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

SnowMan

SnowMan wrote: »

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 got an email from TPAS today to say they are looking at it further, but they have indicated that there is a possibility that at 65 revalued GMP plus revalued excess to 60 might need to be provided after all. I'll report back when I hear back with their definitive answer.

xylophone

As far as I can see, the relevant provisions are:

"GMP anti-franking legislation requirements

7.1 GMP revaluation cannot be offset against benefits in excess of the GMP or against required revaluation increases in those benefits in the circumstances described in this Chapter.




The following members, and their widows or certain widowers, are protected by the legislation: (those)

• who leave contracted-out employment before scheme pension age for whom a GMP is preserved, or
• with a scheme pension age before State Pension Age (SPA)


7.3 A member’s benefit is protected if
• the GMP is increased during an interval between:
- the termination of contracted-out employment, and
- the date on which payment of the GMP commences, and
• on the day after termination, scheme benefits have built up which exceed the GMP at that
time, and
• contracted-out employment ended after 31 December 1984

Pension provision for a scheme member

7.4 Contracted-out schemes must provide a pension at or after SPA which is more than the sum total of the amount by which the GMP has been increased from the date of termination of contracted-out employment to when the GMP becomes payable


any increases in the benefits in excess of the GMP due to their payment being deferred"

So far, so good - with regard to the exemptions from the legislation, the only clause which seems as though it might be relevant is

an occupational pension payable earlier than SPA is adjusted to take into account State Retirement
Pension when State Retirement Pension comes into payment. The protection will apply only to
the rate of pension payable after such an adjustment is made

but .....what do we know?

MikeFloutier

I just returned home and, having had a quick look at the Scheme booklet, realised that I would definitely need the full Rules, as you've said.

I then wrote to TW asking for this and, as they had obviously just received the Actuary's response, they wrote me the following email which I now quote, headed by my response. What do you think? Can I accept this as a suitable promise? Am I just being belt and braces?

---

Dear Jenny,

I'm not sure if we are talking at cross-purposes here and I'm sorry if I'm just being thick, but…would you, in my position, accept a pension of £11,025 instead of one for £14,209 simply on the basis of a promise that, to quote your letter, "you might receive some extra pension from your 65th birthday onwards."

I'm not asking for precise figures here and I understand that the law may change, but what I'm expecting is that, since:

1. My NRD quote is based upon my revalued Excess plus my un-revalued GMP,

surely it is not unreasonable to expect that, due to Anti-franking legislation, the step-up at GMP date would be of the order of,

2. The increase on my GMP portion, at 65, due to revaluation at 7% pa.

Hopefully you can provide this degree of certainty for me, in order that I can make an informed choice between the two quotes you have offered me.

If not, then I will need to escalate my enquiry, through the normal channels, but in order to do this sensibly I will need to be able to read the Scheme's Rules.

Kind regards,

Mike Floutier
07778-335151
mikeandliz.floutier@btinternet.com



On 13 Sep 2013, at 16:59, TW BEN Contact Barclays Team <barclaysteam@towerswatson.com> wrote:

Mr Floutier

I refer to my email below regarding the difference between your Normal Retirement quotation and Early Retirement quotation.

The Scheme actuary have confirmed that if you retire at your Normal Retirement Age, a test will be carried out on your 65th birthday to make sure that your pension meets the minimum level set by law. This means that you might receive some extra pension from your 65th birthday onwards. If you retire early, this extra pension will be paid immediately, but will be reduced because it is being paid early.

As we are unable to know what may happen in the future, the calculation performed in the early retirement calculation is based on various actuarial assumptions between now and your 65th birthday. The overall effect of this is that, whether you take your pension early or at normal retirement age, the pension you receive from your 65th birthday should be of the same value.

If you have any further queries, please do not hesitate to contact us.

Kind regards

Jenny

xylophone

This means that you might receive some extra pension from your 65th birthday onwards.

But what do TW understand to be "the minimum level set by law"?

the calculation performed in the early retirement calculation is based on various actuarial assumptions between now and your 65th
birthday.

