Differed Barclays Pension - help required

Rob_192

My wife and I are doing a bit of forward pension planning and need to get a better understanding of her differed Barclays pension.

Up until recently we had been simply getting the occasional transfer out quotation and adding this into the pot, for which I intend managing my own drawdown. However, I suspect that this would actually be a foolish thing to do and am trying to get a handle on what she might expect to receive direct from the pension.

From the Towers Watson (administrators of the scheme) illustration we have the following information:-

Date of leaving 13 Apr 1992

Normal Retirement Date (NRD) 23 Oct 2023

GMP built up before 6th Apr 1988 = £261.56/year

GMP built up after 5th Apr 1988 = £157.04/year

Scheme pension (over the GMP) built up before 6th Apr 1997 = £1,512.07/year

Total Scheme pension = £1,930.67/year

State pension reduction = £241.33/year

Now I’ve done some research and understand how the GMP amounts increase by 8.5% and 7.5% PA for the 31 years since she left, which results in the first two amounts (the GMPs) providing a pension of £4,758/year at the NRD, but I don’t understand what happens to the other figure (the £1,512.07).

Any help would be greatly appreciated.

Thanks

Rob

Rob_192

I should just add before anyone suggests it, my wife did try asking Towers Watson to explain but they just confussed her totally and hence why I'm trying to get an understanding of it.

Rob

molerat

It is probably increasing by inflation (CPI, RPI or some other value), the scheme booklet or administrators should be able to explain this simply. Can you get up to date figures on the values ?

Rob_192

molerat wrote: »

It is probably increasing by inflation (CPI, RPI or some other value), the scheme booklet or administrators should be able to explain this simply. Can you get up to date figures on the values ?

Thanks Molerate, I have done that and it shows the amount in question is now worth £2871, so I guess you're right. The confussing part is it then adds the two GMP amounts to it at the 1992 value (ie un-adjusted for annual percentage increase) and brings it to a total which is very misleading.

For this non GMP amount, I guess I can work out the percentage increase used and take a view on the next 9 year.

Regards

Rob

agarnett

If this is the so-called "Barclays 1964 Scheme" then I have only read good surprising things about it on MSE this year.

Have you actually obtained a Cash Equivalent Transfer Value this year?

One poster, audi321, who kindly tells us they are an IFA although not a pension transfer specialist, reported quite amazing increases in his own deferred Barclays 1964 Scheme CETV over the past 5 years.

Those original numbers for the pension entitlement will, as you imply, have been revalued quite healthily over the years.

The point is, not so much that the revaluations are healthy, but that the funds necessary to ultimately achieve eventual revalued final salary-based retirement benefits of that ilk are becoming burdensomely great to the scheme! Commentators on the question of whether CETVs from DB schemes are good value or still a dangerous risk, seem to be warming to the fact that low gilt yields mean some very very generous CETVs (perhaps not to be repeated in future years) are coming out of some schemes (not all).

I myself have a remnant of an old 90s DB scheme which contained a pre 6 April 1997 GMP item not dissimilar in size to the bit (the £1,512) you are querying in your wife's original benefits ("Section 9(2B) Rights" is the correct term I think for that bit). That bit may be worth £40,000 or £50,000 alone as a part of the transfer value and possibly with Barclays, much more.

The Barclays scheme does from hearsay seem to be one of the most generous for CETVs, even though Towers Watson is also the actuarial adviser behind some of the less generous ones!

Might be worth contacting audi321 by PM to share some data (apologies audi321 for volunteering your username, but you did kindly already share very valuable information which is of great value as a stake in the ground to members of other DB schemes too )

Rob_192

Agarnett

Yes, it is that scheme and this is what's leading me to review things. The latest transfer quote (Mar15) is giving a value of £129k which strikes me as particularly good. (a 30% increase in the last 3 years)

In the transfer quotation, the GMP part is worth approx £53k and the non GMP (Section 9(2B) Rights, thanks ) is worth approx £76k

I keep thinking we could transfer into a SIPP with a HYP approach and then draw down again that in retirement. (my prefered choice for all my own pension investments).

It's counter-intuitive that it might be better to do this than stick with the GMP, but we're certinly looking at it.

Thank you for the steer on Audi321's experiences, I will search out his posts over the weekend.

