Increases in pre 1988 GMP

parcival

My wife is 60 shortly and the Pru are going to start paying the GMP element of her s32 policy.

They say they will increase the Post 1988 GMP but not the Pre 1988 GMP.

From other posts I thought that Pre 1988 GMP was increased via increases to State Pension. However she does not get her State Pension until age 66.

Is the Pre 1988 GMP effectively frozen for 6 years...

Thanks

xylophone

The arrangement originally was that increases on GMP would be paid with state pension. This was altered to increases on pre 88 GMP and above 3% post 88 GMP would be paid with state pension.

Women whose state pension age no longer aligns with their scheme pension age have found that they receive no increase on pre 88 GMP until they reach SPA, unless (as is the case with the public sector schemes) the employer has agreed to increase the whole of the pension by Scheme rules until SPA is reached.

There is a further wrinkle. When a DB pension has been deferred or transferred to a S32, very ofter the Trustees/Insurer have chosen to revalue the GMP by Fixed Rate in deferment.

This usually means that even when State Pension Age is reached, the Contracted Out Deduction (GMP) is much higher than the notional figure for pre 97 State Pension so that the pensioner sees no increase on pre 88 GMP or anything above 3% on post 88 GMP for a number of years, if ever.

Yet another wrinkle in your wife's case is that she will reach SPA in single tier and there will no longer be any increases on GMP paid through the State Pension.

Has your wife requested a new state pension statement calculated under the new rules?

https://www.gov.uk/state-pension-statement

parcival

Thanks - my wife has requested a state pension forecast which says that her foundation amount will be on the old basis.

Probably better not to plan on any increases on the pre 88 GMP.

PS - It was a former Barclays pension that was converted to the s32.

xylophone

Thanks - my wife has requested a state pension forecast which says that her foundation amount will be on the old basis.

As she is over 55, she should be able to get her foundation amount calculated under new rules?

https://www.gov.uk/state-pension-statement/y/on-or-after-6-april-2016/woman/between-6-april-1953-and-5-april-1960

parcival

Yes, she has the 2 figures.


Her contracted out deduction is large under the new rules so she will get the old state pension.....

xylophone

Her contracted out deduction is large under the new rules so she will get the old state pension.....

Not exactly - see page 10 onwards. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/447195/new-state-pension--effect-of-being-contracted-out.pdf

Is she still working and paying/being credited with NI?

parcival

Thanks - it is starting to get clearer.


Wife no longer working so not building any further credits towards new State Pension......