quick question re pension increases

worn_out

My COD is £139.87 (made up of £98.18 for 1978/79 to 1986/87 and £41.69 for 1986/87 to 2004/05) and my Additional Pension for 1978 - 1997 is just £79.62.

Although the £41.69 bit is already being paid within a LGPS pension and is inflated by CPI each year, the remaining £98.18 is due to be paid soon via a private S32 policy. I am guessing that this bit will not benefit from any increases for inflation via the DWP ?

xylophone

https://forums.moneysavingexpert.com/discussion/4532605

post 12

worn_out

so that's no, as expected.

worn_out

just a second thought on the comparison between AP1 and COD...

The COD equates to the GMP payable to me on retirement in 2015.

This is compared to the AP1, which has it's own inflation factors, but is AP1 for the same period of time, ie up to 2015...or is it just calculated for the period during 1978 to 1997 ?

xylophone

Examples with simple figures.

Suppose a standard situation where a person has been contracted out for the whole of the period and no "fixed rate" increase complications.

He starts with pre 97 AP of £100 and his COD is £100, made up of £70 pre 88 GMP and £30 post 88 GMP.

His AP is therefore nil (£100 - £100).

Let's say September CPI is 2%.

Increase AP to £102. Pre 88 GMP remains the same - £70. Post 88 GMP increases by 2% - £30.60.

Deduct pre 88 GMP + increased Post 88 GMP from increased AP.

£102 - £100.60 = £1.40.

AP payable £1.40.

You can see therefore that the pre 88 GMP increase has been paid by the state with the state pension - the occupational scheme will have paid the post 88 GMP increase with the occupational pension.

Take another scenario - suppose that the CPI increase had been 4%.

AP then becomes £104. Pre 88 GMP remains the same. Post 88 GMP is increased by maximum of 3% to £30.90.

Subtract £100.90 from £104.00.

AP payable with state pension is £3.10, being the full 4% on the pre 88 GMP and 1% on post 88 GMP (the other 3% being paid by the occupational scheme).

xylophone

https://forums.moneysavingexpert.com/discussion/4532605

And if you look at post 21 of the above, you will see an illustration of the situation where COD exceeds pre 97 GMP.

(The poster was wrongly advised that his GMP had increased by fixed rate in deferment).

worn_out

xylophone wrote: »

Examples with simple figures.

Suppose a standard situation where a person has been contracted out for the whole of the period and no "fixed rate" increase complications.

He starts with pre 97 AP of £100 and his COD is £100, made up of £70 pre 88 GMP and £30 post 88 GMP.

His AP is therefore nil (£100 - £100).

Let's say September CPI is 2%.

Increase AP to £102. Pre 88 GMP remains the same - £70. Post 88 GMP increases by 2% - £30.60.

Deduct pre 88 GMP + increased Post 88 GMP from increased AP.

£102 - £100.60 = £1.40.

AP payable £1.40.

You can see therefore that the pre 88 GMP increase has been paid by the state with the state pension - the occupational scheme will have paid the post 88 GMP increase with the occupational pension.

Take another scenario - suppose that the CPI increase had been 4%.

AP then becomes £104. Pre 88 GMP remains the same. Post 88 GMP is increased by maximum of 3% to £30.90.

Subtract £100.90 from £104.00.

AP payable with state pension is £3.10, being the full 4% on the pre 88 GMP and 1% on post 88 GMP (the other 3% being paid by the occupational scheme).

Thanks for that, so I can see clearly how the figures start from the same starting point, but increase at different rates over time.

I know the GMP/COD has inflated right up to retirement date, and is made up of two elements, as you show.

However, the pension statement says the additional pension is for the period to 1997...so does that mean the inflation added ceased at 1997 or does it in fact also continue to be inflated right up to retirement date like the COD ?

xylophone

See http://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/18/what-is-a-gmp/