The Real Truth of new 'flat rate' pension (where everybody gets different amounts)

agarnett

xylophone wrote:

okydoky wrote:

in private sector from 1973 to 2012

with ASP of £72.20, subject to the caveat that this could be lower if I was ever contracted out, especially between 1978 and 1997. Well I was in fact contracted out from 1993 to 2005 so there is a 4 year overlap so presumably, per the Hunter story, I can expect a significant reduction to my ASP for this period?

See https://www.gov.uk/government/upload...acting-out.pdf

As you are likely to have some graduated pension for 1973-1975 and SERPS from 1978 to 1993 and S2P from 2005- 2012 ( and possibly even before, depending on how much you were paid) I would imagine that the ASP figure of £72.20 may be fairly accurate, having taken account of your contracted out years?

Remember that a person who had never been contracted out and became eligible for his state pension this year could be receiving over £160 a week in ASP.

You may be one of those people whose "foundation amount" is greater than the full level of the new state pension?

I think xylophone may have your bases covered for you okydoky ... that stonking great ASP of yours, despite the caveat, may save the day - mine in 2012 was one pound! I was told recently that the computer now says it is £1.88pw

However, it is fascinating how two of us at about the same age may have such a difference in ASP, but I would bet that most of yours was accumulated between 1978 and 1988 when, reading betweenn your lines correctly I hope, you were still contracted-in? In that period I was in a contracted out private sector DB scheme !

It will indeed be interesting to see whether you get stuffed by the caveat given to you in 2012, but I would guess with your particular pattern and especially with a bit of Graduated Pension at the front end which I didn't get as I am a bit younger, you may be ok come June when your new forecast drops on the doormat! Fingers crossed for you!

coyrls

xylophone wrote: »

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

This document states that:

The Contracted-out Deduction is calculated in the same way for Defined Benefit and Defined Contribution pension schemes.

I'm finding this hard to understand. There was never any GMP obligation on Defined Contribution schemes and so how can they be assuming GMP benefits from a DC scheme?

If I get my online pension forecast under the old system, is this likely to be the same as the calculation for the old system figure used for the foundation amount or will this GMP based calculation reduce the figure that I get from the online pension forecast (I was contracted out to DC schemes between 1989 and 2000)?

xylophone

There were such things as Contracted Out Money Purchase Schemes and some people chose to contract out into a private pension. (formerly known as protected rights).

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

coyrls

xylophone wrote: »

There were such things as Contracted Out Money Purchase Schemes and some people chose to contract out into a private pension. (formerly known as protected rights).

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

Yes and as your link states:

Guaranteed Minimum Pensions (GMPs) apply to members of contracted out salary related pension schemes (COSRs).

My question is why GMP is being used to calculate the contracted out deduction for those, like myself, who contracted out to defined contribution schemes, where there was no GMP?

greenglide

If I get my online pension forecast under the old system, is this likely to be the same as the calculation for the old system figure used for the foundation amount or will this GMP based calculation reduce the figure that I get from the online pension forecast (I was contracted out to DC schemes between 1989 and 2000)?

Yes, it is the same calculation. The old rules calculation is precisely the calculation you would have got if your SPa date was 6/4/2016.

The caveat around the old rules amount is present on forecasts and I have always thought it was due to the recalculation of the GMP/CODS relationship. They must calculate it finally at 6/4/2016 as the starting amount is set then and only changes in line with inflation - triple lock up to nSP maximum and CPI over this.

coyrls

greenglide wrote: »

Yes, it is the same calculation. The old rules calculation is precisely the calculation you would have got if your SPa date was 6/4/2016.

The caveat around the old rules amount is present on forecasts and I have always thought it was due to the recalculation of the GMP/CODS relationship. They must calculate it finally at 6/4/2016 as the starting amount is set then and only changes in line with inflation - triple lock up to nSP maximum and CPI over this.

OK, so if I get an online forecast under the old system now, it's likely to be fairly accurate and will only change slightly based on the GMP calculation for the period between now and 6/4/2016. Have I got that right?

xylophone

The point is that you were still contracted out of SERPS/S2P and under current state pension system would have had a Contracted Out Deduction applied to your ASP when you reached SPA.

See https://www.parliament.uk/briefing-papers/SN02674.pdf page 5.

coyrls

xylophone wrote: »

The point is that you were still contracted out of SERPS/S2P and under current state pension system would have had a Contracted Out Deduction applied to your ASP when you reached SPA.

See www.parliament.uk/briefing-papers/SN02674.pdf page 5.

Yes, I understand all that. I am trying to determine if the forecast that I am getting from the online system is likely to be accurate or not. I was contracted out for a some time and contracted in for some time and so have built up some ASP. I wasn't aware that the deduction is calculated based on a GMP calculation, I thought it was based on "years missed". I understand now that it is based on GMP (even though I have no GMP). What I am trying to determine is if the online system is taking the GMP deduction into account. I think the answer seems to be that it does take it into account but it can't be entirely accurate because the final GMP calculation has to be done on 6/4/2016.

Bootsox

I read the article first hand in Sunday's Telegraph and I thought it was a well written piece, useful to get the government scam re the new pension rules out into the wider audience.

jamesd

Bootsox wrote: »

I read the article first hand in Sunday's Telegraph and I thought it was a well written piece, useful to get the government scam re the new pension rules out into the wider audience.

The scam is perpetrated by the author of the piece and it appears to have suckered you in. Just in case I wasn't sufficiently clear with my earlier debunking: the author misled us about her entitlements. She will really get more than the full flat rate. She did this by pretending that the PPF doesn't exist, ignoring the value of her defined contributions pension and apparently using an age 55 annuity purchase rate to work out what she needed to catch up on the shortfall, most of which won't actually be a shortfall anyway.