GMP, COD and Single Tier Pension

hyubh

agarnett wrote: »

However, I am just reminded (thanks to Google yet again!) that Citywire reported in January

Dearie me: 'In the late 1980s the government encouraged workers to ‘contract out’ of S2P meaning the NICs they paid were rebated back to their workplace pension. This was seen as a good way to boost workplace pensions and by the time contracting out was abolished in 2012...' Erm, try again Citywire, try again...

agarnett

Citywire said that contracting out was abolished in 2012. They are correct in that contracting out was abolished for DC SERPS/S2P personal pension policyholders in 2012. Consequently none of those policies, which people like me have held for years, have received any contributions from HMRC since then. Unless they happen to be invested in a reasonable fund, as of 2012 they are dead in the water, yet now we are told (whether we inadvertently cash them in at age 55 because no-one told us the policy had any current purpose) that S2P sized miracles are expected therefrom.

Citywire had missed that contracting out won't be abolished for DB schemes until April 2016. Where is the real problem in that oversight by Citywire ? A commentator corrected it soon after the article was published, but has that journalistic error any major consequence ?

The journalist didn't pick up that Graduated Retirement Benefit was also very often "contracted out" when it existed. Perhaps you could say whether that was an important omission ?

The main story is that Contracting Out turns out to have disadvantaged too many of us, and the main story still holds, doesn't it?

The Government published a number of "Impact Assessments" to be read alongside the original Bill.

Here's one: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/254151/a-pensions-bill-single-tier-ia-oct-2013.pdf

Two charts in it are these:




zagfles, you say we are discussing a small group. But what typifies the group ? How small a group? Are they in these two charts ?

One of the earlier comments in the October 2013 Impact assessment said "People who would have qualified for large amounts of additional State Pension had the current system rolled forward without future reform are the main group who have notionally lower outcomes." Are these your small group ?

hyubh

agarnett wrote: »

Citywire said that contracting out was abolished in 2012. They are correct in that contracting out was abolished for DC SERPS/S2P personal pension policyholders in 2012.

Aside from confusing the end of contracting out full stop with the end of contracting out for DC schemes specifically as you say, the journalist also confuses contracting out being introduced for personal pensions in 1988 with contracting out being introduced for 'workplace pensions' at that point (that's the sort of pension contracting out was originally was for). It's not like the journalist is simplifying for the sake of a non-technical audience - she's just got basic details wrong.

The main story is that Contracting Out turns out to have disadvantaged too many of us

As others have said, you've cited the article eliding everyone who won't get the 'full' single tier because they've contracted out with the subset of that group who may also be worse off because of it. Stick to your other sources...

xylophone

For confused terminology what about the information from the TPS?

Post 56 link.

Teachers are not "entitled to a GMP in the state scheme."

agarnett

hyubh, rather than claim the earth is still flat, or that no man ever stepped on the moon, or that climate change is a myth, or that the new single tier pension and abolition of contracting out is fair, some of us are trying to explore the things that challenge us. Explorers make mistakes. That's how they learn how to overcome.

The maps that Citywire and others have laid out are not the wrong shape - they all lead in similar directions towards what we are questioning. Sure they've got things marked a bit skew whiff, and some things are not shown or are lumped with other detail, but the overall shape of things is well identified.

I see no good purpose in questioning the maps when we can all see what is on the horizon and can feel the vibes which strongly suggest that the wool is being pulled, even as we strain to see.

All of the "Impact Assessments"I have read seem tainted by the type of biased confirmatory language that you see in children's science exercise books describing how the experiment they dreamed up showed what they expected.

Spin.

You seem to have it all worked out, Teach! Perhaps you show us all how it is done, and list all the correct winners and all the correct losers in as much detail as that with which you wish to criticise the explorers and their rudimentary maps, and my homework?

Year by cohort year of all those reaching SPA from 2012 on up to about 2036 would be nice, if you would please, for handing in tomorrow morning

zagfles

agarnett wrote: »

zagfles, you say we are discussing a small group. But what typifies the group ? How small a group? Are they in these two charts ?

One of the earlier comments in the October 2013 Impact assessment said "People who would have qualified for large amounts of additional State Pension had the current system rolled forward without future reform are the main group who have notionally lower outcomes." Are these your small group ?

Course they aren't, they're in the larger group I said were worse done by, those who are contracted in. How do you think people would qualify for "large amounts of additional State Pension had the current system rolled forward " if they were contracted out? That statement makes my point.

I've said who the small group are. I'm not wasting any more time on your pointless copy and paste of irrelavent stuff as you clearly don't understand the issue the rest of us are discussing, ie the GMP indexation issue.

Ta ta.

hyubh

agarnett wrote: »

hyubh, rather than claim the earth is still flat,

Which I did not.

or that no man ever stepped on the moon,

Nor that.

or that climate change is a myth,

Nor that.

or that the new single tier pension and abolition of contracting out is fair,

Funnily enough, I offered no opinion on that either.

some of us are trying to explore the things that challenge us.

Don't worry Alf, we all know a lot of things you post about challenge you

agarnett

You two make a great pair ... of what I am not yet sure, a bit like GMP and COD. The thing taken whole is less than the sum of the two parts perhaps ?

You claim to understand it and complain of wasting time reading my attempts to understand it, but I think I may be one of the worst affected contracted out man and boy types with a new state pension rules pension forecast of just sixty-five bleedin' quid a week, despite having over 35 qualifying years of NI.

No matter that I apparently get the wooden spoon 'old rules' £115 pw - how the bleedin' hell did they arrive at just £65pw using the new rules?

The SERPS policy I have "might" produce £1,690 pa pension. That's £32 pw. The contracted DB scheme pension I have and the DB Buy Out policy I have for a total of 11 years within the period 1978-1997 include some GMP but how much in total I have not a clue beyond the Buy Out policy apparently forecast to pay GMP £270 pa (£5 pw)

The existing DB Scheme GMP position is as clear as mud to understand. I have not been furnished by them with any kind of illustrated benefits for ten years, but I think there is an element of "State Pension bridge" which is another £270pa (£5pw) but the bridge disappears at SPA.

So, in total, default £115pw + £32pw +£5pw +£5pw = £157pw less whatever the premature cessation of government GMP indexation support to private schemes does to me ?

And does it not also depend on how much my "excess" pension turns out to have been reduced by ("franked by"?) to enable those meagre GMP figures as to whether I get anything like the equivalent of the new single tier full flat rate out of the state?

xylophone

did they arrive at just £65pw using the new rules?

Have you read

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210299/single-tier-valuation-contracting-out.pdf

agarnett

xylophone wrote: »

Have you read

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210299/single-tier-valuation-contracting-out.pdf

I am not sure I had seen that one - I apologise if you have put it under my nose previously, xylophone.

The example they give closes with the far too simplified paragraph:

So in this case the current scheme valuation is the higher of the two valuations and becomes the Foundation Amount - this person receives a pension payable from the State of £118 and a further £74 paid by their workplace pension scheme. They can build a further 6 qualifying years (through contributions or credits) until they reach State Pension age. If they do this they could increase their pension by £24.66 (6x £4.11) and could retire on a single-tier pension of £142.66.

I don't have a single workplace pension scheme. I have been a member of several, and what each of them will pay is far from clear, especially after "franking", and especially as I do not believe that HMRC has sufficient records or resources to calculate the combined effects of contracting out and GMPs between several different schemes in a case like mine.

And I can't easily build any further qualifying years.