Bit baffled by Guaranteed Minimum Pension

kuepper

"In the meantime, OP, be glad that you reached SPA before 2016 - the GMP question for those of us who will reach/reached SPA after that date is so much more complicated!"


Not sure about that, if I'd reached SPA since april 2016 my state pension would be at least £164.35 which is ~£10 a week more than I get

greenglide

.... And reached SPa just after the change which means that the GMP on my LGPS pension is ignored and the full amount of the pension is indexed. My SP is greater than the nSP maximum so I get the protected payment and there is no GMP/COD there either.


So I win hands down but I don't think the system is at all fair.

Silvertabby

"In the meantime, OP, be glad that you reached SPA before 2016 - the GMP question for those of us who will reach/reached SPA after that date is so much more complicated!"

Not sure about that, if I'd reached SPA since april 2016 my state pension would be at least £164.35 which is ~£10 a week more than I get

Er - not necessarily - you have some contracted out service (ie, paid reduced NI) and the new £164.35 is only for those who paid full, unreduced, NI for 35 years.


I won't get my State pension until I'm 66 (although I retired at 60) and my current forecast is way short of £164.35 because my entire pensionable service was contracted out. Please don't think that I'm complaining because I'm certainly not - the difference between my actual State pension and the new single tier pension is already being paid as part of my occupational pensions.

xylophone

and the new £164.35 is only for those who paid full, unreduced, NI for 35 years.

Again, not necessarily.

It would be possible for a person to have been contracted out for some part of their employment and yet qualify for the full new state pension and even a protected payment like Greenglide above.

And some people in public service schemes reaching SPA in the new system are in a privileged position regarding GMP.

Some in public service schemes were in a slightly privileged position even under the old system - women's GMP age is 60 (and that is the age at which schemes would do the pre88/post88/excess calculation to determine pension increases).

However, with the increase in SPA, the public service schemes delayed doing the split until SPA was reached.

With regard to the new state pension, although the calculation re deduction for contracting out will have been done at 6/4/16, once the starting amount is established , the whole of that up to the new state pension amount will increase by the triple link.

The Public Service Scheme will not split out the GMP either at GMP age or state pension age.

Therefore the whole of the scheme pension will continue to be index linked by the scheme for the rest of the pensioner's life.

https://www.prospect.org.uk/news/id/2018/January/22/Public-sector-pension-scheme-members-get-full-inflation-protection

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/675360/Indexation_and_equalisation_of_GMP_in_public_service_pension_schemes_government_response_web.pdf

kuepper

"Otherwise, I can only suggest that you ask your LGPS administrator to explain your figures."

I did but they only sent me that link that I didn't understand and which I started the thread with!

Silvertabby

kuepper wrote: »

"Otherwise, I can only suggest that you ask your LGPS administrator to explain your figures."

I did but they only sent me that link that I didn't understand and which I started the thread with!

You need to ask them for your actual (current) GMP figures, split into pre and post 88.

hyubh

xylophone wrote: »

The Public Service Scheme will not split out the GMP either at GMP age or state pension age.

Not quite technically correct. The GMP is still formally 'split out', but since AP<GMP, the difference between the GMP increase and full PI is added back on.

Since pensions software for LGPS (and other public sector schemes) will have needed to be coded for AP<GMP cases in the past, strictly speaking there's no change to the calculation... AP<GMP just happens to apply to every case where GPD>5/4/16, whereas for older cases, it's a relatively rare (and usually only temporary) situation.

xylophone

I did but they only sent me that link that I didn't understand and which I started the thread with!

See Post 18

Otherwise, ask LGPS to set out your personal situation as it is set out for Tim in the example.

Silvertabby

xylophone wrote: »

Again, not necessarily.

It would be possible for a person to have been contracted out for some part of their employment and yet qualify for the full new state pension and even a protected payment like Greenglide above.

And people in public service schemes reaching SPA in the new system are in a privileged position regarding GMP.

Some in public service schemes were in a slightly privileged position even under the old system - women's GMP age is 60 (and that is the age at which schemes would do the pre88/post88/excess calculation to determine pension increases).

However, with the increase in SPA, the public service schemes delayed doing the split until SPA was reached.

With regard to the new state pension, although the calculation re deduction for contracting out will have been done at 6/4/16, once the starting amount is established , the whole of that up to the new state pension amount will increase by the triple link.

The Public Service Scheme will not split out the GMP either at GMP age or state pension age.

Therefore the whole of the scheme pension will continue to be index linked by the scheme for the rest of the pensioner's life.

https://www.prospect.org.uk/news/id/2018/January/22/Public-sector-pension-scheme-members-get-full-inflation-protection

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/675360/Indexation_and_equalisation_of_GMP_in_public_service_pension_schemes_government_response_w
eb.pdf

At the moment, only those public sector pensioners who reach SPA before April 2021 get full protections. Mr S is ok, but I don't reach SPA until 2022. I think the theory behind this decision is that 'us youngsters' have the benefit of being able to increase our pensions from the old basic State pension to the full single tier pension by working/paying NI from 2016 onwards. But I retired in 2016, at 60, and can only improve my State pension by paying voluntary contributions.


That said, it looks like the powers that be are still considering the position of post 2021 SPA'ers. Will just have to wait and see what happens.

xylophone

But I retired in 2016, at 60,

I had not realised that you are still a "bright young thing"!:)

That said, it looks like the powers that be are still considering the position of post 2021 SPA'ers. Will just have to wait and see what happens.

Yes indeed - see links.