We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

GMP and deferred pension

Options
2456716

Comments

  • xylophone
    xylophone Posts: 45,604 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Ask TW for the calculation.

    If they are unhelpful you can seek assistance from TPAS.

    https://www.pensionsadvisoryservice.org.uk/
  • DT2001
    DT2001 Posts: 834 Forumite
    Seventh Anniversary 500 Posts Name Dropper
    Thanks. I agree with your interpretation of their reply. It is at odds with some of information in previous Barclays/TW letters so I will seek more clarity.
    Presumably TW will have to check the pension at 65 exceeds GMP despite having done the !!!8216;test!!!8217;. If CPI stays low i.e. below. 3.5% the pension will be below my estimate of revalued GMP?
    If the whole of the pension is GMP will my SPD @ SPA still happen?
  • xylophone
    xylophone Posts: 45,604 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Thanks. I agree with your interpretation of their reply. It is at odds with some of information in previous Barclays/TW letters so I will seek more clarity.
    Presumably TW will have to check the pension at 65 exceeds GMP despite having done the !!!8216;test!!!8217;. If CPI stays low i.e. below. 3.5% the pension will be below my estimate of revalued GMP?
    If the whole of the pension is GMP will my SPD @ SPA still happen?

    Put your questions above to TW and ask for the calculation of your pension when it came into payment in 2011.
  • DT2001
    DT2001 Posts: 834 Forumite
    Seventh Anniversary 500 Posts Name Dropper
    My questions and WTW!!!8217;s reply are below.
    I am trying to copy the booklet they sent excluding what I think is irrelevant.
    I have already sent copies of letters and emails to TPAS for any guidance.
    Not sure if the increase in GMP can be offset against the original amount of non GMP or just all increases since my retirement.
    The guide does say it assumes you retire at NRD but sends with quotes for early retirement.
    Any further guidance?


    1. Can you provide a copy of the calculation that was done at the date of my retirement please.

    2. In 2008 I was advised that I had a Deferred Pension of £6413.95 pa. plus a GMP of £62.06 p.w. - the bold type is yours not mine.
    In June 2011 a letter which refers to my request for a quotation as at 1/11/11 states the change to dealing with GMP advising that the higher amount (with GMP accrued to date of drawing) was too generous and the revaluation will be applied in full at 65. It does not say the GMP is included how can that have changed?

    3. Does anti franking legislation apply?

    4. Do you do any checks at 65 to see if the minimum pension has been achieved as assumptions were made which could have been wrong? I assume the red inked paragraph relates to NRA pensions only?

    5. Can you advise the split of GMP pre and post 1988 please.

    6. If the whole pension becomes GMP protected does the SPD @ SPA still get taken.

    1. The Trustee of the Barclays Bank UK Retirement Fund (the UKRF) has a strict policy not to provide calculations as these are proprietary to the Trustee. I am sorry that I cannot be of any further assistance in this matter, but as you will appreciate, we must carry out the instructions of the UKRF and the Trustee.

    2. This statement was a projection using assumptions and therefore bodes no actual impact on the benefits payable from the UKRF. At 65 your GMP will be revalued using known increases. Prior to 65 your GMP is included, however it is treated as excess pension and revalues as such.

    3. In respect of your benefits, I can confirm that anti franking legislation does not apply.

    4. I can confirm that at 65, your Guaranteed Minimum Pension will be revalued and if this value is greater than the assumed increases that have been applied, you will be entitled to a !!!8216;step-up!!!8217; which has been detailed in our email on 6 July 2018.

    5. Your pension at date of leaving was:

    Pre 1988 GMP - £684.84
    Post 1988 GMP - £654.16
    Pre 1997 Excess - £4661.32
    Total - £6000.32

    6. I can confirm that your State Pension Deduction of £666.22 will remain applicable. At GMP age your pension will split between your excess and GMP,
  • DT2001
    DT2001 Posts: 834 Forumite
    Seventh Anniversary 500 Posts Name Dropper
    Some of the sections from the booklet

    A note about early retirement
    Some members may be eligible to retire before their Normal Retirement Age. If this applies to you and you choose early retirement, your pension will be reduced to take into account the fact that it is likely to be paid for a longer period of time.


    If you left the 1964 Pension Scheme (including all sections) before 1 January 1985, at GMP Payment Date, the revaluation of your GMP will be offset pound for pound against the non-GMP portion of your pension for service between 6 April 1978 and your date of leaving active membership of the Scheme. Therefore, the example on page 10 does not apply to you and you may not see an increase in your pension at GMP Payment Date.

    Increases to your pension from retirement

    For most members, Normal Retirement Age is age 60 for both men and women.

    Increases to your pension in payment up to GMP Payment Date

    If you retire before your GMP Payment Date (age 60 for women and age 65 for men), the whole of your pension in payment is increased each year in line with the Retail Prices Index, up to a maximum of 5%. However, any pension increases received between the date you retire and your GMP Payment Date on pension built up before 6 April 1997 are offset pound for pound against your GMP revaluation.



    Example

    The example below is for illustration purposes only.

    At your GMP Payment Date, the GMP portion of your pension will be revalued. Any increase to your pension as a result of GMP revaluation will depend on the revaluation factor that applies to your GMP, the annual pension increases applied to your pension between the date you retire and your GMP Payment Date, and the proportion of your pension that is made up of GMP.

    Although the example shows an increase in total pension at GMP Payment Date, your pension is not guaranteed to increase at GMP Payment Date.

