Index linking of the Pre88 GMP pension

geoffjones

Index linking of the “Pre 88-GMP” element of an occupational pension.

In 1992 (aged 40) I took a medical retirement from a large multinational. Now that I am 65 my firm’s pension tell me that my pension from them includes an element of “Pre 88 GMP”. The firm’s pension administrator’s have also told that this Pre88 GMP element will never by increased by them, and here’s the tricky bit—- but that I am entitled for this amount to be indexed linked on an annual basis but that the increases will be paid by the state along with my state pension. This all seems rather complex and Im still wondering if I’m misunderstanding something here ! Ive spoken to my firm’s administrator’s on several occasions and they have confirmed that amount I get from the State should include include the index-linking of the Pre88 element of my firm’s pension. I have spoken to the DWP at South Yorks. on several occasions and the advisor’s I have spoken to tell me they have no knowledge of it. Any help to clarify this situation would be gratefully accepted.

greenglide

Does your State Pension start before or after 6th April 2016?


The new State Pension removed the indexing of the GMP so you will never this linking unless your pension scheme is incredibly generous (none are) or it is a Public Sector scheme as they get indexing of this by the scheme because of a link to equalising of the male and female pension ages.


Before the nSP there is indexing of the GMP with the State Pension but it is not straightforward. You only get anything once the AP that would have been paid has reached the COD - in practice this may never occur.


The good news is that the GMP in many cases is far in excess of the AP that would have been paid if you had not been contracted out!

Brynsam

geoffjones wrote: »

the advisor’s I have spoken to tell me they have no knowledge of it.

You can only wonder about the quality of the 'advisors'! This is hardly a niche area so they should be very familiar with it.

If you reached State Pension Age before 6 April 2016 (and from your question it sounds as if you did, given the comments of the scheme's administrators), then the Government takes into account inflationary increases on pre 6 April 1988 GMP and increases above 3% on Post 6 April 1988 GMP when calculating your total State Pension entitlement. Any increases are added to the overall annual increase in State Pension.


Try this for an explanation of a complicated topic: http://www.thisismoney.co.uk/money/pensions/article-4187806/What-Guaranteed-Minimum-Pension-Steve-Webb-replies.html

xylophone

OP, when exactly did you reach State Pension Age?

If prior to 6/4/16, have you received a letter like this from DWP?

Post 21 https://forums.moneysavingexpert.com/discussion/4532605/totally-confused-by-contracted-out-deduction-letter&page=2

If you did reach SPA prior to 6/4/16, read on in the thread.

CBX1985

Most advisers are not Pension Transfer Specialists. To them it is niche. Just like a employment lawyer dealing with a house purchase.

Brynsam

CBX1985 wrote: »

Most advisers are not Pension Transfer Specialists. To them it is niche. Just like a employment lawyer dealing with a house purchase.

This is nothing to do with transfers - just basic general pensions knowledge.

Dox

Brynsam wrote: »

This is nothing to do with transfers - just basic general pensions knowledge.

Quite - and given the amount press coverage this has had in the last year or so there's no excuse for any pensions adviser not being completely au fait with this.

geoffjones

Thanks to everyone who has responded to my post. My State pension came into effect in Jan 2017 when I was 65. A year prior to that (Jan 2015) I had a form FPC DL 021/02/14, asking me to chose whether I wanted my State Pension under the New State Rules or the Existing State Pension Rules. I chose the "Existing State Pension Rules" because it was over 50% higher. Im now 66 and the increase to my State Pension from April doesn't make any reference to the increase on the Pre88GMP part so Im assuming its not there. Thanks

molerat

There is no way you would have had a choice, reaching SP after 6 April 2016 put you under the new scheme. That letter, the one that was scrapped because it confused people, would have given you the old rules and new rules starting amount. The old rules being the higher so you got that automatically - just the amount not the pension rules. The new pension has done away with the gmp increases and as mentioned above your company pension is not required to cover it.




edit: Just rummaged through my paperwork and found a FP DL 021 02/14 and it is precisely what I described above quoting both the old and new calculation pension amounts clearly stating that you have been given the higher of the two.

xylophone

You are receiving your state pension under the new rules.

With regard to your occupational pension, your scheme has no obligation to pay increases on pre 88 GMP after you have reached GMP age (65 for males) or anything above 3% on post 88 GMP.

The mechanism linking increases on GMP through the state pension disappeared with the new scheme.

What is your weekly state pension amount?

geoffjones

Thanks to Molerat-I just checked the Pension Statement letter from January 2015 too-you are absolutely right it was just telling me of the olden the new and TELLING me Im going to get the new. Obviously with the new rules I guess. Thanks for explaining that. I can just let all this go now.

Thanks also to Xylophone for clarifying it too.