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

SnowMan

Thought I would post up my question to the scheme and the scheme answer

I would like to ask one further question in relation to my xxxxxxx final salary benefits (excluding my transferred in benefits). These are set out in the xxxxxxx letter from xxxxxxxx of xxxxxxxxx.

The deferred benefit payable from age 60 is shown in that letter to be calculated as my GMP at leaving of xxxxxxxx plus my excess pension of xxxxxxx with statutory revaluation on that excess from date of leaving to age 60

It mentions in the letter that if I take this deferred pension at age 60 then 'your pension may be further increased at age 65 in respect of your GMP. You will be informed at the time if an increase has taken place'.

While I understand that numerically you cannot tell me what increase might be because statutory revaluation can’t be known in advance, could you tell me the basis of the calculation.

I am assuming my pension at age 60 (calculated as GMP at leaving plus revalued excess) may get some pension increases up to age 65 (albeit these may be limited to the post 97 pension). I am assuming that a check will then be made at 65 to ensure the pension is at least equal to the sum of the revalued GMP xxxxxxxx and the excess with statutory revaluation to age 60. If it isn’t at least this big there will be a step up to this amount. Is this correct?

The reply I received was

At retirement, at age 60, your pension will be at least equal to the GMP. You will not be able to elect a tax free cash (TFC) sum that reduces the pension to below the GMP liability. In the majority of cases there is no need for us to restrict a TFC sum and the maximum allowed can be paid.

At State Pension Age (SPA) we will ensure that your GMP receives statutory increases going forward, there will not however be any step up of benefits at SPA.

I hope that this clarifies the situation.

Love that last line of the reply :T

Sadly that is typical of the sort of reply scheme members get when they enquire about benefits. The scheme aren't trying to be unhelpful, but often don't have the knowledge to be able to give a meaningful reply. Vague wording is used in the hope the member gives up trying to clarify their benefits.

I've responded to the scheme with an example showing a step at 65 which are The Pension Advisory Service figures (which results in my pension being topped up by by 35% at age 65) and asking them to clarify that a step of the nature in my original question is required.

MikeFloutier

SnowMan wrote: »

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

SnowMan, I'm assuming your Scheme's reply pre-dates the TPAS ruling.

What's the procedure for you now, do TPAS get in touch with your administrators OR do they leave that to you? You can understand my interest

MikeFloutier

On a separate note, as we seem to getting to the end-game with this now, I'd like to go on to consider my decision about whether to take a tax free lump sum (TFLS) and if so, how much.

I'm sure it makes sense to start a separate thread about this. I've been looking at the normal salient aspects of the decision-making process but would like to run my specific situation past you guys.

Also, I was wondering if it made sense to change the Subject of this thread to make it more representative of it's content (although I'm not sure how to do this). My thought was that this would assist others in finding it - apparently there are around 18,000 Barclays deferred pension holders!

SnowMan

MikeFloutier wrote: »

SnowMan, I'm assuming your Scheme's reply pre-dates the TPAS ruling.

What's the procedure for you now, do TPAS get in touch with your administrators OR do they leave that to you? You can understand my interest

I contacted the scheme while I was waiting for a reply from TPAS. And when I got home yesterday evening both TPAS and the scheme had replied to me during the day.

My next step was to email the scheme back yesterday evening to ask them again what the basis of the step will be. I haven't mentioned in that reply I have checked things out with TPAS, but I did use the TPAS figures. I will be emailing TPAS to thank them for their help, and let them know what the scheme has said, but won't be involving TPAS further at this stage, unless I have difficulty resolving things with the scheme.

If I do have trouble with the scheme I will use the scheme's internal complaints procedure and if that fails then I will be contacting TPAS again, with the view to them helping me resolve things, or if that fails, to get my case referred to the Pensions Ombudsman via TPAS. Note access to the Pensions Ombudsman has to be via TPAS.

Similarly in your case there are two ways to involve TPAS

a) to ask TPAS for advice now i.e. what is the minimum pension that needs to be provided at 65, and to help you understand the early retirement and NRA options (they can't give you financial advice on which option is best, but they can help you identify the facts of what those options are including what is the NRA step) or

b) if the scheme internal complaints process fails then to ask TPAS for help with your complaint, with the aim of ultimate referral to the Pensions Ombudsman if resolution can't be achieved.

You might be best to ring the TPAS helpline just to talk it through with them how they can help (you can alternatively use their web contact form as I did although you can't attach documents, or post them your enquiry details).

In my role as a volunteer adviser at my local CAB, I often refer clients through to TPAS. The feedback from clients in relation to TPAS has always been very positive indeed.

xylophone

Mike,

Could you put the following to TW?

In the event that inflation were nil or negative for the whole of the period 31 Jan 2014 to 3 Feb 2019 [/B] if I had taken the early retirement option, my Scheme Pension would still be being paid at a rate of £14209 per annum.

