GMP, COD and Single Tier Pension

hyubh

Billopp wrote: »

When I reached state pension age in 2005 I started off with a GMP of £6.45 pw which became £27.16 pw after nine years of increases , An increase of over £20 pw

I doubt those numbers are right - the increases due are tied to inflation (CPI, previously RPI). Perhaps the £6.45 figure is the GMP at date of leaving rather than at SPA?

Martin51

Well said, Billopp!
I admit to being biased about my crusade re GMP indexation removal from SPA. Compared to those poor souls' pensions in the private sector that got decimated -- either by Maxwell or by company insolvency -- then the GMP indexation looks to be 'trivial'. But actually the fact that something as hard-wired as the GMP/ASP(SERPS) link throughout the pensions' literature can be overturned by stealth ("I get the feeling they don't want to do it as it will bring to every ones attention ...") in the first instance and then, when challenged, an intellectually feeble justification -- which is clearly discriminatory -- in the second instance, then we should ALL feel concerned!

zagfles

Billopp wrote: »

When I reached state pension age in 2005 I started off with a GMP of £6.45 pw which became £27.16 pw after nine years of increases , An increase of over £20 pw that people reaching state pension age under single-tier will not receive.

Eh? That can't be right, do you mean ASP not GMP? It makes no sense for the GMP to have increased in payment by more than 3% pa.

Billopp

hyubh


Sorry I should have said my additional pension of £6.45 pw became £27.16 pw and not used the word GMP.

This is because it includes the increases on my GMP paid by the DWP which Steve Webb and the DWP deny happens.


These figure comm from a letter dated 23 January 2014 from HMRC that I asked for to explain how they worked out my pension and who pays the increase.

In their letter they state "Responsibility of inflation proofing is divided between the State and Occupational scheme" and then mentions "the state is responsible for increases on GMP rights built up before 5 April 1988 . This is known as pre 1988 GMP.

Nothing could be clearer but the DWP and Steve Webb deny that happens.

greenglide

In which case someone with 9 qualifying years under the old scheme could have more than 9 years under the new scheme (if they have a lot of ASP) or less (if they were contracted out).

Something is wrong with this picture!

From 6/4/2016 you require ten years contributions to get anything irrespective of any Starting Amount based on either old rules or new rules. The MQP test is applied separately a bit like one of the old rules in the past - 20% or 25% to get anything?

This has been discussed before and there are some statistics around as to how many people are expected to fall foul of this in the early years.

Martin51

Billopp and Stevekenny2000,
Have sent a reply, with email, to your private messages. I hope you got this? Had a bit of trouble with the private messaging. Cheers

Martin51

Here's a comment from the late Pensions Minister:

"We are very clear that all accrued rights should be honoured: a pension promise made should be a pension promise kept. Therefore we would not make any changes to pension rights that have already been built up. I have confirmed that I regard accrued index-linked rights as protected.”

Steve Webb (LibDem), now Pensions Minister, in a letter dated 12 April 2010

Posted on the OPA's (opalliance) website

On the same website is posted:

“Indexation of pensions in payment is an established part of pensions legislation. The Conservative Party has no plans to change the current index-linking of public sector pensions in payment. We agree with the view that the right to indexation of pensions already accrued is part of the accrued pension rights and those rights will be protected.”

Philip Hammond, 27 April '10, (the then Conservative Shadow Chief Secretary to the Treasury)

The latter statement refers explicitly to PUBLIC sector pensions. You will note a reference to 'pensions in payment' and a reference to 'pensions already accrued'. These are not the same thing, but Hammond uses BOTH in the same statement.

Five years is a LONG time in politics!

hyubh

Martin51 wrote: »

The latter statement refers explicitly to PUBLIC sector pensions. You will note a reference to 'pensions in payment' and a reference to 'pensions already accrued'. These are not the same thing, but Hammond uses BOTH in the same statement.

Five years is a LONG time in politics!

Not sure what you're trying to show with those quotes to be honest - the second one was before the Conservatives were even back in government. Moreover, last time I looked, public sector pensions are indeed still indexed in payment (and deferment, by the same rate - nothing hinges on Hammond conflating the two), notwithstanding the change from RPI to CPI in 2011...

greenglide

But presumably you can, incorrectly IMHO, stretch it to include indexing of the GMP?

Does the government pension schemes not gave some sort of special relationship whereby the indexation of the GMP is done by the scheme rather than with the state pension?

Of course left hand, right hand ........

Martin51

Well, the first was by Steve Webb, who became Pensions Minister!

Ros Altmann, new Pensions Minister, used quite a bit of this type of sentiment to build a strong case against the DWP/Government's handling of 'broken promises'.

How about this: "Firstly, GMPs should be reinstated - in full - in the state scheme. It was Government who called these 'guaranteed minimum pensions', not employers, nor trustees, nor advisers and, if Government never mentioned that such pensions might not actually be received in full, then it must compensate. These are the rules which everyone involved in finance must live by."

The above was in the context of those whose pensions in the private sector were decimated by insolvency. Not the subject of what's been discussed here, but it does nevertheless help to build a picture of the importance and value that the GMP was held, and to the once-again dismissive attitude by bureaucrats of accrued rights.