My GMP

vvvvvvvvvvvvvvvv

In 1991 i transfered a company pension plan.The GMP in the paperwork is from 1991 is for example £4000 p.a..It was tranfered to a section 32.My query is this.Will/has the GMP of £4000 p.a. stay at that amount or will it have increased?Does the GMP just stay at that same 4k p.a. until i retire?

SeekTruth

vvvvvvvvvvvvvvvv wrote: »

In 1991 i transfered a company pension plan.The GMP in the paperwork is from 1991 is for example £4000 p.a..It was tranfered to a section 32.My query is this.Will/has the GMP of £4000 p.a. stay at that amount or will it have increased?Does the GMP just stay at that same 4k p.a. until i retire?

Just done a bit of investigation and it appears that a Section 32 (buyout bond) with GMP amounts to the same as a GMP as part of a deferred pension (my information comes from http://www.pensionsandannuities.co.uk/Guaranteed_minimum_Pension_GMP.htm , NB I know nothing about this company) and it will rise during deferment, either by Average Earnings (Section 148 Orders) or by a fixed percentage rate. If it is rising by Section 148 then to date it will have risen by either 149.7% (if taken out before April 1991) or 126.8% (if taken out after April 1991) - figures taken from Earnings Factors Orders 2013 - so to somewhere between about £9k and £10k. If rising by a fixed percentage then it will be 7.5% per year, compounded - so to about £18k or £20k depending again on whether after or before April. It will continue to rise until age 60 for females and age 65 for males (unless transition to Single Tier Pension has some effect - it certainly appears to have an effect on the government commitment to pay some/all of the inflation increases once the GMP is in payment).

xylophone

The GMP has to be revalued - check your policy.http://www.pruadviser.co.uk/content/nav/about/26674/pghome/49880/53732/53759/53768/53789/

Zelazny

One thing to watch out for - they often quote the GMP at retirement age on this sort of paperwork. Read it carefully, does it say GMP at leaving, or GMP at retirement?

mania112

Yes it will increase - a section32 maintains the benefits as held before it was transferred.

The most common rate at which it 'revalues' in deferment will grow as follows:

Leavers after 5 April 1988 but before 6 April 1993 7.5% p.a.

SeekTruth

Zelazny wrote: »

One thing to watch out for - they often quote the GMP at retirement age on this sort of paperwork. Read it carefully, does it say GMP at leaving, or GMP at retirement?

Good point!

Having looked at the figures I don't think it would have been possible to have a GMP of around £4000 in 1991. In fact I don't think it would even have been possible to reach £2000.

xylophone

https://forums.moneysavingexpert.com/discussion/comment/60651909#Comment_60651909
might be worth a look in this connection.

That said, it is not entirely clear whether the £4000 mentioned in post 1 is just an example or an actual figure.

vvvvvvvvvvvvvvvv

Zelazny wrote: »

One thing to watch out for - they often quote the GMP at retirement age on this sort of paperwork. Read it carefully, does it say GMP at leaving, or GMP at retirement?

Thanks everyone for your replies.

I think.after double checking paperwork i have dug out that Zelazny's post above is correct.It must have been all added up at inception and the figure says the policy will pay at least 4k p.a. at retirement.It also says just over a 3rd of the GMP will increase by 3% p.a. compound.Whats that about?why is it only roughly a 3rd that increases p.a.?

xylophone

Whats that about?why is it only roughly a 3rd that increases p.a.?

See SnowMan's post 10 in thread above.