CETV worth transferring?

Parking_Trouble

I am starting to think that IFA's deserve their commission :T

So GSK have come back with a projected annual pension of £2,704.92 at age 62.

They seem to have moved the goal posts on the GMP revaluation.

In a document from 2000 they clearly state 8.5% pa for leavers before 6th April 1988. £314.60 @ 8.5% compound over 32 years is £4,280.66 - is that a correct calculation?

Now they say:

Your Guaranteed Minimum Pension (GMP) must revalue in line with National Average Earnings, subject to a maximum of 5% per annum (compound) for each complete tax year between your date of leaving and your GMP age, then by 1/7th of 1% for each week between after your GMP age.

For the Excess they say:

Your Excess pension earned since 1 January 1985 must revalue in line with the increase in the Retail Prices Index (RPI) between your date of leaving and 31 December 2010.

 Your Excess pension earned since 1 January 1985 must then revalue in line with the increase in the Consumer Prices Index (CPI) between 1 January 2011 and your Normal Retirement Date.

For the Excess Pension the May 2000 document has conflicting information. It says only the Excess which accrued after 1st Jan 1985 is revalued at 5% pa. Elsewhere it says SKF leavers before 1st May 1990 have a guaranteed Non-GMP revaluation of 5% pa.

Even if I assume zero increase for the Excess it should add another £536 pa to the revalued GMP.

How do I determine exactly how the calculation should be made?

Is £4,800 pa realistic figure?

xylophone

Your Guaranteed Minimum Pension (GMP) must revalue in line with National Average Earnings, subject to a maximum of 5% per annum (compound) for each complete tax year between your date of leaving and your GMP age, then by 1/7th of 1% for each week between after your GMP age.

Limited Rate Revaluation?

http://www.pruadviser.co.uk/content/nav/about/26674/pghome/49880/53732/53759/53768/53789/

Limited Rate Revaluation
This is not available to leavers after 5 April 1997. The GMP is revalued each year by RPI up to a maximum of 5%. The Scheme pays a Limited Revaluation Premium to the DSS, who then take responsibility for any additional revaluation needed if RPI is greater than 5%. (The Limited Revaluation Premium will be refunded on later transfer to a personal pension plan.)

See page 44 of
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/372354/CA14_Termination_of_Contracted-out_Employment_Manual.pdf


It is all rather odd - you seem to have retained old SKF NRA and yet the basis on which GMP was revalued changed to SKB (?) GSK (?) and excess revaluation has also changed?

You'll need to query with the Administrator.

Parking_Trouble

Thanks again. I have already gone back to Equiniti.

I agree it is odd. Unclear if it is poor administration or some changes to the scheme during the two mergers sine I left 30 years ago. I guess there would have been notification of any changes to the scheme during that time but they won't have had my change of address until I asked in 2000. They lost my address after that although I haven't moved since then.

I have sent them a copy of the May 2000 transfer statement and asked them what the right method of calculation is and more detail behind their calculation.

I think they should provide all of the detail for their calculations.

xylophone

Let us know the outcome.

You have read through both of these?

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/

Your employer in 1982 was Smith Kline French (Beckman).

https://en.wikipedia.org/wiki/Smith,_Kline_%26_French

You left in 1987 with a deferred DB pension.

You should have received a statement of deferred benefits at that time but either the company did not supply it or you lost it.

That said, it would seem that at that point, your GMP revalued at FiR - with regard to the revaluation of the excess, it is unclear whether the Scheme's own rules applied or statutory rules applied.

Smith Kline Beckman (formerly French) merged with Beecham in 1989, two years after you left their employ.

It is conceivable that some change to deferred pension arrangements was made in connection with the merger.

Smith Kline Beecham merged with Glaxo in 2000, creating Glaxo Smith Kline.

Again, it is conceivable that some change to deferred pension arrangements occurred with that merger.

You received your last pension statement in 2000 and the details on this seem to bear little relation to the figures you gave in your first post or those in the latest communication from GSK's administrator.

It is rather a pig's breakfast.

https://www.pensionsadvisoryservice.org.uk/pension-problems/avoiding-problems/what-you-must-be-told

Parking_Trouble

Equiniti have provided a copy of my 1987 Certificate of Leaving Benefits from SKF.

So this is driving the figures they have provided and the revaluation method or so it seems.

£314.60 GMP - revaluation will be based on national average earnings max 5%

£536.38 Excess - revaluation RPI, max 5%

1st Payment due 1st June 2023 (I will be 65 the month before)

In 1987 they projected the highest rate of revaluation and came up with £4841.85 but that is clearly no going to happen.

Doesn't match the revaluation method alluded to in the letter I had in 2000

A lot of conflicting and confusing information in the 1987, 2000 and current correspondence. Very frustrating.

xylophone

In which case it would appear that the GMP revaluation is "Limited Rate"

see BW link

and the excess "Limited Price Indexation" (see BW link).


http://adviser.royallondon.com/technical-central/rates-and-factors/national-average-earnings-index/

http://www.swanlowpark.co.uk/retail-price-index.jsp

Are they now saying that Scheme Pension Age ( when you can take your pension without reduction) is in fact 65 and not 62?

When your pension comes into payment, the scheme will have no obligation to escalate the GMP portion as it is all pre 88.

You can check this with Equiniti.

How will the excess escalate in payment?

If you should choose to commute part of your pension for a lump sum, what factor would be used?

At least you now have the facts to lay before a Pensions Transfer Specialist should you choose to explore a transfer out.