Deferred GMP only pension and early retirement

tarbat

I have a deferred, GMP only pension relating to 2 years service at the Gas Board from 1982-84, amounting to around £42 per week, payable at age 65. When I left the Gas Board, I took a refund of contributions but this GMP only pension remained in place for the next 35 years and they've just told me about it. I was contracted out during my time there.

Anyone know what the rules are relating to taking this early, now, at age 62?

xylophone

The Administrator has confirmed that regardless of the refund of your contributions, you still have a GMP pension ?

It may not be possible to take the pension before GMP age (60F/65M) - the Administrator will advise you of the position.

It appears that the pension is all pre 88 GMP - there is therefore no obligation on the Scheme to index link this once in payment. The amount would remain the same for life.

tarbat

xylophone wrote: »

The Administrator has confirmed that regardless of the refund of your contributions, you still have a GMP pension ?

Yes. In fact it was this that set me off looking for other GMPs across my working life. I received a letter out-of-the-blue, 35 years after I left the company, asking me to register on the National Grid pension website. They then wrote to me to tell me I have a GMP only pension. Anyway, I've written back to ask for early retirement or a transfer value, so will see what they say.

keftin

In a similar situation - only the GMP portion left after withdrawing other funds over 30 years ago.

Same here, letter out of the blue to an old address.

Cannot access pension early as statutory retirement date for GMP (male) is 65.


However, I am entitled to a cash equivalent value, which I have requested/received and which will be subject to the usual rules (25% tax free etc)

tarbat

keftin wrote: »

However, I am entitled to a cash equivalent value, which I have requested/received and which will be subject to the usual rules (25% tax free etc)

Yes, I've also been offered a "transfer value" so that I can hopefully take 25% lump sum and a pension now. Just waiting to receive the transfer value.

I'm still a bit puzzled as to how National Grid knew my current address, as we've moved house 7 times since I worked at the Gas Board. Presumably from a Government agency?

xylophone

Just waiting to receive the transfer value.

Will the CETV be in excess of £30,000?

If so, and as this is a "safeguarded benefit" will you be required to take advice?

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/495377/pension-benefits-with-a-guarantee-factsheet-jan-2016.pdf

Guaranteed Minimum Pensions and section 9(2B) rights

Where a person has accrued a Guaranteed Minimum Pension (GMP) in respect of contracted-out employment between 6 April 1978 and 5 April 1997, this is a right to a level of pension income calculated by reference to their earnings in that employment, which is revalued either by a fixed revaluation rate or in accordance with national average earnings before coming into payment, and then inflation linked during payment. Pension benefits which represent, or include, a GMP are therefore safeguarded benefits. Similarly, pension benefits accrued after 1997 under a scheme contracted out under the “Reference Scheme Test” (also known as section 9(2B) rights) must guarantee a minimum level of annual income, calculated by reference to salary. Such benefits are therefore safeguarded.

DBdoobydoo

Is it normal that despite a refund of pension contributions that you should still get a GMP pension from the old employer?

I worked for the NHS from the late 1970s to the early 1980s & when I left because of the rules of the scheme at the time as I had under five years service I was obliged to take a refund of contributions.

I am in receipt of my state pension but only get £139.50/week despite 35 years contributions. I had assumed that the reduction was because I was contracted out in another DB scheme & am now in receipt of that pension but does the NHS pension scheme owe me a GMP pension?

xylophone

Is it normal that despite a refund of pension contributions that you should still get a GMP pension from the old employer?

I was somewhat surprised by this but am wondering whether this has occurred where service was at least two years and no CEP was paid.

See post 23 here

https://forums.moneysavingexpert.com/showthread.php?t=6009662&page=2

However, you have mentioned that you have DB pensions totalling £28,000 per annum already in payment so that whether you are receiving SP under the old or new arrangements, a COD or COPE would be expected.

You can check your exact circumstances/pension calculation through DWP/HMRC - see link above.

Goldiegirl

I've read this thread with interest, as I have a GMP only pension for my service with Barclays 1978 - 81.

I was aware that there was no obligation for them index link the pension once in payment, but I wasn't aware that it may be possible to take a cash lump sum. I suppose that also means I could transfer the lump sum into my SIPP.

I haven't heard anything from Barclays since I left in 1981. but they wouldn't be able to trace me as I got married after I left them.

I can take my GMP pension when I'm 60, so I will contract the scheme administrators in the new year as I'm 60 next March.

I'm also wondering if I have to take the pension at 60, or if I can defer, as I'll be missing out on 5 years of uprating if I take it earlier than the male GMP age

DBdoobydoo

xylophone wrote: »

I was somewhat surprised by this but am wondering whether this has occurred where service was at least two years and no CEP was paid.

According to this link

https://www.gov.uk/guidance/pay-contributions-equivalent-premiums

Employers or pension scheme administrators pay a Contributions Equivalent Premium (CEP) when an employee leaves and

• has less than 2 years pensionable service
• is not entitled to any benefits from a contracted-out salary related scheme
• has rights in the state scheme that can be restored by payment of a CEP

In my case my total NHS service was nearly four years so prompted by this thread I have contacted NHS Pensions to find out the status of any GMP to which I might be entitled. It may however well be the case that the two year qualifying period was longer back in 1983 & that I was fully reinstated to SERPS for those contracted out years.

BTW I was a bit vague in describing my finances. I have a 10K DB pension (that isn't index linked) from a UK employer where I was employed & contracted out from 1983 to 1999. I have another pension of around £18K that is index linked but this is my state earnings related pension from France where I worked for some years. The French pension (or rather collection of pensions) is far more generous than SERPS ever was albeit with very large contributions that I resented at the time but appreciate now.

DBdoobydoo

xylophone wrote: »

I was somewhat surprised by this but am wondering whether this has occurred where service was at least two years and no CEP was paid.

See post 23 here

https://forums.moneysavingexpert.com/showthread.php?t=6009662&page=2

Just read this in post 22 which confirmed my assumption that the qualifying period had formerly been longer.

It is worth saying that for leavers prior to 6th April 1988 that a refund of contributions was possible (and indeed the norm with a consequential buying back into SERPS) where the member had less than 5 years service. And this changed to 2 years for leavers on or after 6th April 1988.

So anybody who had a refund of contributions from a contracted-out scheme, having left the scheme on or after 6th April 1988 with less than 2 years service, or less than 5 years service having left before 6th April 1988, should be checking their record.

In which case it looks like the NHS aren't responsible for a GMP but it's still got to be worth checking with the DWP that I was correctly reinstated for SERPS for those years & not still marked as contracted out.