Pension coming up - advice please

xylophone

I am also wondering about the lump sum on offer - is a lump sum automatic with this scheme?

Jack2015

Thanks for your replies and your help. It has been very very grateful.

@xylophone

Have you claimed your state pension?

Have you yet received the letter to which I refer in my post above showing your contracted out deduction?

No, haven't claimed my state pension yet. I have asked and received a state pension breakdown and from the DWP have a summary but nothing like the post you shown It states that I will have £151.74 a week which is made up of £115.95 a week and £35.79 additional state pension. There is no mention of any time when/if I opted out.

A rough calculation for the GMP would be 8.5% compound for 30/31 years.

I make it approx £3632.

I was told today from pension provider today that the GMP at the date of leaving was £289.64 a year and receives increases up to age 65 of 8.5% a year. It would appear that the pension excluding the lump sum is made up of entirely of GMP. Your calculations come to that figure. I haven't received anything from my pension admin that the pension would be GMP.

@RichandJ - I was told by letter today that GMP would of increased in those 31 years at 8.5%. I thought that would be around £700 today, but xylophone has kindly come up with the figure that my pension admin come up with. I unsure how the 8.5% increase works.

It would appear that the lump sum doesn't have to be taken. If i didn't take it I would get a pension of £4591 a year.

Thanks for all your help. I have very appreciative.

xylophone

The detailed letter comes once you have claimed the state pension.

I suspect that as your GMP revalued by fixed rate in deferment, your COD will be greater than the figure for ASP 78-97.

I am guessing that the Additional State Pension shown on your statement relates to S2P?

With regard to your GMP from your scheme, as this was pre 88, the scheme has no obligation to index link this once in payment - I assume therefore that it doesn't?

Turning to the lump sum option, if you don't take it, would the scheme index link/increase the extra pension over the GMP amount and if so how?

kidmugsy

If you don't take the lump sum, will that increase your widow's pension? It's worth finding out.

RichandJ

xylophone wrote: »

Although depending on the particular scheme it might.

I know somebody who was in a DB Scheme 1974-82 who has GMP and excess - GMP increased by Full Rate rather than Fixed Rate, balance by scheme rules.

It can happen with the more generous schemes. I agree your GMP reval calc.

xylophone

It can happen with the more generous schemes.

It was a case of "Never mind the remuneration, feel the (non - contrib) pension scheme....":)

Jack2015

Thank-you very much for all your help. Pensions I seems is a real headache.

The detailed letter comes once you have claimed the state pension.

Thanks will now apply for the state pension.

I am guessing that the Additional State Pension shown on your statement relates to S2P?

Between 1968 and 1978 I believe I was paying national insurance payments. Between 1978 and 1984 I was paying reduced NI because of being in this pension. Between 1984 and 1996 i was self employed so was paying a reduced NI, and between 1996 and 2010 was employed and had no pension. So i think I should hopefully have 23 years of S2P.
Will this breakdown be shown in the confirming letter?.

With regard to your GMP from your scheme, as this was pre 88, the scheme has no obligation to index link this once in payment - I assume therefore that it doesn't?

Turning to the lump sum option, if you don't take it, would the scheme index link/increase the extra pension over the GMP amount and if so how?

No I don't believe it will be indexed linked, have just asked the pension provider.

Thanks

xylophone

From what you have said above, between 1968 and 1975 you would have earned Graduated Retirement Benefit ( a predecessor of SERPS) - this usually amounts to a few pounds a week.

There was no equivalent benefit between 1975 and 1978 because although the Social Security Pensions Act 1975 introduced SERPS it didn't start until 1978.

Between 1978-1984 you were contracted out of SERPS but earned a GMP through your Occupational Scheme.

You would have earned only Basic State Pension in your self employed years - there might be a little SERPS for 1996-97.

You were employed between 1996-2010 so should have earned S2P.

Your letter confirming your state pension should be similar to my relative's and show how your pension is made up.

You have confirmed with your Occupational Pension Administrator that your GMP pension will not increase/be index linked in payment and that if you did not take the lump sum but chose extra pension, that would not be index linked in payment either?

Is there any provision for your spouse (if you have one)?

Jack2015

xylophone you have been a legend answering all the questions. I have been looking over other forum post and your replies are really helpful.

agarnett

Jack2015 wrote:

xylophone wrote:

With regard to your GMP from your scheme, as this was pre 88, the scheme has no obligation to index link this once in payment - I assume therefore that it doesn't?

Turning to the lump sum option, if you don't take it, would the scheme index link/increase the extra pension over the GMP amount and if so how?

”No I don't believe it will be indexed linked, have just asked the pension provider.

Thanks

One thing xylophone has diplomatically not said is that if you had asked the same question two years ago you almost certainly would have received a very different answer.

What has happened in the meantime are government pension reforms which pulled the rug from under index-linked GMP in retirement. Up until now, the government have been funding such increases behind private scheme paid GMP benefits. As of next year they won't be. Between 1978 and 1984 you were implicitly involved in a three way agreement to have your State Earnings Related Pension entitlement contracted out to your employer pension scheme in exchange for reduction of your NI contributions. The three parties were the State, the employer (who got a bigger NI reduction than you did) and you.

The government has decided to renege on the covenant made to your pension provider and to you which funded the index-linking of the GMP in retirement. This means your government have removed a significant part of the G in GMP. Your pension provider, like most schemes in the same boat, have decided to paper over the deliberate crack by suggesting that they never index-linked it in the first place. If you press them, that might agree that the government used to routinely fund it, but now they don't, so no-one does.This Citywire discussion describes it as well as any ...