Scheme with normal retirement age of 60 refusing to pay deferred pension until 65

Cyberman60

I am a deferred member of a non-contributory Defined Benefits Scheme and have been reading posts on here with great interest as I thought I should be entitled to a pension at sixty which was the Normal Retirement Age of the scheme at the time I became a deferred member. I was active in the scheme for six complete years from 1973 to 1979 so for the period between 1978 and the end of 1979 I was contracted out of SERPS.

I have written to the Trustees and requested relevant information
regarding entitlement next year and this is the reply from them:

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'Dear Sir,
The plan is contracted out of SERPS. Any pension put into payment must be at least the same as the GMP due to be paid at age 65. The GMP is roughly the same as the pension you would receive if you had been contracted into the additional state pension at the time.

The pension within the scheme consists of the GMP only.

Your pension at leaving the scheme was £28.60 per annum and is subject to statutory increase each year.

Please contract us again closer to age 65 so we can provide you with a retirement quotation. '

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Surely I should be entitled to a pension however small at age 60 (Normal Retirement Age) as the scheme should at least pay me 6/60ths of my salary on leaving according to normal DBS scheme rules ?

Can somebody advise me here please ?

mgdavid

cannot comment on your case but I was a deferred member of a DB scheme with an NRD at age 62 and as expected I was paid it from 62nd birthday.

Seabee42

I would say this will depend on that schemes deed and rules. By the sound of it they are using preservation (to cover the GMP). In our scheme we would not let someone retire early or take any tax free cash sum before GMP pension age if their benefit fails preservation.

Cyberman60

Thanks for those replies folks. Seabee42, this is not early retirement as I will be at Normal Retirement age of 60 according to the scheme. I believe that the offsetting of benefits accrued against GMP is called 'franking' which apparently was made illegal on January 1st 1985 via the Health and Social Security Act 1984 (see legal timeline pre94 on Aries Pensions website ) so can it still now be used on deferred pensions ?

I'm tempted to contact the Pensions Ombudsman for his view on this. What do you think ?

atush

Are you sure that the normal RA hasn't been raised since you left to 65?

xylophone

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


The Social Security Act 1973 (Effective 6 April 1975)

Introduced preservation – members had to be over age 26 and have at

least 5 years qualifying service to qualify for preserved benefits.

Is it possible that you did not qualify for preserved benefits so that your only pension is the revalued GMP for 1978-1979?

The scheme is obliged to pay you your revalued GMP but only from GMP age (still 60 for a woman, 65 for a man).

http://www.barnett-waddingham.co.uk/news/2012/07/what-is-a-gmp/

Cyberman60

Hi Atush, the DBS scheme was closed to new members in 2012 and retirement age raised to 65 but people could remain retiring at 60 if they agreed to pay an extra employee 3% contribution. As a deferred member though I surely remain with the original 'Normal Retirement Age' of sixty as my terms cannot be varied. I mentioned this to the Trustees in my letter to them and they have not denied that being the case but are simply using the GMP guarantee as a get-out IMO.

zagfles

Cyberman60 wrote: »

Thanks for those replies folks. Seabee42, this is not early retirement as I will be at Normal Retirement age of 60 according to the scheme. I believe that the offsetting of benefits accrued against GMP is called 'franking' which apparently was made illegal on January 1st 1985 via the Health and Social Security Act 1984 (see legal timeline pre94 on Aries Pensions website ) so can it still now be used on deferred pensions ?

I'm tempted to contact the Pensions Ombudsman for his view on this. What do you think ?

Have a chat with the TPAS first http://www.pensionsadvisoryservice.org.uk/contact-us.aspx

Are you sure you didn't transfer the pension to a subsequent employer or personal pension and they refused to take the GMP element?

Cyberman60

Hi Xylophone, I had seen that clause before but also saw that in SSA 1986 the law again changed when in April 1988 'Qualifying service for preserved benefits reduced from 5 years to two years'.

I thought that this was backdated but perhaps it was not and so that I would assume to be the answer. Thanks for the reply.

Cyberman60

Hi Zagfles, this pension has always been deferred with no effort to transfer on my part and I have continued to receive updated annual information from the scheme over the years with regards to my being a deferred member. Thanks for the reply and link.

RichandJ

Cyberman60 wrote: »

Hi Xylophone, I had seen that clause before but also saw that in SSA 1986 the law again changed when in April 1988 'Qualifying service for preserved benefits reduced from 5 years to two years'.

I thought that this was backdated but perhaps it was not and so that I would assume to be the answer. Thanks for the reply.

No. It was not backdated. Sounds like you have a GMP & only a GMP.