GMP, COD and Single Tier Pension

xylophone

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.

Have you checked your NI record? https://www.gov.uk/check-national-insurance-record

Try typing https://www.parliament.uk/briefing-papers/SN02674.pdf into Google although some of the information has been overtaken by events.

agarnett

xylophone wrote: »

Have you checked your NI record? https://www.gov.uk/check-national-insurance-record

Yes, and looking back at my files I see I printed a copy of that https://www.gov.uk/government/upload...acting-out.pdf and filed it alongside my NI contribution record, so you must have got me thinking along the right lines at some earlier point!

I have already noticed an overlap between two contracted out arrangements due to what looked like pretty uncontrolled backdating of DC SERPS personal pensions to April 1987 from as far as two years beyond that date.

As part of the same confusing set up, I think they made backdated "incentive" rebates to DC SERPS policy providers for a number of years after that. These were described by the provider as "2% of part of your salary" although I have no idea which part! Consequently I have a policy that received five separate rebate amounts in 1993, 4 or them on consecutive days! I have little idea of how they were calculated or exactly which periods each applied to.

Try typing https://www.parliament.uk/briefing-papers/SN02674.pdf into Google although some of the information has been overtaken by events.

That was some briefing note! And what astounding confessions from the government of the day (it was published 11 March 2010) about their inability to accurately forecast individual's state pension entitlements - more or less confirming my doubts that they can calculate them now too!

Martin51

Hi Billiop, AGarnett et al.,
The thread has gone quiet over the past week.

I found a site called '38degrees', which is a site where you can conduct your own campaign. I noted a number of protect-our-pensions campaigns, one of which had already made a formal protest to Parliament. See 'WOMEN'S PENSION 60. AGAINST TAX ALLOWANCE LOSS 65 / PENSION LOSS WIDOWS, HOUSEWIVES, POOR WORKERS'
The Government has acted quickly and ruthlessly to implement the single tier. It has brushed aside any legal issues and certainly reneged on promises made over the years to those who were imminently in the frame to collect their well earned rewards. Maybe some (certainly NOT the losers) will praise the Government?

Since posting on this blog, I have been having many bits of correspondence with the DWP, initially through the now-deposed Steve Webb and recently through a private secretary. Every letter where I question 'discrimination', 'mis-selling', 'fair', etc. I am met with just 'clarifications' on how the new system works. Wonderful, but maybe that's what I should expect.

But I have also shared my disgruntlement with Ros Altmann in the lead up to the Election. I even shared Billop's posting about the NAO's response and the pending Parliamentary Ombudsman' response to Billop's friend's submission. She did not comment directly, but did say that someone should ask a Parliamentary question. This was before it was confirmed that her position in a pending Tory government was to be the Pensions Minister. Dr Altmann's support for those in the private sector who have suffered pensions' mismanagement even by the Government of the day is well known. She is well aware of the mess due to Government indifference over protected rights and unfairness of its attitudes towards the private sector. The removal of GMP indexation from SPA is but one.

But, and its a BIG but, will she be able to effect changes needed to address the injustices that will impact folk like us? Will the Government in fact be making some sizeable savings, at least initially, by removing some of these benefits that are enjoyed by current pensioners? And might this form part of the Tories' huge benefits-saving target?

Stevekenny2000

Hi,

I saw your post and mention in some Telegraph articles.

I have had a very similar experience with the DWP and Steve Webb and have been attempting to mount a Parliamentary Ombudsman investigation into this scandal. A friend of mine has also been persueing the DWP et al with freedom of information requests.

I am unsure if its possible to exchange email address's via this site - if it is could you send me yours so we can exchange information?

Best

Steve Kenny

xylophone

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 "…

There was a change to this in 1988 when the scheme had to inflation link GMP in payment up to 3%.

The note goes on to attempt to elucidate what was meant by the statement that DWP does not pay increases on GMPs.

You will note the mixing up of "increases and indexing/inflation linking....."

