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

MikeFloutier

Thanks again SnowMan, I expect they have already drafted a reply to my last email so I'll give it a few days, but will follow up as you suggest if they are still prevaricating.

The State Pension Deduction (SPD) figure is odd, I hadn't picked up the difference in my quotes. The reason is that, in the statement they gave me on Leaving (1 Jan 1995), they quoted £792.48, but on all future correspondence (i.e.. from 2008 onwards) the figure becomes £672.49. This is the same for all NRD & Early quotes.

In the recently discovered booklet, their current calculation is revealed (1/80 x Pensionable service after 1 Jan 77 (18 years) x Basic State Pension at Leaving (i.e. £2995.20)). This results in pretty much the same as the lower figure.

If the "pensionable service" figure included service from Joining (some time in 1973) then the result would probably be the higher figure - hey! who's complaining

And finally, the SPD is effective on SPA. I guess we'll give them that one.

While I'm waiting for TW's reply I'll try to get a better scan for the link to the Example in the Booklet.



btw, did I see you on TV last night in Kendal at the finish of the Cumbrian stage of the Tour of Britain

SnowMan

MikeFloutier wrote: »

btw, did I see you on TV last night in Kendal at the finish of the Cumbrian stage of the Tour of Britain

I was positioned on the bend 4.9km from the finish. On the TV pictures you can just see me side on in a red jacket, my bike is visible propped up against a road sign 50 metres down the road.

13 of the last 14 miles they did yesterday are my precise bike commute route to Ambleside when I operate our outreach there.

If the weather had been better I would have gone over to Honister. The crowds on TV looked amazing, what a spectacle despite the weather. Did that climb from the opposite side in April, it's a brute.

xylophone

No illustration for Early retirement.

Pity - it would seem so much more logical for the early retiree to have his AD deducted from his revalued to age 60 excess and receive that sum together with the unrevalued GMP - then a similar "partial franking deduction" could be done at 65 - the SPD might need to be done a few weeks later than 65 whether the pension is taken early or at NRD.

With regard to the COD, since ( we assume) the single tier scheme will be in operation at that point https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210299/single-tier-valuation-contracting-out.pdf would be relevant.

MikeFloutier

Thanks Xylophone, I think I've looked at this one before. I have to say I can't really get my head round it so I'm hoping it won't make a huge difference in my deciding between NRD & Early retirement.

MikeFloutier

Ok, well I've written back to TW emailing a good copy of the page of their booklet (containing the detailed pension calculations that SUPPORT our view). I also attached a copy of the same page with my details/figures overwritten.

I asked them to confirm that, notwithstanding changes in pension law, and ignoring RPI changes, that these calculations would be used to re-calculate my pension at GMP age - i.e. an increase of..... GMP revaluation MINUS (or partially franked) to the extent of the RPI/5% increases (2.5% in their example) on the whole pension between Retirement and GMP date.

Their reply is as follows:

Dear Mr Floutier,

I write with regards to your email dated 14 September 2013 and subsequent email earlier today.

Your normal retirement quotation is based upon your revalued Excess plus your un-revalued GMP. Upon reaching age 65 (GMP entitlement age) your GMP, revalued by 7% from your date of leaving the scheme to age 65, will be put into payment. This will be incorporated into your pension and is not paid in addition to your pension benefits. Therefore, if the value of your GMP at GMP entitlement age is higher that the pension already in payment, you will receive a ‘step up’. However, if your GMP is lower than the pension already in payment (ed - can't see how it can possibly be higher), you will not receive any additional pension.

We are unable to confirm if you will receive a ‘step up’ or not when you reach age 65.

I understand that the figures you have been provided are largely different. This difference has occurred as the early retirement calculation takes into account projections up to age 65, based on assumed increases, to ensure that the pension that you will receive now will be high enough to ‘cover’ your GMP when it comes into payment in 5 years’ time. The normal retirement calculation does not take this into account and the benefits that would be paid are those revalued to your normal retirement age of 60.

Due to the reasons above, we are unable to comment on the figures you have calculated using the “What happens to your pension when you leave Barclays”.

I am sorry that we are unable to provide the confirmation that you require in order to make an informed decision, however, as stated in our email of 13 September 2013, the overall effect is that whether you take your pension benefits early or at normal retirement age, the pension you receive from your 65th birthday should be approximately the same value.