Rob

xylophone

Deferred pension...;)

Your wife will be 60 in 2023 (Scheme Pension Age in Barclays 64 FS Scheme)?

The revaluation would be on the whole of the GMP at date of leaving, therefore 7.5% on £418.6.

The reason for splitting out the two relates to how the pension increases in payment after GMP age.

Barclays are not obliged to index link the pre88 GMP in payment and the post 88 only up to 3%.

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

The excess over GMP (£1502.07) revalues differently.

https://www.barnett-waddingham.co.uk/comment-insight/blog/2012/07/24/revaluation-for-early-leavers/

https://forums.moneysavingexpert.com/discussion/4736856 post 43 re State Pension Reduction.

What does the Barclays Scheme now regard as State Pension Age for a woman in your wife's position? That is, at what age will the SPD apply?

The GMP age for a female remains 60 but SPA for your wife will be 66/67?

agarnett

Rob_192 wrote: »

In the transfer quotation, the GMP part is worth approx £53k and the non GMP (Section 9(2B) Rights, thanks ) is worth approx £76k

This is where I get confused when looking at my own, trying to separate what properly is called GMP and what isn't. In the pension I am talking about, the pre 6.4.1997 part was 12 years ago described as part of the GMP, but I have recently got the impression that its GMP Jim, but not as we know it! Which may mean it is non-GMP!

I'm afraid that's about all I can offer at this point (I only started my first ever SIPP a few weeks ago, and your mention of HYP has sent me whistling back to Google!). All I've told you, I've learned myself only in the last month, and mostly from non-qualified MSE folks

Aha, and trusty xylophone has come up with some real useful nitty-gritty again I see - so you are well served now

Rob_192

Xylophone, thank you so much for taking the time to replay in detail - answers below:-

xylophone wrote: »

Deferred pension...;)

Oops! how embarrassing, I blame spell checker.

Your wife will be 60 in 2023 (Scheme Pension Age in Barclays 64 FS Scheme)?

The revaluation would be on the whole of the GMP at date of leaving, therefore 7.5% on £418.6.

OK, I misunderstode, but at least we now know.

The excess over GMP (£1502.07) revalues differently.

https://www.barnett-waddingham.co.uk/comment-insight/blog/2012/07/24/revaluation-for-early-leavers/

Not entirely sure I follow that. Having re-checked, I found an explanation on the TW website which suggests it's increased at RPI (up to a max of 5%). Shame I didn't find this before posting! but they do hide it away.

tp://forums.moneysavingexpert.com/showthread.php?t=4736856&highlight=barclays+pension+scheme post 43 re State Pension Reduction.

What does the Barclays Scheme now regard as State Pension Age for a woman in your wife's position? That is, at what age will the SPD apply?

It states that this is changing and has a link to the gov website.

xylophone

Not entirely sure I follow that. Having re-checked, I found an explanation on the TW website which suggests it's increased at RPI (up to a max of 5%). Shame I didn't find this before posting! but they do hide it away.

Your wife left in 1992.

The BW article says

Social Security Act 1990 Leavers on or after 1 January 1991

Revaluation extended to cover the whole of the member's pension, in excess of the GMP. Annual increase applicable was the increase in the Retail Price Index (RPI), capped at 5% (sometimes known as 5% Limited Price Indexation - LPI).


Pensions Act 2008 Post 6 April 2009 accrual

Allowed schemes to reduce the revaluation percentage from RPI capped at 5% a year (as above) to RPI capped at 2.5% for pensions accrued after 6 April 2009.

Pensions Act 2011 6 April 2011

Consumer Prices Index (CPI) replaced RPI as the basis for the minimum statutory revaluation. Rules for the pension scheme will determine whether this change was applied to benefits.

Some schemes did not limit revaluation but simply applied RPI.

Your wife will receive her state pension under the new scheme.

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

When will the SPD be applied? Your wife might like to check.

As I said in my previous post, when the pension comes into payment, the Scheme has no obligation to index link that part of the pension relating to pre 88 GMP.

Even under the current system, in view of the fact that her GMP has been revaluing at Fixed Rate, she would have been very unlikely to receive any index linking through the state system but at all events, this is disappearing under the new system.

She might want to clarify with TW whether the scheme will take responsibility for index linking the GMP after the new state pension regime begins. https://forums.moneysavingexpert.com/discussion/4509161