then and it isn't now.

That is why I think anyone affected by either the loss of GMP increases or future pension entitlement should write to the Committee of Public Accounts complaining that the Government are not giving advance warning about pending changes in legislation to what people will receive under single-tier pension.

Even if they are in their case?

I agree that loss of GMP increases is cliff edge and also agree that some people will gain from the single-tier pension who will be mainly people in the public sector as they won't receive a loss of future pension entitlement under their occupational scheme where it is likely that most in the private sector will see a reduction in their future pension accrual, change to money purchase or closed down because their employer are losing their NI rebate of 3.4%.

No. The point you seem to be missing is that there aren't many people in the private sector who are still active members of contracted out DB schemes. The vast majority of private sector employees with GMPs will be those with deferred benefits, not those in active schemes. The change to money purchase (nearly always contracted in) has already happened for the vast majority.

Such people will see no change to future accrual in their occupational scheme, because it won't be affected at all by single tier. Instead, what most are likely to see is a big increase in their accrual to the state scheme, because, due to the GMP benefits in the deferred occ scheme and hence COD, they're unlikely to have a full single tier. State pension accrual rates for such people on an average income would approximately double.

The losers would be those who don't have the opportunity to build further state pension accrual, either because they have little working time left after April 2016 or because they have mixed contribution record with enough ASP after COD to get the full single tier already.

This wont happen in the public sector as the Government have passed a law that there would be no further changes to public service schemes for 25 years that could make their pensions reduce.

I am only mentioning in my thread people who will receive less under single-tier pension than under the existing system.

Are you going to write to the Committee of Public Accounts?

No.

zagfles

hyubh wrote: »

Unfortunate indeed.



Personally I find considering gendered SPAs of the past 'discrimination' that need retrospective correction rather 'ridiculous', especially given the wider legal and social context when those SPAs were put in place was 'discrimination' in the other direction (marriage bars etc.). We are where we are however...

The issue is the disconnect between scheme obligations and govt obligations. You have a state scheme which still discrminates, and certainly did in the 90's, yet occupational schemes are expected to make right any gender differences from rights accrued in the 90's caused entirely by discrimination in the state scheme!

xylophone

In a letter dated 12 April 2010,[6] Webb said on behalf of the Liberal Democrats: "We are very clear that all accrued rights should be honoured: a pension promise made should be a pension promise kept.

In a parliamentary briefing SNO4956, the author cites NP34 of 1978

"The new state pension will operate in partnership with good occupational schemes… if your employer operates such a scheme he can apply to contract you out…of the state scheme’s additional pension and you would then pay lower contributions to the state scheme … Your basic pension would then be provided by the state scheme and your additional pension by your employer’s occupational scheme, with inflation-proofing after the pension is in payment provided by the state "…"

When is a promise not a promise?

zagfles

xylophone wrote: »

In a parliamentary briefing SNO4956, the author cites NP34 of 1978

"The new state pension will operate in partnership with good occupational schemes… if your employer operates such a scheme he can apply to contract you out…of the state scheme’s additional pension and you would then pay lower contributions to the state scheme … Your basic pension would then be provided by the state scheme and your additional pension by your employer’s occupational scheme, with inflation-proofing after the pension is in payment provided by the state "…"

When is a promise not a promise?

To give the obvious answer - when it's made by a politician!