GMP uprating

little_monkey

Can i ask a question regards this?

On my policy information sheet it has

Pre 88 GMP at date of leaving £***.**

Post 88 GMP at date of leaving £***.**

GMP revaluation rate 7.5%

Do i add the Pre and Post together then revalue at 7.5% yearly upto retitement age to come to my eventual GMP?

greenglide

If your SPA date is after 06/04/2016 it is academic anyway as GMP will not exist after this for people attaining SPA. The full amount "should" be paid by the scheme and should be uprated according to the scheme rules.

If it is a public sector scheme you will be fine. Private sector scheme it is up to the scheme to interpret their rules.

little_monkey

greenglide wrote: »

If your SPA date is after 06/04/2016 it is academic anyway as GMP will not exist after this for people attaining SPA. The full amount "should" be paid by the scheme and should be uprated according to the scheme rules.

If it is a public sector scheme you will be fine. Private sector scheme it is up to the scheme to interpret their rules.

No it is a section 32 policy bought out from my company pension in 1991.It will have a GMP when i retire at 65 in about 10 years.Those figures are what i was given back in 1991 when the policy was bought out.I was just wondering how they will come to the final GMP in 10 years time.Is it like i asked and the pre and post 88 figures added together and re valued upto the year i retire at 65 as in the original policy matre date?

xylophone

the scheme

OP refers to a policy- a S32 - https://forums.moneysavingexpert.com/discussion/comment/64378794#Comment_64378794

Do i add the Pre and Post together then revalue at 7.5% yearly upto retitement age to come to my eventual GMP?

Your policy specifies fixed rate and confirms the percentage?

http://www.barnett-waddingham.co.uk/news/2012/07/revaluation-for-early-leavers/

"Revaluation of Guaranteed Minimum Pension (GMP)

Any GMP element of a preserved pension must also be revalued, but the method is different to revaluing excess benefits. Currently, trustees have the choice of two different methods of revaluing GMPs: Full Rate increases or Fixed Rate increases. Schemes which opt for increases at Full Rate increase their GMPs annually in line with Section 148 Orders (previously known as Section 21 Orders). Section 148 Orders are based on the increase in the National Average Earnings Index each year.

Fixed Rate revaluation increases are determined by the date of termination of pensionable service. The annual percentage increase is fixed and depends on the date of leaving as follows:
Date of Leaving
Annual Percentage Increase
Between 6 April 1978 and 5 April 1988
8.50%
Between 6 April 1988 and 5 April 1993
7.50%
Between 6 April 1993 and 5 April 1997
7.00%
Between 6 April 1997 and 5 April 2002
6.25%
Between 6 April 2002 and 6 April 2007
4.50%
Between 5 April 2007 and 5 April 2012
4.00%
After 6 April 2012
4.75%

The revaluation period for GMPs is the number of complete tax years between a member's date of leaving and their GMP Pension Age. For members retiring before they reach GMP Pension Age, the revaluation period for GMPs would normally be the number of 6 Aprils between the two dates.

Furthermore, if a members actual retirement date is after their GMP Pension Age then statutory late retirement increases will apply to the GMP."



So that ( as far as I can see), the two GMP amounts added together then the 7.5% (compound) for the correct number of years should give you the rough value.

Your insurer should supply the information you require on request?

However, the two amounts need to be separated for the purposes of how increases in payment will be given.

The insurer does not have to provide any inflation linked increase on the pre 88 GMP.

The insurer will only pay inflation linked increases of up to 3% on the post 88 GMP.

The revalued GMP divided by 52 is roughly equivalent to the weekly COD - you will be receiving your state pension in about ten years' time under the single tier rules.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210299/single-tier-valuation-contracting-out.pdf

You should be able to obtain a statement reflecting the single tier pension calculation in due course.

https://www.gov.uk/new-state-pension/overview

zagfles

greenglide wrote: »

If your SPA date is after 06/04/2016 it is academic anyway as GMP will not exist after this for people attaining SPA.

Yes it will. See paras 67 & 68: http://www.dwp.gov.uk/docs/extract-single-tier-white-paper.pdf

greenglide

However, the two amounts need to be separated for the purposes of how increases in payment will be given.

The insurer does not have to provide any inflation linked increase on the pre 88 GMP.

The insurer will only pay inflation linked increases of up to 3% on the post 88 GMP.

The revalued GMP divided by 52 is roughly equivalent to the weekly COD - you will be receiving your state pension in about ten years' time under the single tier rules.

But DWP will not inflation proof the pre 88 GMP nor the post 88 GMP in excess of 3% as GMP will not exist for SPA of 6/4/2016 or later.

How will these policies handle this? Inflation proof according to their rules but then the member loses out and also may get hit by the rebate derived amount which reduces his STP pension as well?

zagfles

greenglide wrote: »

But DWP will not inflation proof the pre 88 GMP nor the post 88 GMP in excess of 3% as GMP will not exist for SPA of 6/4/2016 or later.

How will these policies handle this? Inflation proof according to their rules but then the member loses out and also may get hit by the rebate derived amount which reduces his STP pension as well?

The GMP will exist!! The uprating of the GMP through the state pension won't post April 2016, but as far as schemes are concerned their GMP obligations are unchanged.

So the good news is that people with a high fixed revaluation will benefit from that until GMP age without a corresponding increase in their COD, but the bad news is that they won't get the state indexation of GMPs once over GMP age.

The media obviously just highlights the bad news.

xylophone

How will these policies handle this?

We don't know? There is no requirement for insurers/schemes to go beyond their statutory responsibilities?

Although when we discussed this on a previous occasion, we wondered whether the "public service" type schemes would. https://forums.moneysavingexpert.com/discussion/comment/65583593#Comment_65583593 post 6.

polymaff

Success. After much prompting, TPS has agreed to restore the uprating - until we notify them that the State Pension is being drawn. A definite result.