GMP, COD and Single Tier Pension

Martin51

Thanks to all for adding comments. What a minefield! I can see that a lot of you have accrued a great amount of detail. Between you you probably know more than the DWP!

Stevekenny2000: I have worked out how to send you a private message. Cheers

If anyone feels like me about the whole badly handled GMP saga and wish to protest, then let me know, either by a posting or by a private message.

You can begin by berrating your MP via WriteToThem.

Best

Martin51

zagfles,
Interesting! I'd willingly swap my GMP for a piece of 'pension excess'.
Somehow I think that my GMP is going to sink faster than the Titanic. All aboard!:(

hyubh

zagfles wrote: »

Ironic really as most schemes don't discriminate

Hmm, only because Barber was dealt with for scheme benefits back in the 1990s...

and schemes might end up losing out because of the ridiculous discrimination in state rules for GMP's.

Hardly 'ridiculous' for a direct substitute for part of the state pension to reflect the normal pension ages of the state pension during the time it was being earned.

Billopp

Martin51

If you can contact me I have a great deal of information about GMP increases going back to 2008.

If you have not seen this report by the Institute of Fiscal Studies yhou must read it

IFS Reports (R82)
A single-tier pension: what does it really mean?

Long-run effect of the proposed reforms
In the longer term, the new system will be less generous to just about everyone
than the system that it is replacing. This certainly includes anyone born in 1986
or later and potentially includes cohorts born as early as 1966. That is because
the accrual rate will be lower than the combined accrual rate of the basic state
pension and state second pension, and because almost all the same activities
create entitlement under the current regime as under the new one. Particularly
worse off are those who contribute for longer, whether through paid
employment, caring or receiving disability-related benefits.
Although the more generous indexation arrangements under the proposed
system would narrow the gap between income under the current and the
proposed system through retirement, most people would have to live to over 100
to be better off overall.
The only significant exceptions will be the long-term self-employed and people
who will start to receive credits to the basic state pension (but not the state
second pension) under universal credit. However, it remains to be seen whether
the self-employed will be asked to pay higher National Insurance contributions,
which could offset this gain.

4.2 Comparing state pension income at SPA under
the proposed and current systems
This section describes – for individuals reaching SPA between 6 April 2016 and 5
April 2020 – how state pension income at SPA under the proposed system will
compare with what they would get under the current system. For more detail on
how pension income will be calculated in the new system and how rights already
built up under the existing system will be ‘protected’, see Sections 3.1 and 3.4.
The data we have only include information on individuals’ activities up to 2010–
11. In this section, we start by describing what individuals’ state pension rights
would be under the current and proposed systems if they then did no ‘creditable’
activities from 6 April 2016 onwards. We then discuss how this compares with
the picture if individuals expect to continue working or doing other creditable
unpaid activities between 2016 and when they reach the SPA. More detail on the
assumptions made is provided in Appendix B.39

Interesting information on pages 50 and 52

hyubh

Billopp wrote: »

IFS Reports (R82)
A single-tier pension: what does it really mean?

Unless I'm missing something, this doesn't cover your (or at least Martin51's) issue at all. If you're wanting to mount a serious complaint, stick to the actual issue - increases on GMP in payment. Generic talk about how the new state pension will turn out less generous for many younger people is stating an intended feature of it, not a problem in its design.

Billopp

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.

hyubh

Billopp wrote: »

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

At the risk of sounding harsh, so what? That has nothing to do with the GMP increases issue - you're citing where the IFS analysis turns to compare someone with a full contracted-in record under the old system with an equivalent person whose state pension entirely falls under the new rules. For a potential replier at the DWP, all you're doing is clouding your real issue with a general moan about the single tier pension generally - and the ship of the latter has already sailed.

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.

It claims this for younger people unaffected by transitionary arrangements - and again, that's not an unexpected feature of the new system given it's supposed to cost less money. For older people that are affected by transitionary arrangements the report claims the opposite ('Only 2% would lose').

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.

<snip>

In her reply she said

<snip>

This is the first time I have had something in writing from a Government Organisation

Margaret Hodge in that role was not part of the government, but the chair of a parliamentary committee that exists to scrutinise the government.

Billopp

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.

As confirmed by the NAO which is a Government Organisation they stated that THe DWP/ Government should be telling everyone how they are effected by the new state pension not just people who will not receive GMP increases.

I don't know if you remember the terrible problems the Government had with the change of inherited SERPS from 100% to 50% that should have taken effect from 2000. It was previously announced by the Government in 1986 but the DWP forgot to mention it in any of their publications untill about 1999. Because of this the Public Accounts and NAO were involved in investigating why the DWP had forgotten to tell the people about the change so people could not plan for the loss.

The Government then had to put of the change of legislation and not let it effect current pensioners. It was put off for two years and the Government introduced a sliding scale reduction from 2002 to 2010.

The DWP were accused of maladministration for not telling people about the change by not giving people enough time to plan for the reduction of inherited SERPS. In the inherited SERPs situation reduction it was the Governments intention to give fourteen years warning so people could prepare for the loss of inherited SERPS.

In the case of the single-tier pension it looks like the DWP are not going to give any warning about loss of GMP increases or reduction in future pension entitlement


The DWP were told in 1999 that they should give people plenty of warning about changes about reduction of future benefit paid by the state.

It is clear to me that they have not learned by their past mistakes even though they were told they had to give prior warning about major Changes. You should read the reports done by the NAO ant Select Committee at that time. They were very damming about the DWP and how they told people about changes to legislation.

If people are going to get anywher with the change in legislation they are going to have to get newspapers to write articles that mention loss of GMP increases and loss of future pension accrual that effects many more people.

It is only if you get thousands of people to complain about DWP not telling about lack of changes under single-tier pension that the Government might then put of the change like they did with inherited SERPS reduction.

I don't think the Committee of Public Accounts and NAO are are very happy with the way the DWP are dealing with the change of legislation as they don't appear to have learned from how they failed to tell people about the inherited SERPS problem.

I realise this is of track but you have to bring to the Government and DWPs attention that they have a duty of care to tell people in advance about major changes that effect them which they are clearly not doing with the single-tier pension.

hyubh

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.

You will get nowhere with that approach. Imagine unfairly getting a parking ticket at a municipal car park then writing a letter ostensibly asking for it to be rescinded but where you spend five pages complaining about the quality of the local shops. Or perhaps more to the point: imagine being the clerk at the other end.

zagfles

hyubh wrote: »

Hmm, only because Barber was dealt with for scheme benefits back in the 1990s...

Should have dealt with state discrimination at the same time really. State pension ages still aren't equal even now...

Hardly 'ridiculous' for a direct substitute for part of the state pension to reflect the normal pension ages of the state pension during the time it was being earned.

What is 'ridiculous' is for schemes have to pick up the cost and hassle for something caused by state discrimination. If it's OK to have unequal state pension ages even today, why is it not OK for the 'direct substitute' to as well?