Today I phoned TPAS to chat it over but they asked, because of the complexity of the case, that I send them all the correspondence along with a covering background letter and they would start a case for me - prior to me initiating Internal Dispute Resolution Procedures (IDRP) with Barclays.

I then phoned TW in the hope of getting some sense but the best I could get was that they would call me back within 48 hours.

I did, however, manage to secure a promise that they would email me a pdf of the Rules; something they have successfully avoided so far - expect some posts re this


I did see you on that bend btw SnowMan

SnowMan

That is a shockingly poor response from TW, full of contradictory information and nonsense. Personally I don't think TW have the competence to administer the scheme, if the way they have responded to you is representative of the way they respond to member queries.

Sending the paperwork to TPAS and getting them actively involved has to be the way forward now. It is worth including in that paperwork to TPAS a mention of the CA14 reference that xylophone (and later you) found that descibed the anti-franking test and the part of the DWP equalisation note that numerically described the test.

MikeFloutier

Thanks SnowMan, I'll have the anticipated phone call with the TW letter author in the hope of explaining her contradictions; including the apparent denial of their booklet's example (it's so hard trying to communicate when a two way exchange takes 2 weeks each time).

If that gets nowhere I will write to TPAS as you suggest.

mrschaucer

One step forward, two steps back. That response is frankly unacceptable.

MikeFloutier

Ok, well their 48 hours have passed and they've neither called back nor emailed the Scheme rules as promised. I've now started work on my pack for TPAS - better order some printer ink:)

SnowMan

I've now got a response from my scheme with figures and a different methodology of how the pension will be calculated at age 60 (NRA) and 65 (GMP payment age). Note the scheme does provide discretionary increases in payment but I suspect because of the funding position of the scheme there will be no discretionary increases in payment only statutory increases in payment. The following is on the basis there are no discretionary increases in payment. The scheme are now saying they will pay:

From age 60:
- the GMP revalued at 6.25% from leaving to age 60, plus
- the pre 97 excess over GMP at leaving statutorily revalued (5% or inflation) from leaving to age 60 plus
- the post 97 pension at leaving statutorily revalued (5% or inflation) from leaving to age 60

From age 65:
a) the GMP revalued at 6.25% from leaving to age 60, plus
b) the pre 97 excess over GMP at leaving, statutorily revalued (5% or inflation) from leaving to age 60, plus
c) the post 97 pension at leaving statutorily revalued (5% or inflation) from leaving to age 60, plus
d) statutory increases in payment to the post 97 pension between age 60 and 65

(note that the revalued GMP at age 65 is funded out of a) and a bit of b))


If this new information and calculation method is correct then this leads to the following conclusions:

1. My deferred benefit statement must be wrong in saying that at age 60 no GMP revaluation would be given (the scheme are now saying GMP revaluation to age 60 is given). Note I have a scheme booklet also which is consistent with the scheme's latest answer that GMP revaluation to age 60 is given.

2. The pension at age 65 is still less than the amount TPAS have said needs to be paid from age 65 due to anti-franking. This is because in a) above TPAS are saying that the GMP revalued to age 65 (and not age 60) should be paid, b), c) and d) are the same as TPAS suggest. Or in words TPAS are saying that increases to the GMP between age 60 and 65 cannot be offset against the pre 97 excess or its revaluation. However this answer was based on the scheme not giving any GMP revaluation at NRA at age 60 which may or may not change the anti-franking test at age 65.

3. Overall in relation to what I was expecting from the deferred benefit statement plus the correct anti-franking step at age 65, I will get a higher than I was expecting pension from age 60 (higher by GMP revaluation at 6.25% from leaving to age 60) and a slightly lower pension from age 65 (lower by GMP revaluation at 6.25% between 60 and 65).

4. I will receive a slightly lower pension than a female comparator (although it is so complicated it is difficult to say for sure) which is likely to be in breach of the Equality Act as all my service is post 17th May 1990.

5. My position has diverged somewhat from that of Mike's as my scheme is now saying they will pay GMP plus revaluation to age 60 from NRA age 60.


I may run this latest information past TPAS to see what they think.