GMP and deferred pension

xylophone

Various commentaries, on the Internet , may well help us to understand the legal position BUT they are not a substitute for it.

Yes indeed.

MikeFloutier

DT2001 wrote: »

This link...suggests all of the excess can be franked.

Just to be clear, the Excess, (i.e. Non-GMP portion) is NEVER franked. It is the GMP portion, or, more usually, part of it, that is franked (by the Excess.

You may think I'm nit-picking but it's important to understand what we're talking about.

It all gets a bit muddy with the ERD situation as the Excess gets:

1. Stepped up at ERD, then
2. Reduced, by Actuarial Reduction, also at ERD, then,
3. Reduced again, at GMP, in respect of increases applied to it from ERD to GMP date - effectively reducing it to its level at ERD.

The only figure that's bothering me in your "page 10" schedule Tony is the -£1,058.08 which negates the step-up given at ERD. I need to think through my logic for having it as a deduction.

I'd still appreciate some comments on the "page 10" schedule on my Googledrive.

MikeFloutier

DT2001 wrote: »

Happy birthday to Mrs F and many thanks for all your calculations Mike

You're welcome Tony, Mrs F says "thank you" btw

DT2001

Mike I have adjusted your figures on google drive for the actual (I hope) figures in November 2011 when I drew my pension. Deferred Pension was £8735 (GMP £1339 and non GMP £7396).
Acturial reduction factor I put in at 0.626 (being half way between 51 and 52 according to figures my colleague had in 2003 - so could be too high). This gave pension of £5468 which is £1064 less than actually paid ignoring £38 which was commuted. So all pretty close. Just working some thoughts on your £1058 conumdrum.

DT2001

If you start with 6532 (my pension at drawdown in Nov 2011) multiply it by 3% p.a. until May 2025 when GMP comes in you get £9590. Very close to my GMP figure unless rules change.

If the WTW paragraph on 6/7/18 reply is correct on how you calculate an ERD pension i.e. deferred pension plus increases to NRD (at say 3%) plus GMP at leaving all actuarially reduced by roughly 0.626 gives £6.6K.

Still does not explain why! In theory the extra £1058 is not an increase after retirement.

MikeFloutier

DT2001 wrote: »

Mike I have adjusted your figures on google drive for the actual (I hope) figures in November 2011 when I drew my pension. Deferred Pension was £8735 (GMP £1339 and non GMP £7396).
Acturial reduction factor I put in at 0.626 (being half way between 51 and 52 according to figures my colleague had in 2003 - so could be too high). This gave pension of £5468 which is £1064 less than actually paid ignoring £38 which was commuted. So all pretty close. Just working some thoughts on your £1058 conumdrum.

Agreed, my deferred NRD figure of 8,383.44 was your pre-Oct 2011 figure so I agree that it should be £8,735

MikeFloutier

DT2001 wrote: »

If you start with 6532 (my pension at drawdown in Nov 2011) multiply it by 3% p.a. until May 2025 when GMP comes in you get £9590. Very close to my GMP figure unless rules change.

If the WTW paragraph on 6/7/18 reply is correct on how you calculate an ERD pension i.e. deferred pension plus increases to NRD (at say 3%) plus GMP at leaving all actuarially reduced by roughly 0.626 gives £6.6K.

Still does not explain why! In theory the extra £1058 is not an increase after retirement.

Re PARA 1 - The revalued Excess being close to the revalued GMP is simply a coincidence, there's nothing in this for us.

Re PARA 2 - The ERD pension calculation you mention is correct because:

1. It can be whatever they want it to be as it's an arbitrary amount; selected for the purpose I mentioned earlier, and

2. The actual figure agrees with their calculation method.

Re PARA 3 - As I've said it's an arbitrary increase in order to smooth the progression of the pension amount around GMP date.

Since it has been added to your excess for the period before GMP date, it follows that it must be deducted (in some form) after GMP date.

So we leave the deduction of £1,058.08 in!


Any other queries anyone, or do we now have the final version of "page 10"?

MikeFloutier

MikeFloutier wrote: »

Any other queries anyone, or do we now have the final version of "page 10"?

Haha, ok, having tried to re-jig "page 10", I've come up against the issue of the figure for the Actuarial Reduction.

Since they obviously used a certain figure, we, in order to retain the upper hand in negotiations, when using "page 10", need to be sure about the actual factor. I know it doesn't make a big difference figures-wise but we don't want to give them anything they can challenge.

Since the figure of 0.653 came from somewhere it would be good to track down the figure they actually used.

MikeFloutier

MikeFloutier wrote: »

Since the figure of 0.653 came from somewhere it would be good to track down the figure they actually used.

In https://www.nhsbsa.nhs.uk/sites/default/files/2017-03/GAD_early_and_late_retirement_factors_May_2015.pdf

the NHS, in similar circumstances narrow the factor down to the nearest month of your age at ERD.

I can't remember whether you've mentioned your birth date but, if you calculate your age in years and months, at ERD on 1/11/2011, you can then interpolate to find the factor they will have used; i.e. a certain number of 1/12ths between your relevant birthdays.

Looking at post 19, you mentioned a factor of 0.653 for age 51, and 0.682 for 52. If these figures came from WTW then these should be the ones to interpolate from; always assuming you were between 51 and 52 on 1/11/2011

DT2001

.676 according to that table ERF1.