"The Department for Work and Pensions does not pay increases on guaranteed minimum pensions (GMPs). GMPs are occupational pension scheme benefits which were accrued between 1978 and 1997. Pension schemes are liable for any statutory indexation of GMPs, and this liability will not change as a result of the single tier reforms. The Department for Work and Pensions pays state pension benefits and their indexation, including additional state pension (SERPS and S2P) and basic state pension.
Additional state pension and GMPs are linked in that when a person reaches pensionable age, the total amount of GMP is subtracted from the total amount of additional state pension built up between 1978 and 1997, and any net amount is paid. This subtraction of the total GMP amount is called a ‘contracted-out deduction’, and reflects that reduced national insurance was paid during the period of contracting out in return for meeting legislative requirements. This calculation is performed each year that the pension is payable.
There is no statutory obligation on schemes to pay increases on GMPs accrued between 1978 and 1988. However, additional state pension built up during that period is subject to increases. When the contracted-out deduction is subtracted from the additional state pension, the remaining additional state pension includes an increase linked to prices. In this way, an amount broadly equivalent to the GMP, but which is in fact additional state pension, is subject to an increase. Schemes are under an obligation to pay increases on GMPs accrued between 1988 and 1997, subject to a cap of 3%."

In other words, the scheme pays the GMP but the state provides inflation linking in whole (Pre 88) or in part (post 88) because of the connection between GMP and ASP.

You will note from link in my post above that Steve Webb studiously avoided a clear explanation....

Martin51

xylophone,
Thanks for this. The wording that you submitted is the standard response that DWP issues. I think that the first bit about Government not paying indexation on private pensions actually refers to those members still in service or retired but not yet at SPA. This is of course correct; it is up to the employer to index the GMP until SPA.

The second bit is the key element, where it explains how GMP uprating works from SPA, which is indeed paid by the State -- until the advent of single tier!

Steve Webb and the DWP have naturally played all this down. Webb tried to justify the abolition of GMP uprating from SPA by trying to con me by saying that there was a limit to what we can expect from future generations in paying pensions and that the impact of people like me who had so-called generous provision as negligible!

Unfortunately I was unable to inform Mr Webb before he was deposed that what he thought was irrelevant! All that matters is that the Government upholds its duty to pay those who were promised GMP indexation!

How can we trust Governments that are no better than private companies with regard to mis-selling?

And as to being affordable by future generations, then why don't they cut out indexation on what contracted-in members will have inside the single tier AND what those who have GMP accrued within the public sector? Then you have parity across the board -- but ALL losers!

I doubt that that would be popular ...

Martin51

Stevekenny2000,
Thanks for your posting. I'm quite happy to share email addresses. Have you tried to send anyone a private message through this site?

Best

Martin51

xylophone

employer to index the GMP until SPA.

Not quite - the employer has to index the GMP until GMP age which is no longer necessarily the same as state pension age.

This was particularly unfair on women http://www.thisismoney.co.uk/money/pensions/article-2701873/EXCLUSIVE-Secret-loophole-freezes-pensions-250-000-women.html

Public Sector Schemes like the CSPS recognised this unfairness and arranged to pay inflation linked increases on the whole of the pension until state pension age, see for example http://www.civilservicepensionscheme.org.uk/media/14453/pensioners_newsletter_2013.pdf

"New arrangements will apply to members whose GMP age (60 for women, 65 for men) is
different from their State pension age – for example, women born after 5 April 1950. In these
cases, the scheme will temporarily increase the GMP element which the State previously paid
until State pension age."

Those in private schemes may not have been so fortunate.

Martin51

Thanks xylophone. I agree with your amendment.

Cheers

zagfles

xylophone wrote: »

Not quite - the employer has to index the GMP until GMP age which is no longer necessarily the same as state pension age.

This was particularly unfair on women http://www.thisismoney.co.uk/money/pensions/article-2701873/EXCLUSIVE-Secret-loophole-freezes-pensions-250-000-women.html

Public Sector Schemes like the CSPS recognised this unfairness and arranged to pay inflation linked increases on the whole of the pension until state pension age, see for example http://www.civilservicepensionscheme.org.uk/media/14453/pensioners_newsletter_2013.pdf

"New arrangements will apply to members whose GMP age (60 for women, 65 for men) is
different from their State pension age – for example, women born after 5 April 1950. In these
cases, the scheme will temporarily increase the GMP element which the State previously paid
until State pension age."

Those in private schemes may not have been so fortunate.

It's not necessarily women who lose out, it depends on a lot of different factors. The govt, schemes and actuaries have been tying themselves in knots trying to sort out the GMP equalisation issue.

Ironic really as most schemes don't discriminate, but govt GMP rules do, and schemes might end up losing out because of the ridiculous discrimination in state rules for GMP's.

See:

http://www.pensionsworld.co.uk/pw/article/gmp-equalisation-what-to-do-about-jack-and-jill-12317211

http://www.gov.uk/government/uploads/system/uploads/attachment_data/file/220482/methodology-document-2012.pdf