Guaranteed minimum pension

Jayjay08

Advice need please.
Sadly my mum passed away at the beginning of October, I was sorting out her paperwork/finances and I discovered a pension she had been getting from an employer from many years ago. I contacted them on behalf of my father to see if he was entitled to any of the pension she had. They replied saying he would be and to send in birth/marriage/death certificates, which I done and they were duly returned along with a letter stating he could have 15k as a trivial commutation lump sum or he could have £1000 per annum forever. He wanted the lump sum, which they said was taxable, and I returned the form asking for the trivial commutation
Iv since received a letter stating because of some court ruling in October they are currently unable to offer this lump sum now. Until they work out what his “top up” might be, if any. They said this is a very new procedure and it could take months, even years before it’s completed. I phoned and asked if we could take the lump sum then get the top up later if there was any and they replied no. Basically the only option they are giving me is to take it at £1000 a year or wait until the process is sorted out.
I’m finding this pretty unacceptable as
1. My dad needs the money now.
2. As far as I know the benefit is only available to my dad, so if anything happens to him between now and the process getting sorted will the pension pot be kept by the company?
3. Is there anything I can do to help him get his lump sum now?

Any help greatly appreciated.

dunstonh

Sorry for your loss.

Iv since received a letter stating because of some court ruling in October they are currently unable to offer this lump sum now.

The court ruling is impacting on a lot at the moment.

I’m finding this pretty unacceptable as
1. My dad needs the money now.
2. As far as I know the benefit is only available to my dad, so if anything happens to him between now and the process getting sorted will the pension pot be kept by the company?
3. Is there anything I can do to help him get his lump sum now?

It's not unacceptable I'm afraid. It is an unfortunate consequence due of timing. The trivial lump sum is discretionary. There is no requirement in law for them to offer it. So, if they have chosen to suspend it pending legal opinion and internal calculations, then they are allowed to do so.

Hopefully, it won't be too long as its not just trivial payments being put on hold but occupational DB transfers as well. It is quite an important issue and wont be something you would expect to put on the backburner.

xylophone

https://www.pensionsadvisoryservice.org.uk/content/spotlights-files/uploads/Death_benefits_commutation_SPOT014_V1.3.pdf

See also

https://www.linklaters.com/en/insights/publications/uk-pensions/2018/october/high-court-confirms-gmp-equalisation-is-required

TPAS may be able to provide some guidance.

https://www.pensionsadvisoryservice.org.uk/

xylophone

Hopefully, it won't be too long as its not just trivial payments being put on hold but occupational DB transfers as well. It is quite an important issue and wont be something you would expect to put on the backburner.

http://www.theactuary.com/news/2018/11/pension-industry-split-on-how-to-deal-with-gmp-equalisation/

While trustees seek legal and actuarial advice on how to deal with GMP equalisation, Aegon warned against delaying transfers from defined benefit to defined contribution schemes.

The insurance firm also urged the Pensions Regulator to clarify how it expects trustees to respond to transfer value requests, with GMP equalisation set to take “months if not years”.

“GMP equalisation won’t reduce anyone’s entitlement, so trustees shouldn’t need to delay quoting or paying transfers for fear of overpayment,” Aegon pensions director, Steven Cameron, said.

“The most common sense solution is to proceed on the current basis and to make a second installment where future calculations show the transfer value paid understated the member’s entitlement.”

minty777

What does this equalisation mean for males and females with a GMP?

Can someone post some examples of what would change and how?

xylophone

https://www.sackers.com/publication/the-high-court-decides-how-to-solve-a-problem-like-gmp-equalisation/#link4

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/220482/methodology-document-2012.pdf

may be of interest.

Jayjay08

Thanks again, very much appreciated.
Can I ask, why wasn’t my dad given the option of how he would have liked the pension paid?
Instead of £1000 a year, why couldn’t he have taken £4000 a year?
If anything happens to my dad between us sending this letter back asking for the money and the pension company making us wait while they calculate their adjustments will the pension be lost?

xylophone

Instead of £1000 a year, why couldn’t he have taken £4000 a year?

It appears that your mother had a pension which also provided for her widower.

A pension is normally paid as a monthly amount for life with a widow/er pension of a certain percentage of that monthly amount also for life.

The value of the widower's pension has been calculated as under £30,000 so that the administrator has been able to offer commutation as a lump sum (see link in my post above) as the alternative to the life pension.

It seems that your mother acquired the pension through membership of a pension scheme that was contracted out at least between 1978 and 1997 also that some part of her entitlement was a Guaranteed Minimum Pension.

If anything happens to my dad between us sending this letter back asking for the money and the pension company making us wait while they calculate their adjustments will the pension be lost?

You can ask the administrator - if you are in difficulty TPAS may help.

sandsy

Jayjay08 wrote: »

Thanks again, very much appreciated.
Can I ask, why wasn’t my dad given the option of how he would have liked the pension paid?
Instead of £1000 a year, why couldn’t he have taken £4000 a year?
If anything happens to my dad between us sending this letter back asking for the money and the pension company making us wait while they calculate their adjustments will the pension be lost?

He can't take it the way he likes. This type of pension didn't have a pot which offers choices on how income is taken. It offered specified income amounts for your mum, and subsequently, your dad. The scheme rules don't permit it to be taken any other way.

AnotherJoe

Jayjay08 wrote: »

Thanks again, very much appreciated.
Can I ask, why wasn’t my dad given the option of how he would have liked the pension paid?
Instead of £1000 a year, why couldn’t he have taken £4000 a year?
If anything happens to my dad between us sending this letter back asking for the money and the pension company making us wait while they calculate their adjustments will the pension be lost?

Simplistically because all he's entitled to is the £1k a year, its at their discretion to pay a lump sum instead (to get rid of the ongoing liability)

Jayjay08 wrote: »

If anything happens to my dad between us sending this letter back asking for the money and the pension company making us wait while they calculate their adjustments will the pension be lost?

Thats a very good question. I would ask them that because it would appear if they indefinitely they dont need to pay anyone so it seems to me the consequences of a delay (IANAL ! ) should be down to them.

Gazza555

Hi There, my wife passed on the 2 October I have just received the trustees offer of £150.00 per year. They have told me there will be no lump sum offer while there is this ongoing GMP equalisation decision. my wife pension was over £10.000 how can they only offer £150 per annual. I ask because I have her funeral to pay for and they wont help to pay towards this is there any thing I can do to get the trustees to pay this funeral bill as my wife passed before the 26/10/2018 Thanks gazza.