GMP calculation for Barclays Pension

enthusiasticsaver

Help please from any mathematicians out there! I have just received a revaluation on my Guaranteed Minimum Pension from Barclays who I left in 1985. Unfortunately they have just given me a formula to work it out rather than an actual illustration and I wondered if anyone who is great at working this out can check it.


They say that to calculate the value of my GMP (in 2020 at age 60) I should use the GMP at the date of leaving in 1985 which was £221 x ((number of years from the date of leaving to the GMP payment date)to the power of 1.085) The number of years is 35 and it is supposed to be 8.5% increase per year.


I calculated on an excel spreadsheet a number of years ago that it should be around £3800 per annum in 2020 and it was on track around 10 years ago when I checked but when I put this formula that Towers Watson gave me into a calculator it came out at £8377 per annum which I am sure is incorrect so I guess I must be doing something wrong.


Anyone any good at maths formulas??

Eco_Miser

I think the formula should be £221 x (1.085 to the power of (number of years from the date of leaving to the GMP payment date)).[1.085 is the rate of increase as a decimal, plus 1 (for the initial amount). This is then multiplied by itself for each of the 35 years, and the result multiplied by the starting amount.] So £3840.90.

Your_Hero

enthusiasticsaver wrote: »

Help please from any mathematicians out there! I have just received a revaluation on my Guaranteed Minimum Pension from Barclays who I left in 1985. Unfortunately they have just given me a formula to work it out rather than an actual illustration and I wondered if anyone who is great at working this out can check it.

They say that to calculate the value of my GMP (in 2020 at age 60) I should use the GMP at the date of leaving in 1985 which was £221 x ((number of years from the date of leaving to the GMP payment date)to the power of 1.085) The number of years is 35 and it is supposed to be 8.5% increase per year.

I calculated on an excel spreadsheet a number of years ago that it should be around £3800 per annum in 2020 and it was on track around 10 years ago when I checked but when I put this formula that Towers Watson gave me into a calculator it came out at £8377 per annum which I am sure is incorrect so I guess I must be doing something wrong.

Anyone any good at maths formulas??

£221 x (£1.085)^35 = £3,840.90

enthusiasticsaver

Thank you both and yes that is what I calculated it should be. I did not dream that the pension administrators would give me the wrong formula.