Barclays Final Salary pension GMP/Excess revaluation & Anti-franking

xylophone

TW won't "project forwards" but I wonder whether they would "look back" just by way of example to help you (all right, me...:D) understand the position?

Supposing you put forward the case of a certain Mr De Ferd Exbar who attained SRA back in February 2008.

His pension started at £10,000 per annum and consisted of his revalued excess of £9000 and his unrevalued GMP ( this equalled £1000, being £700 pre 88 and £300 post 88).

He reached his GMP/SPA in February. Allowing for his fixed abatement deduction of (say) £500, what was his position with regard to his Barclays pension, (was there any increase in pension by way of GMP adjustment) and how was this calculated?

No doubt TW will say that they can't comment on hypothetical situations.....:rotfl:

SnowMan

Remember from post 26 that the administrators only took over a few months ago so what the old administrators did may differ from what TW are planning to do.

I think it is highly likely the previous administrators would have topped up to revalued GMP plus revalued excess at 65.

But we know from the Biggs case earlier that administrators can come in and try to fundamentally change the way benefits are calculated and minimum benefits tests are applied, sometimes without justification.

xylophone

Yes, and of course, mistakes can happen with pension calculations even where there has been no change - I seem to remember past posts with anguished cris de couer concerning misapplication/misinterpretation of the rules so that pensioners were being required to make repayments/accept pension reductions etc.

All praise to Mike for trying to clarify the exact position before he retires and for sharing the information, which may well be of help to others.

I am hanging on his every word!:D

SnowMan

I am wary that data records aren't always as good as they should be in pensions administration. It is understandable really as the gap between leaving a scheme and benefits coming into payment can be a very long time, encompassing all sorts of technological changes, methods of data storage and changes of administrators and systems.

I've got another deferred pension, and got a letter through from the administators a while ago through a tracing service saying they were trying to find out my current address. I thought this was odd as I had told the administrators my new address and they had even written to me at that address previously.

I rang them up to ask what was going on, but they refused to speak to me and said I had to notify a change of address in writing. I explained I wasn't notifying a new address, I was just asking them to use my correct address. After asking to speak to the pensions manager it subsequently transpired that the administrators had moved their records from one system to another but hadn't transferred some addresses so they were reverting to addresses when the member left the scheme and sending my correspondence to an old address where it was being returned 'not at this address'.

You can see how errors are made and contact is lost between former members and schemes (of course the members are often at fault for not notifing new addresses).

The message has to be for members to keep all correspondence in relation to their scheme benefits and keep them in a safe place. And also to try and understand their benefits as best they can; not just so they can identify what thay may have to retire on, but to make sure what they are actually paid is what they should be paid.

xylophone wrote: »

All praise to Mike for trying to clarify the exact position before he retires and for sharing the information, which may well be of help to others.

I am hanging on his every word!:D

Coudn't agree more. Same here.

SnowMan

Given my position is very similar to Mike's I thought I would check it out with The Pensions Advisory Service (TPAS). TPAS emailed me back today.

Their intial answer was that the scheme only has to pay revalued GMP plus unrevalued excess from 65 and mentioned the Pensions Ombudsman decision in a 2007 case and paras 87 to 90 of PSA93 (I think the case must be the Biggs case I earlier linked to and we were all struggling to analyse).

I've gone back to them to give reasons why I think that view is untested (mentioning mainly things mentioned earlier in the thread), not least that it would be a giant loophole around the requirement to revalue excess in deferment introduced for post 1/1/1991 leavers.

I've also mentioned that I think chapter II of the PSA93 has to be considered also in terms of what it requires in terms of statutory revaluation and how it interacts with the anti-franking bits in paras 87 to 89.


I've also asked a cycling friend, who is a real practicing expert in final salary pensions, and his view is that the normal interpretaton of the legislation is that at least the revalued GMP and excess revalued to age 60 needs to be provided from age 65.

Because the legislation is all over the place he thinks there are some schemes around adopting unusual interpretations of the legislation (TW's approach seems to one one of them) but makes the point I made earlier that paying only revalued GMP plus unrevalued excess would be going back to the position that applied to pre 1/1/86 leavers which doesn't make sense.

He thinks that most schemes will not make these unusual interpretations and perhaps 90% of schemes will check revalued GMP plus revalued excess to 60 is covered, from 65.


I've emailed my scheme also to ask them the basis behind the calculation of the step up at age 65.

xylophone

I've emailed my scheme also to ask them the basis behind the calculation of the step up at age 65.

So now we're hanging on your every word......

Their initial answer was that the scheme only has to pay revalued GMP plus unrevalued excess from 65

So that a woman in Mike's place would only have to receive her revalued GMP +unrevalued excess at NRD/GMP age (60), about £11,567 rather than the £15,000+ previously calculated?

And at 65, Mike would have to be receiving at least £8548+ £5477? (£14025).

Now if the above is the case,then the comment re any possible step up at 65, (post 49)

Please note that we cannot comment on the likelihood of this occurring.

makes a certain amount of sense which it doesn't if the case were simply that his revalued GMP simply had to be as great as his total pension at 65 - the £11025 with which he starts out is already greater than his revalued GMP.

TW would be waiting to see if the inflation increases on the £11025 had brought his pension up to £14025?

If the full 5% were paid for 5 years, then his pension would have increased to £14071 so no step up would be required?

xylophone

Turning now to the early payment quotation of £14209 pa, if the pension is taken 3 days before NRD, Mike would be receiving more at the outset than the maximum he could receive at 65?

