ford company pension

emmett8

good evening everyone,am very new to this but am after some advise on the following.I recently contacted Ford Mo Co regarding my options of withdrawing my pension from them.The response I received is as follows:
Thank you for your enquiry about the options open to you,if you take your benefits earlier than expected.
By law,your total pension from your Guaranteed Minimum Pension(GMP) age of 65 must not be less than your GMP this is the amount of pension that the Fund guaranteed to pay at your GMP age,instead of you earning a state second tier pension up to 6 April 1997.
If the Trustee(s) allowed you to take your pension now,my calculations show that the total pension at your GMP age would not be enough to match the GMP.Regretfully,this means that the Trustee(s) cannot allow early payment at this time.
I was probably under the false impression that I could access my pension pots but it seems to me that you have to have a "certain" type of pension to do this although this was not made clear when "everyone"could suddenly release some funds.Can anyone advise me of the above Ford situation because I'm not sure if I am been fobbed off,many thanks in advance

Silvertabby

The 'pension freedoms' were only ever intended to apply to money purchase schemes, not final salary schemes.

What you are describing isn't uncommon. When you joined the Ford scheme you (and your employer) paid reduced National Insurance contributions. In return, the Ford pension scheme made a promise that the pension they paid you would not be less than the additional State pension you would have accrued had you not joined the Ford scheme. In your case, that's your GMP (Guaranteed Minimum Pension).

They have, by law, to pay you at least your GMP from age 65 (still GMP age for a man regardless of increases to State pension age) and so can refuse to pay you anything before that if the value of your pension - before or after any early retirement reduction - is below your GMP.

hyubh

emmett8 wrote: »

Can anyone advise me of the above Ford situation because I'm not sure if I am been fobbed off,many thanks in advance

In addition to what Silvertaby says, I would imagine the Ford scheme uses so-called 'fixed rate' GMP revaluation. Due to the fixed rates in question having outpaced wage inflation (this wasn't originally intended), your GMP by age 65 is likely to be rather more than the SERPS forgone; moreover, above inflation revaluation on the GMP has likely contributed to the fact a scheme pension ignoring GMP requirements wouldn't cover the GMP at GMP age.

Not only that, but with the abolition of contracting out last year, if you're still employed, you're currently effectively earning the SERPS foregone as part of your 'new' state pension. So, in all, I'd be reasonably confident you've actually done pretty nicely out of developments since you ceased to be an active member.

xylophone

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

Look at the flow chart here

http://www.hscpensions.hscni.net/download/Employers-Decision-Tree-GMP-Test.pdf

You have not "passed the GMP test".

emmett8

thank you for your replies and giving me a greater understanding of how (my) scheme works.