Carillion Pensioners Action Group?

zagfles

Game_Over wrote: »

Here's what the TUC has to say:

https://www.tuc.org.uk/blogs/carillion-pensions-do-not-trust-horse-trojans

Their angle seems to be that final salary (defined benefit) schemes are perfectly good when funded properly -- and that it's a long history of inadequate funding by wealthy employers, not any intrinsic lack of viability -- that's the issue.

Sounds to me just like the NHS debate!

The cost of providing final salary schemes has massively increased over the last 30 years, for a multitude of reasons which we've discussed here loads of times. In the 80's it might have cost 10-15% of payroll, now it costs around 30-50%.

These days FS schemes are an anachronism anyway - CARE schemes (also DB of course) are better at coping with a modern, flexible workforce where people change their hours, work part time, do regular overtime etc, and aren't open to the sort of dodgy manipulation sometimes seen with FS schemes (eg give someone a big payrise in their final year rather than pay them redundancy).

kidmugsy

Game_Over wrote: »

f inflation runs at 2.5%-3% then in 10 years time ... it might be worth 70%-75% less in real terms than if he was continuing to get the c2.5% discretionary increases he was being awarded from time to time under the old arrangements.

It's not as bad as that, thank goodness. An uncompensated 3% p.a. inflation for 10 years would chop off about a quarter of the value of his pension. The big fear (for me) is a burst of 1970s inflation.


If my principal DB pension entered PPF then, as far as I can see, my widow's pension would drop from her current right, 90% of my pension, to a mere 50%. Then she'd be penalised further by a massive reduction in inflation-protection from our current full CPI protection. With that worry on my plate I have no desire to end up funding your elderly relative too. Does that mean I think the taxpayer may become liable for part of the PPF's liabilities in the future? Yes, it seems a reasonable fear.

xylophone

I have an elderly relative who was a member of the Carillion Final Salary pension scheme that has just been turned over to the PPF.

Elderly enough to be in receipt of a pre 6.4.2016 State Pension?

If so, when his state pension commenced, did he receive a letter like this at post 33

https://forums.moneysavingexpert.com/discussion/4532605


from the administrator of his occupational scheme?


Do you have sight of his state pension increase letter for the current tax year?



What figure is shown at (A)pre 97 additional state pension?

What figure is shown at (B) less Contracted Out Deduction?

If A is greater than B then he will be receiving index linked increases on his GMP.

See post 45 in above thread.

Game_Over_2

I wasn't aware of that! I had to look it up -- though I knew about the distinction between final salary and defined contribution because both sorts exist where I work.

I suspect there are vested interests with a desire to make pensions seem as complicated as possible. Having lots of jargon and initials is part of it.

Game_Over_2

kidmugsy wrote: »

It's not as bad as that, thank goodness. An uncompensated 3% p.a. inflation for 10 years would chop off about a quarter of the value of his pension.

Apologies for not making myself clear -- I meant his pension would be 75% of what it would have been. So our calculations tally with each other.

zagfles

xylophone wrote: »

Elderly enough to be in receipt of a pre 6.4.2016 State Pension?

If so, when his state pension commenced, did he receive a letter like this at post 33

https://forums.moneysavingexpert.com/discussion/4532605


from the administrator of his occupational scheme?


Do you have sight of his state pension increase letter for the current tax year?



What figure is shown at (A)pre 97 additional state pension?

What figure is shown at (B) less Contracted Out Deduction?

If A is greater than B then he will be receiving index linked increases on his GMP.

See post 45 in above thread.

But how does it work when in the PPF? The PPF website makes no mention of GMP increases capped at 3% as schemes are supposed to provide for 88-97 service.

Game_Over_2

My relative is elderly and took early retirement in the early 1990s. So even if he contracted out (which I've never heard him say), I doubt it is a significant part of his pension.

(I had to look up GMP as well. It's a government guarantee relating to any bits of pension accruing from having contracted out.)

xylophone

But how does it work when in the PPF? The PPF website makes no mention of GMP increases capped at 3% as schemes are supposed to provide for 88-97 service.

I enquired as to whether the elderly relation was already in receipt of a pre 2016 State Pension.

If so, and A is greater than B, then he will continue to receive some indexation on the GMP portion of his pension.

See explanations of this in the long thread to which I refer.

With regard to what happens with PPF under the NSP I don't know.

Each of the Carillion workers can obtain a new state pension statement in the normal way.

The "starting amount" for each of them will have been calculated as explained in many previous posts.

The old system linking GMP with SP has gone for everybody.

See House of Commons Briefing Paper Number 04956, 6 February 2017
Guaranteed Minimum
Pension (GMP) increases

There is this

http://www.pensionprotectionfund.org.uk/DocumentLibrary/Documents/PPF_GMP_FAQs.pdf

and

http://www.nortonrosefulbright.com/knowledge/publications/141433/pensions-briefing-guaranteed-minimum-pensions

which has some reference to PPF.

xylophone

My relative is elderly and took early retirement in the early 1990s. So even if he contracted out (which I've never heard him say), I doubt it is a significant part of his pension.

Is he in receipt of a pre 6 4.16 state pension?

If so, have you seen his state pension letter from this year or earlier years?

Is a COD shown?

zagfles

xylophone wrote: »

I enquired as to whether the elderly relation was already in receipt of a pre 2016 State Pension.

If so, and A is greater than B, then he will continue to receive some indexation on the GMP portion of his pension.

See explanations of this in the long thread to which I refer.

Yes. I know how the GMP works and interacts with the state pension, both old and new. That wasn't my question.

With regard to what happens with PPF under the NSP I don't know.

What about the old state pension? That was what I was assuming the OP's relative is in.

Will the PPF increase the GMP by CPI capped at 3% (their website implies not), and if not will the COD then be frozen going forwards for 88-97 accrual? Or will he lose CPI indexation on 88-97 GMP other than any excess over 3%?

Each of the Carillion workers can obtain a new state pension statement in the normal way.

The "starting amount" for each of them will have been calculated as explained in many previous posts.

The old system linking GMP with SP has gone for everybody.

See House of Commons Briefing Paper Number 04956, 6 February 2017
Guaranteed Minimum
Pension (GMP) increases

There is this

http://www.pensionprotectionfund.org.uk/DocumentLibrary/Documents/PPF_GMP_FAQs.pdf

and

http://www.nortonrosefulbright.com/knowledge/publications/141433/pensions-briefing-guaranteed-minimum-pensions

which has some reference to PPF.

That's all about GMP equalisation (something the pensions industry and govt have been tying themselves in knots about for years). Nothing about indexation.