GMP Revaluation

mikioletto

I joined my Company in 1984 and worked until 2004 when I was granted,
under the Company's Pension Fund's rules,early retirement for medical reasons, without abatement.
Every year the Trustees have applied RPI increases to pensions in payment and pensioners have been advised accordingly. In April 2015, upon reaching State Pension Age ( 65 born 1/7/50 ) I was advised by the Trustee's Secretary about the GMP elements of my pension, both pre and post 6th April 1988 and of the different increases applicable in April 2016, one year later, having reached pensionable age only in July 2015. Having seen no increase in my payslip for April for the portion pertaining my ex employer ( post 6th April1988), I have written to the Pension Fund run by Equiniti asking about the revaluation,as I understand it, which should have been applied to the portion of GMP identified in the letter to me in October 2015 for the sum of £ 186.94 pcm. This portion of GMP should have been revalued from my date of leaving( May 2004 ) until reaching pensionable age in 2015. This portion of GMP will receive no increase this year because they explain the Govenment has published the Increase Order 1998 and in it only registers a negative one ( ie deflation ). This is what the Pension Fund has broadly replied,alas they've chosen to ignore the revaluation question which remains,to my mind, unanswered.I could forward literature in my possession, if needed. Puzzled!

PensionTech

What makes you think the GMP wasn't revalued?

The revaluation of the GMP between retirement and GMP age doesn't get paid on top of your existing pension. Before GMP age, none of your pension is made up of GMP - effectively the GMP doesn't really exist as part of your pension in payment before age 65. It will have been taken into account in calculating your benefits when you retired, but it didn't actually go into payment. When you hit 65, the GMP due at that date - which is revalued all the way from when you left the scheme up until age 65 - is split out from your other benefits. This doesn't change (in most cases) the actual immediate amount of your benefits in payment - rather, it changes how they will be increased in future year on year.

So let's say you retired at 55, and your pension at that date works out to be £1000 per annum. This figure might be calculated on the basis of the GMP revalued to that date (let's say GMP revalued to age 55 is £200pa), but none of what you're being paid at 55 is actually called GMP. It's all "excess" pension.

Then let's look at your GMP revalued to age 65. Say it's £400 per annum. Your total pension, in the meantime, has been increased to £1100pa. Your administrator just sections off the GMP so that the excess is now £700 and the GMP is £400. The total you get paid is still £1100, but it's now made up of two different components.

Going forward, your GMP will start to attract different increases to your excess pension. That's the only thing that changes when your GMP gets split out.

There are cases in which it can be more complicated than this and you do get a "step-up" at GMP age, because your pension at that age isn't enough to cover the GMP, or because of certain other really technical and complex stuff. But that doesn't apply to most people.

By the way, please try to use paragraphs - it makes queries much easier to read on a computer screen!

mikioletto

Thank you very much for your reply......crystal clear!
I'll bear in mind paragraphs for the next time!!
Regards:T