Another GMP / COPE question

ProDave

I have one small DB pension scheme that I have been drawing since the age of 50 (since the rules of that scheme specifically allowed early withdrawal from that age)

My pension statements have always shown a pension amount and a GMP amount.

I read in another thread that GMP is "payable at age 65 for men".

Does that mean this pension that I am already receiving does not yet include the GMP and will increase by the stated GMP amount when I reach 65?

xylophone

Have you read your scheme booklet?

GMP is part of your pension, not an addition to it.


At the moment, does the whole of your pension in payment increase by the rules that after GMP age apply only to the excess?

This is the case with one scheme with which I am familiar.

Pre GMP age (60F/65M), the whole pension in payment increases by RPI every year.

At GMP age, pre 88 and post 88 GMP are split out.

Pre 88 GMP, no increase paid by scheme, post 88 GMP increase up to 3% CPI paid by scheme, excess increased by RPI.

However, this may not be the case with your scheme.

ProDave

I have never seen any detail. I just got a quote of how much it would be when I elected to draw it early at age 50.

Each year it gets increased and I am notified of the increase. A typical one (not the most recent, just the first I found) says "on 1st July your non GMP AVC and SUPP elements were increased by 1%. any CARE elements were increased by 2.5%

No mention of CARE on my payslip (don't even know what CARE is)

There is also an unknown (or unexplained) "suppliment" of £2.22 each month.

So they are not giving me much information

The question relates to the GMP which as I understand it is the bit funded by opting out of SERPS at the time so is that being paid already? or have I a small increase to look forward to when I reach 65?

xylophone

CARE

Career Average Revalued Earnings.

Do you have your Pension Scheme Booklet?

When you joined the company, there was a DB Scheme?

This closed to future accrual in favour of a CARE Scheme?

You were contracted out on a Final Salary basis between 1978 and 1997?

You contributed to an AVC Scheme and used it at retirement to buy additional pension within the DB Scheme?

Some part of your remuneration represented a contribution to the payment of a pension supplement?

On what basis is your GMP revalued to GMP age?

Do you have a statement on leaving the scheme showing pre 88 GMP/post 88 GMP and excess?

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

zagfles

ProDave wrote: »

I have never seen any detail. I just got a quote of how much it would be when I elected to draw it early at age 50.

Each year it gets increased and I am notified of the increase. A typical one (not the most recent, just the first I found) says "on 1st July your non GMP AVC and SUPP elements were increased by 1%. any CARE elements were increased by 2.5%

No mention of CARE on my payslip (don't even know what CARE is)

There is also an unknown (or unexplained) "suppliment" of £2.22 each month.

So they are not giving me much information

The question relates to the GMP which as I understand it is the bit funded by opting out of SERPS at the time so is that being paid already? or have I a small increase to look forward to when I reach 65?

Usually it's included in what you're getting already, it's not a separate element, it's part of your pension. The reason it's separated out is that different indexation rules apply to the GMP in deferment and in payment.

But some schemes are different so you'd need to check with your scheme.

ProDave

Okay this CARE thing. They closed the DB scheme AFTER I left that employment, so I ONLY have benefits from the DB scheme which is related to final salary on leaving and years service (only 3 years) This was roughly between 1995 and 2000. My payment was reduced under the scheme rules because I chose to draw it early (and hence for longer)

I think the annual statement about increases and CARE must just be the same sent to all members and for me the CARE bit is irelevant.

I didn't contribute to any AVC with this scheme.

So the only reason the GMP and non GMP parts are listed separately is because they have different inflation increase rules?

And what I am receiving now won't change apart from inflation increases?

Thanks for all the help.

xylophone

You had three years in a (presumably) contracted out final salary DB Scheme at some point between 1995 and 2000.

In which years exactly were you in the scheme?

If after 6 April 1997, you would not have a GMP.

https://en.wikipedia.org/wiki/Guaranteed_Minimum_Pension

The "Reference Scheme Test" would have applied.

What is shown on your "statement of benefits on leaving the scheme"?

xylophone

And what does your pension booklet have to say about increases in payment?

ProDave

I was in the scheme from July 1995 to September 1998

Upon leaving I was given a deferred benefits statement

Pre Aprill 1998 GMP (left blamk)
Post 1988 GMP £154
Non GMP £1131
Total pension £1285

Those were the figures when I left the scheme, they have indeed been increased every year ans I get a statement each yeas telling me the new values.

There is a note in that statement about the suppliment

"If a suplimentary pension is shown,this is payable when members commence pension prior to state pension age. It is equivalent to the integration deduction made in calculating the fund pension and is payable only up to state retirement age"

So I will loose that extra £2.22 when I reach state pension age then.

It also says the GMP is revalued in line with line with statutory requirements at a fixed rate of 6.25% each full tax year until state pension age

The balance (presumably the rest of the pension) will be increased by the RPI up to a maximum of 10% while the company continues with it's contributions (that point may be significant)

xylophone

Re integration

http://www.mycompanypension.co.uk/Integrating-With-The-State-Pension-Active-Members-DB

Presumably your Scheme Booklet clarifies exactly how this operates in your case.

At GMP age, your scheme pension must be at least equivalent to your GMP revalued to GMP age.

While your pension was in deferment GMP/non GMP increases were applied as explained - see also Barnett Waddington note.

I am assuming that as you were permitted to take your pension early, the GMP test was passed - look at post 2 here

https://forums.moneysavingexpert.com/discussion/1439747

Is the whole of your pension currently being increased by RPI up to 10%?

I would imagine that at GMP age your GMP will be split out as I explained in my first post - the post 88 GMP will be increased by up to 3% (probably CPI rather than RPI) and the balance by scheme rules.

You can check this with your scheme administrator.