But I thought that it simply equated to GMP revalued to age 60 + revalued excess?

What are these actuarial assumptions?

And if it is a case of "might" at GMP age but a certainty of £3200 extra at three days before NRD,how can you be sure that the value of your pension whether taken early or at NRD will be the same?

Still flummoxed!

xylophone

Mike - found this https://www.barclayspensions.co.uk/whos_who_non_member/trustee

The last resort?

MikeFloutier

Thanks Xylophone, however, the Barclays Scheme has an Internal Dispute Resolution Procedure that I will need to follow.

Failure to resolve at that stage would mean I would go to the The Pensions Advisory Service and finally the Pensions Ombudsman.

I have intimated this in my reply to TW and I imagine, due to the lack of similar Barclays cases appearing in such forums as this, that this may be somewhat of a test case for the new administrators.

I sincerely hope we can work our way through to a satisfactory outcome without having to go further as this would be so time-consuming etc.

xylophone

Have you heard from any old colleagues through the Facebook link?

Why can't TW give you some examples with possible scenarios?

SnowMan

SnowMan wrote: »

I've got an email from TPAS today to say they are looking at it further, but they have indicated that there is a possibility that at 65 revalued GMP plus revalued excess to 60 might need to be provided after all. I'll report back when I hear back with their definitive answer.

I've received a further response from TPAS today (have to say a massive thank you to them:beer:), and it's very good news.

TPAS's opinion is that the statutory minimum pension in my case payable from age 65 is

a) the revalued GMP at age 65 plus
b) the excess at leaving statutorily revalued to age 60 plus
c) increases in payment to the post 97 pension between age 60 and 65.

For the avoidance of doubt, when I say excess above, I mean the excess of the total pension over GMP (noting that this is the excess of the pre 97 pension over GMP plus the whole of the post 97 pension, as GMPs ceased to accrue after 6th April 97)

Note the last bit doesn't apply to Mike as he has no post 97 accrual. And of course there is the slight difference in his case of the state pension deduction.

The logic to c) is (I think) that the post 97 benefits must be provided in addition to the pre 97 benefits (I think the logic is as per the Biggs case). So those increases in payment (in my case just the statutory Limited Price Indexation increases for 5 years on the post 97 pension) must be provided on top.


Meanwhile, and you are going to laugh, my scheme have told me there will be no step at age 65 :rotfl:

SnowMan

MikeFloutier wrote: »

I then wrote to TW asking for this and, as they had obviously just received the Actuary's response, they wrote me the following email which I now quote, headed by my response. What do you think? Can I accept this as a suitable promise? Am I just being belt and braces?

..................

Dear Jenny,

I'm not sure if we are talking at cross-purposes here and I'm sorry if I'm just being thick, but…would you, in my position, accept a pension of £11,025 instead of one for £14,209 simply on the basis of a promise that, to quote your letter, "you might receive some extra pension from your 65th birthday onwards."

I'm not asking for precise figures here and I understand that the law may change, but what I'm expecting is that, since:

1. My NRD quote is based upon my revalued Excess plus my un-revalued GMP,

surely it is not unreasonable to expect that, due to Anti-franking legislation, the step-up at GMP date would be of the order of,

2. The increase on my GMP portion, at 65, due to revaluation at 7% pa.

Hopefully you can provide this degree of certainty for me, in order that I can make an informed choice between the two quotes you have offered me.

If not, then I will need to escalate my enquiry, through the normal channels, but in order to do this sensibly I will need to be able to read the Scheme's Rules.

Kind regards,

Mike Floutier

It is a totally unacceptable response from the scheme.

I think your email response is brilliant :T.

MikeFloutier wrote: »

however, the Barclays Scheme has an Internal Dispute Resolution Procedure that I will need to follow.

Failure to resolve at that stage would mean I would go to the The Pensions Advisory Service and finally the Pensions Ombudsman.

Absolutely that's the way to go.

MikeFloutier

Thanks SnowMan; great news about your pension!

I'll post again when TW respond.

No joy with Barclays pensioners btw, I guess they all just trust the Old Firm.