If I had taken the retirement at NRD option, my pension would still be being paid at £11025 per annum.

You have already advised that if I took the early retirement option, there could be no step up at GMP age.

Therefore (again assuming nil or negative inflation), my pension would continue to be £14209 per annum.

What increase (if any) would be applied to the NRD pension (£11025) at GMP age, again assuming nil or negative inflation?

MikeFloutier

Thanks for your strategic advice SnowMan, I'm sure it will now be resolved with a good outcome, we just have to make sure we follow through.

Thanks for your suggestion Xylophone but I'm of the view that they simply don't want to commit themselves to figures. This is so strange since they DO give a figure for Early retirement. I can only think that, for some reason, the Actuary is taking this line and TW are having to front this.

The only reasoning I can imagine is that, for Early retirement, the Actuary is forced to provide a NOW figure (since payment is immanent), whereas for the NRD quote they are looking at figures involved in a payment scenario that is 5 years off (hence they only commit to the known figures)

This is a bit unreasonable, but it may be the reason - if that makes sense.

What I'm trying to get from them is confirmation of the system they will apply at 65.

To get back to your suggestion Xylophone, I think that they have already made it clear that they will be providing what we are expecting. So, maybe it would be a useful idea to present our own calculations and ask them to confirm or deny.

This would get around them having to reveal the calculations, since they would already be out in the open. They would then be faced with either saying Yes, or justifying a No answer.

Greeniron

SnowMan wrote: »

Note access to the Pensions Ombudsman has to be via TPAS.

You can approach the Ombudsman without going to TPAS, though he would expect the scheme's internal dispute resolution procedure to be completed.

xylophone

Mike- I have been looking at this - you might be interested in the short paragraph on "partial franking"?

http://www2.skandia.co.uk/Adviser/KnowledgeDirect/Pensions/guaranteed-minimum-pension/Taking-benefits-from-a-Guaranteed-Minimum-Pension-GMP/

MikeFloutier

So, following on from my post 127, what I would suggest putting to TW is:-

---

"1. My retirement pension on leaving the Scheme at 31/12/1994 was £7,279.55 (made up of a GMP of £1802.84 plus the non-GMP portion i.e. "Excess" of £5,476.71) - your letter of 24 June 2011

2. From leaving until my retirement at Normal Retirement Date (NRD) at 3 Feb 2014, the following increases apply - your letter of 21 October 2008:-

a) My Excess portion receives an increase commensurate with the change in RPI (roughly 68.5%) giving a new Excess figure of £9,222.78.

b) My GMP portion of £1,802.84, although subject to increases of 7% pa, is not revalued at this stage (this takes place at GMP date in 2019)

c) This gives a total pension payable at Retirement on 3 Feb 2014 of £11,025.62 (i.e.. the sum of a) & b) above).

3. From Retirement to GMP date (ie. 2014 to 2019) we will assume, for the sake of argument that RPI is Nil. Therefore, the only increase to my pension at GMP date would be the GMP revaluation up until Retirement. This equates to an increase of £4,756 giving a total GMP figure of £6,558.

Therefore, at GMP date, my retirement pension of £11,025.62 would be increased by the increase of £4,756 (in respect of GMP revaluation) giving a total pension, at GMP date of £15,781.62.

Notes.

1. If RPI between Retirement and GMP date is higher than zero, then this would be applied to my whole retirement pension (£11,025.62). This has simply been excluded for the sake of simplicity. I believe that, apart from a change in Pension law, this is the only variable, and has been excluded for this reason.

2. At State Pension Age (SPA) I understand that there will be a deduction from my pension of £792.48"

---

This is all based on letters received from Barclays in 2008 & 2011, as mentioned. One thing that puzzles me is the restriction on revaluation of GMP to Retirement date rather than GMP date.

Obviously I would include the above text with a suitably worded letter to TW asking for their confirmation that my figure work was correct. Do you think the text is too long?

SnowMan

MikeFloutier wrote: »

Do you think the text is too long?

Yes it is too long and risks seriously confusing the issue.

I think you have asked the pertinent question very clearly and concisely in your email reply in post 114

i.e can you expect your pension at 65 (before the state pension deduction) to be higher than your NRA pension by an amount equal to the 7%pa GMP revaluation between leaving and 65 i.e a £6,745 increase (= 8547 - 1802).

So I would wait for an answer from the scheme to that earlier question.


Incidentally in relation to your earlier question of how to change the thread title, go to your opening post (post 1) click 'edit' and then click 'go advanced' and you can then edit the thread title.

You might also want to edit out your email address (and the scheme contact's email address) from earlier posts, these things can get picked up by spam bots and you'll get more of those emails promising miracle cures.