Unexplained Pension Forecast

[Deleted User]

Hi,

molerat wrote: »

The new less confusing statement is obviously more confusing

Sorry, can't help,

goodValue

Xylophone
I've now had a look through the online leaflet you posted, and
found it had some useful information. But my pension estimate doesn't
have the information you mentioned; there is no Summary or Breakdown.

I will be getting a company pension, similar in value to the State Pension, for the work I did in the 1980's and the estimate for this has an element of GMP. I will be getting two other company pensions whose estimates were in the £100's. These last two estimates were about four or five years ago, and gave only a single figure so I don't know if there was any GMP.

xylophone

Some information about GMP and revaluation for early leavers here.

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

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

The new state pension and contracted out deduction

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

teddysmum

goodValue wrote: »

I didn't ask for an estimate based on the new rules, so are they
just calculating with just the new method now?

Are you not stuck with the new system , as your pensionable age is reached after it comes into force ?


I remember that people enquiring whether they could be considered under the new system, by deferring their pension until it came in , were told that they could not be, as people are assessed under the system current on the day they reach pensionable age and not that when they actually take the pension.

jem16

teddysmum wrote: »

Are you not stuck with the new system , as your pensionable age is reached after it comes into force ?

It really makes no difference due to transition arrangements. Just before the start of the new pension, everyone will have their foundation amount calculated. This works out the amount you would get under old and new rules - you will get the higher of the two amounts.

I remember that people enquiring whether they could be considered under the new system, by deferring their pension until it came in , were told that they could not be, as people are assessed under the system current on the day they reach pensionable age and not that when they actually take the pension

Those comments were made by people who didn't understand the transition rules and thought they were going to get more than they actually would get under the new rules.

goodValue

Thanks Xylophone (can't find a Thanks button).

Thanks for the information about GMP.
If I've understood this, and it is complex, having a GMP gives one
big advantage, but also gives two governmental punishments; your
company pension is increased, but your State Pension is decreased,
and you don't get cost of living increases on part of your company
pension.
I now see where the deduction of £14.74 mentioned, previously, comes from.
However, as the increase of company pension is roughly balanced by the decrease in State Pension, it seems perverse that the government also punishes you by effectively denying you cost of living increases on that part of your pension.

xylophone

The interaction of GMP/COD and state pension under the current system can be complex.

Where the GMP has revalued at full rate in deferment, the pensioner normally finds that at State Pension Age, that part of his Scheme Pension that related to pre 88 GMP will be index linked through the state pension Additional Pension Increase - the part of his Scheme Pension relating to post 88 GMP will be index linked by the Scheme up to 3% with anything over through the State Additional Pension.

However, where the GMP revalued by Fixed Rate in deferment, a pensioner quite often found that the COD (roughly equivalent to revalued GMP) was so much higher than the ASP figure, he saw no increase on pre 88 GMP for many years.

The new state pension will not inflation link the GMP as described above. https://forums.moneysavingexpert.com/discussion/4509161

goodValue

Thanks again Xylophone.
Obviously, I still have a lot to learn about this subject. The issue of index linking and GMP appears to be controversial as well as complex.

Whilst I'm trying to get to grips with this, is there any way of checking whether the reduction in State Pension (or Contracted Out Deduction, if these are one and the same) has been calculated correctly?

xylophone

It could be difficult for the individual to do the calculation for himself.

https://forums.moneysavingexpert.com/discussion/5118275

What happens under the current system is that when a person reaches GMP age, HMRC advise the Occupational Scheme Administrator of the amounts in question.

goodValue

From SeekTruth in "Calculating Contracted Out Deduction" post:

http://forums.moneysavingexpert.com/....php?t=5118275

For someone whose only contracted out service is prior to April 1997 their RDA will equal their Contracted Out Deduction and will also equal their GMP.

So for anyone who doesn't have a significant contracted out period after 1997 there appears little point in checking this deduction - if HMRC take their value from the Company Pension administrators, then any gain/loss in the State pension due to an incorrect value, will be compensated for by an equal loss/gain in the company pension.