There must be a miscalculation somewhere.....

SnowMan

xylophone wrote: »

So that a woman in Mike's place would only have to receive her revalued GMP +unrevalued excess at NRD/GMP age (60), about £11,567 rather than the £15,000+ previously calculated?

I asked TPAS just about my position as a male and TPAS were answering based on that.

In my reply to TPAS, querying the basis for their answer, I asked whether a female comparator in my position would get revalued GMP plus revalued excess at 60 (the £15,000 region amount in Mike's case), and therefore whether I had a potential claim against the scheme because of the Equality Act (if they don't pay revalued GMP + revalued excess).

TPAS's argument/explanation in the way it has been presented to me seems to imply that the scheme could offset excess revaluation and GMP revaluation for a female retiring at NRA 60 also (the point I think you were correctly making xylophone). Yet I don't believe TPAS are going to say this offset for a female is possible. In which case you have to wonder what their logic is for the NRA 60 with GMP age 65 scenario.

I am expecting my scheme to say they will pay from 65, the revalued GMP + revalued to 60 (the 90% probability interpretation according to my friend) in which case there is no way to test the equality issue in my case. In Mike's case the scheme look like they are trying the 10% interpretation, so teh answers are going to come from Mike's case.

In Mike's case as we discussed only a small part of his pensionable service was post 17/5/90. The scheme can discriminate between males and females in relation to pre 17/5/90 service so the equality argument has limited weight.


I am still sure the way forward is for Mike to contact TPAS. But it might be an idea to ask the same question as I did in a more closed mind way. That is to say that parliament introduced successive legislation to protect the GMP and excess elements of pensions and then required both to be separately revalued in deferment. So that for leavers after 1/1/91 the scheme had to pay GMP revaluation and statutory revaluation on top of the deferred pension at leaving. In addition the DWP paper shows this test to be the correct calculation. And a a female at 60 would get both revaluation to excess and GMP at 60. And so ask them as a result to confirm that he will get at least the revalued GMP plus revalued excess at 65, if he takes his deferred pension at the NRA of 60.

SnowMan

xylophone wrote: »

Turning now to the early payment quotation of £14209 pa, if the pension is taken 3 days before NRD, Mike would be receiving more at the outset than the maximum he could receive at 65?

There must be a miscalculation somewhere.....

Or else the previous administrators used the correct (in my view) 90% interpretation of the anti-franking test at 65 and the new scheme administrators are trying to move to a 10% (incorrect in my view) interpretation, but have at the same time inherited the early retirement calculation used by the previous scheme administrators which tests actuarial equivalence against the correct anti-franked stepped pension at 65.

If that is the case you can see the mess the current scheme administrators will have created, and they will be looking to change the early retirement factors also. Of course the scheme administrators won't be writing to male members to tell them that they are making a sudden huge cut to their deferred benefits. Wonder what Unite would make of that?

It's just like the Biggs case and the new administrators coming in there.

MikeFloutier

Ok, having read post 90 I've had no further posting notifications so I'm sorry I haven't yet read your later posts.

We're just about to go out to Porthleven for the day so I thought I'd post the reply I just received from TW along with my previous email which prompted it:-

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Dear Mr Floutier,
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Thank you for your email.
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I can confirm that we have sought advice from the Scheme actuaries to provide confirmation regarding the potential step up at GMP age and State Pension Age. Once we have received a response we will contact you again.
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In the meantime, I can confirm under early retirement your benefits are projected forward to your Normal Retirement Date (NRD) and the relevant early retirement factor is applied based on your age at your chosen retirement date. Your GMP payable at age 65 is also estimated to ensure this be covered by your pension, and an additional step up is provided if necessary. In comparison under normal retirement, your benefits are paid as at their value at that date with the GMP element not being re-valued. The basis for the early retirement calculation has resulted in your early retirement benefits being higher than your pension that is payable at your Normal Retirement Date.
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Therefore, with your early retirement quote there will be no need to provide a step up at your GMP and State Pension Date. However, your normal retirement quote may need a step up to cover your GMP and SPD.

If you have any questions please contact us on 01737 227567.
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Kind regards,
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David Matthews
Administrator!

Towers Watson
PO Box 709 | Redhill, RH1 9EG
Phone: 01737 227567 | Fax: 01737 241496
barclaysteam@towerswatson.com
https://www.barclayspensions.co.uk
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From: Mike Floutier [mailto:mikeandliz.floutier@btinternet.com]
Sent: 04 September 2013 14:30
To: TW BEN Contact Barclays Team
Subject: Re: Michael Floutier - removed - Normal Retirement Date 3rd February 2014 (0148997)
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Dear Joanna,
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Many thanks for your email regarding the pension illustrations you have provided me.
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1. From what you say, considering the fact that my pension, at retirement, is already far in excess of my revalued GMP (ie at GMP date), there can clearly be no prospect of an increase or Step-up in my pension at GMP date. Please confirm!
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2. Assuming this is the case, you have still not really given any reasoning behind the large £3,200pa difference between the NRD & Early retirement date illustrations.
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I am sure you understand that I am trying to decide whether to accept a £11,000 pension or a £14,200 pension. I need to understand why the Early retirement option is so much higher.
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An increase, due to GMP revaluation at GMP date (only on the NRD option), seemed to hold the answer, but now you say that there will be no such increase.
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If nothing else, please could you explain why the Early retirement illustration is so much higher.

Kind regards,
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Mike Floutier