GMP and deferred pension

xylophone

it would confuse more than it would enlighten!

Which being interpreted means that there was nobody on the team capable of explaining it in plain English?:)

Incidentally, if you type GMP Pensions Ombudsman into Google, you might find the 30 Oct 2017 determination in respect of Equiniti and Lloyds Bank of interest.

MikeFloutier

I keep trying to post this email from WTW in October 2013 but it keeps saying "my token has expired" so I'll just post it without commenting except to say that the attachment they mention is broadly in line with my estimate in post 136 of my thread.

I don't think it says anything new but it does summarize their position and the TPAS guy agreed that it was reasonable; I based my decision on this email:

Dear Mr Floutier,

I write further to your recent telephone call of 30 September 2013 regarding your on-going query about the pension payable on early or normal retirement.

I would like to apologise if the previous information supplied has not fully addressed all of your queries.

Please find attached a copy of the consolidated Scheme Trust Deed and Rules applicable to your UKRF membership as requested, along with the subsequent amendment Trust Deed and Rules.

To help you make a decision in respect of your retirement, I have recreated the example on page 10 of the booklet you have referred to, using the figures applicable to your normal retirement calculation. This document is attached password protected with your National Insurance number. Please be aware it is our standard policy not to provide quotations for dates greater than six months in the future and the figures provided are not guaranteed.

To summarise the facts of your case, under early retirement your initial pension will be higher than if you took normal retirement. The early retirement pension will remain higher until your GMP payment age. At your GMP payment age of 65, your normal retirement pension should receive a step up which will bring this pension to a level higher than the corresponding early retirement pension that would be payable at this date. This is contradictory to the information you have already received, and I would like to apologise that we have previously told you that either type of retirement would result in the same pension at age 65.

I fully appreciate that it does not seem logical that you would receive a higher pension for taking early retirement that you would for taking normal retirement. This is purely down to the fact the calculation basis for early and normal retirement is different, and early retirement allows for a ‘step up’ immediately whilst normal retirement provides for a step up at GMP payment age. In your particular case it has resulted in your early retirement pension being considerably higher than your normal retirement pension.

The figures outlined above are an indication only and should not be relied upon. All the above information is based on current pension legislation and the current Trust Deed and Rules of the Scheme. These can change at any point in the future and this is why we are unable to confirm for definite that your pension will receive a ‘step up’ at GMP payment age and the amount.

Ps. Loving Cornwall Tony, I sailed up to Plymouth from Falmouth recently and anchored overnight at Cawsand, nice spot!

xylophone

Ps. Loving Cornwall Tony, I sailed up to Plymouth from Falmouth recently and anchored overnight at Cawsand, nice spot!

Will this be the start of a beautiful friendship? And all because of GMP!:)

MikeFloutier

I have to say that, after reading around the subject of GMP, I am starting to doubt whether I have any real understanding of what it really is.

Read the following from an earlier post in this thread:

If you choose to take early retirement from the Scheme, a test is carried out to ensure that upon reaching age 65 your total pension amount would be enough to cover the level of GMP that you are entitled to.

I assume this is a quote from a WTW email. Whilst its clearly true that one's pension should be at least equal to GMP, this kind of remark gets us thinking that the role of our Barclays pensions is to "cover our GMP entitlement".

I have read WTW quotes where is was said that: "If, at GMP age, GMP is higher than the pension in payment THEN there would be a step-up due."

Again this has the tendency to dumb down our thinking to the level that our perfectly good DB pensions are nothing more than GMP; the implication being that they may actually be less.

This is exactly the kind of understanding that will be accepting of full franking.

I think it might be helpful if we were to write a short description of GMP that was not entangled with a DB pension. It seems to me that it is just this entanglement that has been muddying the waters of our understanding of what GMP actually is.

Having done that we can then begin to contextualise it properly.


PS. Please don't hear me wrong. I'm not saying that we don't understand GMP. I'm suggesting that our understanding is not clear and robust enough. Why else would these threads be so long? Why would WTW spout such stuff and have to make so many apologies for mis-information.

DT2001

Re xylophones post 42.
Interesting that the Ombudsman fully franked the step up in point 24 but the IDRP chairman did not in point 16.
Ombudsman also referred to PSA 1993 part III s13(3) saying GMP must continue for life. So I think, if my pension becomes totally GMP, the SPA deduction cannot be applied. Every little helps as half of the pension will received no increase and half at CPI.

DT2001

Re post 43 and 8 why for early retirement is there a potential step up?
Having read xylophone ‘s link re GMP and the Ombudsman, Lloyds tested to see if part of the pension could be commuted and then did the step up test at 65.

xylophone

I think it might be helpful if we were to write a short description of GMP that was not entangled with a DB pension.

It is not possible to disentangle GMP from private/occupational scheme provision.

this kind of remark gets us thinking that the role of our Barclays pensions is to "cover our GMP entitlement".

There is a sense in which this is true, at least as far as state provision is concerned.

If we go back to the seventies, while there were occupational pension schemes ( including the Barclays scheme) which provided decent provision for employees, there were very many people who could look forward to little more than a basic state pension (augmented by the meagre graduated retirement benefit).

The government decided to introduce a scheme which would provide a state pension element related to earnings - this was SERPS.

SERPS had to be funded and this was achieved through higher NI contributions.

The government was prepared to allow "contracting out" of these higher contributions but only on the basis that the occupational scheme provided benefits that were at least as great as those that would have been provided by SERPS - this is the Guaranteed Minimum Pension which the Scheme must provide once the pensioner has reached GMP age.

The fact that occupational schemes usually provide benefits far in excess of the GMP is not the Government's concern but rather a matter for the contractual relationship between employer and employee.

DT2001

WTW latest

I can confirm that The Scheme Trust Deed and Rules is a large document containing many attachments and deed’s of variation, sometimes too large to send via email.

We ask that you request a part of the scheme rules relating to your query

Oh, ............

xylophone

We ask that you request a part of the scheme rules relating to your query

Oh, ............

You might write back asking how you are supposed to know... ESP?:)

xylophone

I have to say I am waiting with bated breath for Mike's 65th birthday...

"that dreadful day when the secrets of the scheme must be revealed"....:)