    John is age 59 and plans to retire at age 60 on 4 September 2011 (his Normal Retirement Age).
    He left active membership of the 1964 Pension Scheme on 1 January 1991 with a deferred pension of £5,000 a year, of which £1,200.16 was GMP. This was based on a Final Pensionable Salary of £20,000 and Pensionable Service of 15 years (1/60 x 15 x £20,000). His State Pension Deduction on leaving active membership was £426.79.
    John!!!8217;s pension at date of leaving active membership of the Scheme:
    Designated GMP portion £1,200.16
    Non-GMP portion £3,799.84
    Total deferred pension £5,000.00
    John!!!8217;s estimated pension at Normal Retirement Age (age 60):
    Designated GMP portion £1,200.16
    Non-GMP portion (including annual pension increases since
    leaving active membership) £6,591.56
    Total pension in payment from age 60 from Scheme £7,791.72

    John!!!8217;s estimated total pension on the day before his 65th birthday (3 September 2016):
    This assumes that John!!!8217;s total pension has been increased
    by 2.5% since his Normal Retirement Age (ie 5 years, one month) £8,618.52
    John!!!8217;s estimated pension at GMP Payment Date (4 September 2016):
    GMP portion (£1,200.16 revalued by 7.5% for each complete tax year since
    John left active membership) £7,318.98
    Non-GMP portion* £6,591.56
    Less the State Pension Deduction (£426.79)
    Estimated total pension in payment from age 65 from the Scheme £13,483.75
    Annual pension
    *Increases to John!!!8217;s pension since Normal Retirement Date are offset against his GMP revaluation; therefore, John!!!8217;s non-GMP portion reverts to the value at age 60.
  • xylophone
    xylophone Posts: 45,604 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    edited 27 July 2018 at 1:10PM
    As Mike Floutier noted, the booklet does not have a worked example for a deferred pensioner who retires early.

    Mike did have a quotation for retirement before age 60 but he was so close to age 60 at the time it was obvious that the pension quoted would more than cover the GMP at age 65.

    In your case, you wished to take benefits at age 51 and a GMP test was required - see here for information from NHS scheme on this matter - (while remembering that the NHS uses "full rate " in deferment).

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

    https://www.nhsbsa.nhs.uk/sites/default/files/2017-04/Guaranteed%20Minimum%20Pension%20factsheet%20%2804.2017%29%20V4.pdf

    It is clear from information you provided that your lump sum on retirement was reduced to take account of the fact that the GMP test had to be met.

    It would seem that the calculation indicated that at age 65, your pension in payment would be high enough to meet the GMP.

    Was your pension in 2011 your GMP at leaving revalued at 7% to age 60 (the step up TW mention?) plus an estimate of the excess revalued to age 60, (65?) the whole reduced by the actuarial reduction? (See post 26 MF thread and post 101 and 146).

    Since then, the whole of your pension has escalated in payment by RPI capped at 5% and this will continue to age 65.

    By law your pension at GMP age must be at least equal to your GMP - what calculation will be done at age 65? Is it as shown in post 165 MF thread or is it different because you took early retirement and a "step up" was applied at early retirement?

    You have provided the figures and the information provided by TW to TPAS - you might wait to see what answer they come up with?
  • xylophone
    xylophone Posts: 45,604 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    The Trustee of the Barclays Bank UK Retirement Fund (the UKRF) has a strict policy not to provide calculations

    https://thebigtent.paraplannerspowwow.co.uk/discussion/225/barclays-bank-ukrf-trustees-wont-provide-commutation-or-early-retirement-factors
  • DT2001
    DT2001 Posts: 834 Forumite
    Seventh Anniversary 500 Posts Name Dropper
    Was your pension in 2011 your GMP at leaving revalued at 7% to age 60 (the step up TW mention?) plus an estimate of the excess revalued to age 60, (65?) the whole reduced by the actuarial reduction? (See post 26 MF thread and post 101 and 146).

    I think it was calculated as your post #10. Value of non GMP excess in Nov 2011 was £7396 I think.
    Actuarial reduction at 51 was 0.653 and at 52 - 0.682 in 2008 as they advised me.
    Different to 2 years later and Mike Floutier!!!8217;s but in line with one of your links and franking for early leavers.

    I!!!8217;ll update when I hear more from WTW and TPAS.
  • DT2001
    DT2001 Posts: 834 Forumite
    Seventh Anniversary 500 Posts Name Dropper
    Xylophone Can I ask a slightly different question? Should the amount paid out on a pension be theoretically the same i.e. if you take it early it is acturially reduced. I was wondering having read about trustee duties where it stated that adjustments could be made if pension taking prior to NRD as long r!duction was reasonable. I was just thinking that if I had read it correctly the should be some account taken of GMP as if I had waited to 60 anti franking would apply. Am I on a false trail?
  • xylophone
    xylophone Posts: 45,604 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    having read about trustee duties where it stated that adjustments could be made if pension taking prior to NRD as long r!duction was reasonable

    Is this something you have read in the Rules of your Scheme?

    As far as I know, any "adjustment" made when a pension is paid before NRD relates to the actuarial reduction.

    The pension is reduced because the expectation is that it will be paid for longer.

    And account has been taken of GMP (GMP test) in so far as you must receive at least your revalued GMP at age 65.
    what calculation will be done at age 65? Is it as shown in post 165 MF thread or is it different because you took early retirement and a "step up" was applied at early retirement?

    seems to me the question that needs to be answered?
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 350.9K Banking & Borrowing
  • 253.1K Reduce Debt & Boost Income
  • 453.5K Spending & Discounts
  • 243.9K Work, Benefits & Business
  • 598.7K Mortgages, Homes & Bills
  • 176.9K Life & Family
  • 257.1K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.