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

MikeFloutier

xylophone wrote: »

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/

Firstly, thanks for your advice SnowMan, I guess I'm just trying to clarify, in my own mind, what I should be chasing.

Xylophone, thank you, you should amend your User ID to include the epiphet "King of the Links".

The paragraph on "partial-franking" seems to fit my situation precisely - ie. I mentioned that the Barclays rules on revaluation of the GMP seems restricted to Retirement date rather than continuing on to GMP date.

Since they are already revaluing BOTH Excess and GMP at RPI/5% between Retirement and GMP it makes sense that GMP revaluation stops at Retirement.

MikeFloutier

Thanks SnowMan, sorry I replied before I saw you reply. I will leave it as it is.

MikeFloutier

I have just found a booklet about my Barclays pension from 2011 that gives a worked example that seems to really clarify Barclays thinking, especially with regard to the "partial-franking" that Xylophone has highlighted. I'd like to post a scan/pic of it but can't see how to do this on the forum; can anyone help me with this please.

mrschaucer

If you scan it and save to your computer, would it work to *copy and paste* it into your post?

MikeFloutier

Ok, I tried tiny pic but it didn't seem to work, all that showed on the forum was a "?" in a blue box.

Anyway, I'll type it in but I'll insert my data instead of John's, his is pretty similar anyway.

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Pension at date of Leaving Scheme:-
GMP portion £1802.84
Non-GMP portion £5476.71
Total deferred pension £7279.55

Estimated pension at NRA:-
GMP portion £1802.84
Non-GMP portion (including annual increases since leaving £9222.78
Total pension in payment from age 60 from Scheme £11025.62

Estimated total pension on day before 65th birthday:-
This assumes total pension increased by 2.5% since NRA £12474.47

Estimated pension at GMP payment date - 65th birthday:-
GMP portion (£1802.84 revalued each full tax year -23?) £8546.42
Non-GMP portion * £9222.78
Less State Pension Deduction (£792.48)
Estimated total Scheme pension in payment from age 65 £16976.72

* Increases to Mike's pension since NRD are offset against his GMP revaluation; therefore Mike's non-GMP portion reverts to the value at age 60

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Haha, I spent all that time trying to format it and it's all got compacted. Anyway you get the idea.

Given the size of the pension at age 65, I'm not too concerned about the offsetting (partial-franking).

The really funny thing (apart from the existence of this new booklet), bearing in mind the only real objection from TW is the uncertainty of RPI increases, IS THAT, the step-up (from NRD to GMP date) is the same no matter if RPI has been 5% of Zero.

I guess it would be sort of correct to say there would be no step-up (i.e.. from 1 day before my 65th to the day after it) if RPI had been so high that my "Estimated total pension on day before 65th birthday" was actually more than my pension at 65 (including GMP revaluation).

Actually, I think RPI only has to be around 9% for the five years between NRD and GMP age for my £11,025.62 to ramp up to £16,964.

MikeFloutier

Thanks Mrs C, I'll give it a try now:-

No, doesn't seem to work, good idea though!

MikeFloutier

Let's try this - http://tinypic.com/view.php?pic=2ilzloh&s=5

Ok that seems to work ok although the figures are a bit hard to read.

xylophone

RPI only has to be around 9%

The Scheme pays a maximum 5% escalation on pensions in payment?

The maximum your escalated pension can be the day before your 65th birthday is £14071? The minimum it can be is £11025?

The maximum your revalued GMP can be is £8547?

The maximum your SPD can be is £793?

Given these facts there couldn't fail to be a step up at SPD ( though the higher the escalation the smaller the step up) so why were TW being so coy about it?

Was there an illustration in the booklet for early retirement?

Did the booklet cover the question of the Contracted Out Deduction?

MikeFloutier

Thanks Xylophone,

No mention of COD.

No illustration for Early retirement.

Regarding RPI, the latest Retirement Guide says, "Where inflation is higher than the 5% maximum in the Rules, Barclays may, at it's discretion, award a higher increase." e.g.. as in the 80's.

I'm guessing that TW aren't even aware of this booklet's contents, i.e.. the one with the detailed illustration.

SnowMan

The example certainly clarifies how the increases work and it is what we were expecting since post 31 (albeit we waivered a bit at times). It also clears up the one remaining doubt about how the state pension deduction interacts. Of course a booklet isn't definitive but it is a pretty strong indication.

Perhaps given you have found that example there is now some value going back to TW after all with figures but use the figures in post 136 rather than your earlier post 130.

That is say something along the lines of:

'Further to my earlier email I've seen on page x of the scheme booklet of .....an example. That seems to clarify how the step up should work at 65. A hyperlink to that information is ....

Amending that example to my own figures gives

[insert post 136 figures].

Please can you confirm that is correct for the methodology of the step up at age 65'


One query to Mike, is the state pension deduction at age 65 £672.49 or £792.48 as quoted in post 43? And a minor point does it apply from GMP age (age 65) or from State Pension Age? (65 years, 3 months and 3 days in your case).