Guaranteed minimum pension

DairyQueen

Gazza555 wrote: »

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.

Very sorry for your loss.

Posters on this thread have already explained:

- that there is no 'pot of money' with a DB pension. These types of schemes are designed to pay an annual income for life to the member and their widow/er.
- that there is no legal obligation for the pension provider to offer to remove the liability for your widowers's pension from their scheme by offering a lump sum in exchange for future payments.
- that GMP equalisation is impacting/delaying any such lump sum offers.

As there is no pot of money there is nothing for the scheme to pay to your wife's estate.

You would not be offered £150p.a. widower's pension if your late wife's annual pension from this scheme was over £10,000p.a. It is most common for such schemes to provide 50% widow's benefit.

Are you sure that you haven't included her state pension in the total of £10,000? Was she receiving any other state benefits, such as Attendance Allowance, that you may have included in that figure of £10,000?

Was she receiving income from any other pension scheme?

An annual figure of £150p.a. suggests that your wife was receiving approximately £300p.a. in income from this pension. If this is the case then any offer the pension company may make to commute will be a multiple of £150p.a. based on actuarial predictions of inflation and how long you will live (your age and gender, for example, will be relevant).

As an example:
My aunt (then age 86) was widowed last summer. She was offered £17,500 in exchange for an annual widow's pension of £2,556 per year (before tax). The pension company had therefore offered her approximately 6 years of inflation-linked income as a lump sum.

Also, bear in mind that any lump sum you receive will be subject to income tax in the year in which you receive it.

Did you wife have any other savings/investments? If she had savings then banks will usually release funds to settle funeral expenses in advance of probate.

Silvertabby

Gazza555 wrote: »

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.

My sympathies.

Unfortunately, I doubt there is anything anyone can do to pursuade pension funds to act before this GMP question has been sorted. I know someone has suggested that payments could be made using the old factors, then re-calculated once the correct data is available - but I know from past experience that most fund software won't be able to handle this, meaning that most of the re-calculation would have to be done manually. I doubt many pension funds would be willing to undertake/fund this (huge amount of) extra work.

I may be able to explain the difference between your late wife's pension of £10K per annum and your offer of £150 per annum. To be sure, could you post the to/from dates of your wife's pensionable service, your date of marriage and which pension scheme she was a member of. Just the relevant years, and just 'public sector pension' (if that is the case) will do.

Gazza555

Hi There, Thanks for your post what it was my late wife was offered £10.223.00 from an old pension she forgot about from argos on February 2018. because sainsburys were taking over the pension and she was turning 55. She passed on 2 October 2018 and I have been dealing with a company JLT regarding her pension they have not told me how much the pension pot is they wrote to say because of GMP equalisation exercise there will be no lump sum offer just now but this may change in the future. So currently the offer of trivially commute your benefits would not be an option An annual pension of £151.56 has been offered which would mean I will never live to see this pension paid out. I was hoping this pension pot would help me pay her funeral bill. Will their be a chance when this GMP is sorted out to be offered a lump sum and is there a time scale on that ruling. Many Thanks Mr G.

Silvertabby

Gazza555 wrote: »

Hi There, Thanks for your post what it was my late wife was offered £10.223.00 from an old pension she forgot about from argos on February 2018. because sainsburys were taking over the pension and she was turning 55. She passed on 2 October 2018 and I have been dealing with a company JLT regarding her pension they have not told me how much the pension pot is they wrote to say because of GMP equalisation exercise there will be no lump sum offer just now but this may change in the future. So currently the offer of trivially commute your benefits would not be an option An annual pension of £151.56 has been offered which would mean I will never live to see this pension paid out. I was hoping this pension pot would help me pay her funeral bill. Will their be a chance when this GMP is sorted out to be offered a lump sum and is there a time scale on that ruling. Many Thanks Mr G.

So, this £10K was a one-off lump sum triviality payment, not a pension of £10K per year. That does make sense. Depending on the scheme factors, I would hazard a wild guess at about £3K (taxable) if you take your spouse's pension under triviality rules. Unfortunately, there doesn't appear to be a time scale on the resolution of the GMP problem, so it's likely to be many months before you will be able to take the one-off payment - provided that the scheme will allow you to defer payment until then.

In the meantime, are you also under State pension age? If so, have you claimed the DWP bereavement payments?

Gazza555

Hi there, Many thanks for getting back I am 50 years old. I have not tried for DWP funeral payment I was hoping this money she was offered in May 2018 would come to me as a lump sum and pay for the funeral so your saying there is a chance I may get offered a lump some in a few months once the GMP equalisation process has been granted because JLT has stated that this could be investigated in the future. once the equalisation process has been granted. Many Thanks.

Marcon

Gazza555 wrote: »

... your saying there is a chance I may get offered a lump some in a few months once the GMP equalisation process has been granted because JLT has stated that this could be investigated in the future. once the equalisation process has been granted. Many Thanks.

I'm sorry to dash your hopes, but Silvertabby didn't say 'a few months' - she said 'many months'. It has been in the Government's 'too difficult' pile for years. The problem is so complicated that most schemes will not take any action until they receive some sort of Government guidance on how to resolve an issue which has been a thorn in the side of pensions schemes for several decades.

Some schemes are being more pragmatic and offering retirement benefits (with or without lump sums) with the caveat that these will be revisited at some future point and if necessary a top up will be paid. Might be worth asking JLT if the scheme in question has any plans to do this.

Silvertabby

Gazza555 wrote: »

Hi there, Many thanks for getting back I am 50 years old. I have not tried for DWP funeral payment I was hoping this money she was offered in May 2018 would come to me as a lump sum and pay for the funeral so your saying there is a chance I may get offered a lump some in a few months once the GMP equalisation process has been granted because JLT has stated that this could be investigated in the future. once the equalisation process has been granted. Many Thanks.

It's not a funeral payment - that no longer exists - but, if you qualify, it's a non-means tested £3.5K bereavement grant plus a monthly payment for 12 months. I don't think the funeral director will wait for the GMP problem to be resolved - it could take many months, not just a few months.

Jayjay08

Does anybody know the ongoing situation with this GMP thing?
Has it been resolved yet as Iv heard nothing back from my mums pension company.

Silvertabby

Jayjay08 wrote: »

Does anybody know the ongoing situation with this GMP thing?
Has it been resolved yet as Iv heard nothing back from my mums pension company.

Nothing yet, I'm afraid.

Jayjay08

Is there anything been resolved about this yet? Does anyone know?