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GMP confusion

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  • hyubhhyubh Forumite
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    DairyQueen wrote: »
    So, in the most extreme example, those who were very close to SPA when the nSP was introduced, and were contracted out throughout their working lives (and were not members of public schemes), will not receive indexation (or full indexation) on their equivalent of ASP (i.e. the GMP).

    Most of these people wouldn't have received it for a while anyway because their revalued GMP at GMP age was higher than the equivalent revalued SERPS...
  • xylophonexylophone Forumite
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    Most of these people

    The people who would be affected in this way would be those whose pensions had been deferred and subject to "Fixed Rate Revaluation".

    See PDF linked here
    https://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN02674
  • hyubhhyubh Forumite
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    xylophone wrote: »
    The people who would be affected in this way would be those whose pensions had been deferred and subject to "Fixed Rate Revaluation".

    Yes. And while BT (getting back to the OP) doesn't, it has a fully public sector-style treatment of GMP for the majority of its membership (sections A and B), including a mirroring of the 'temporary' arrangement for individuals who are currently reaching SPA (this is a consequence of the rules for sections A and B saying pension increases mirror the civil service scheme).

    Is the OP in section C I wonder...?
  • xylophonexylophone Forumite
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    Is the OP in section C I wonder...?

    He left BT back in 1988 and later transferred his deferred BT pension into a S32.
  • hyubhhyubh Forumite
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    xylophone wrote: »
    He left BT back in 1988 and later transferred his deferred BT pension into a S32.

    Doh, yes. So he lost the mirroring of PCSPS increases...?
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  • edited 14 October 2019 at 7:42PM
    xylophonexylophone Forumite
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    edited 14 October 2019 at 7:42PM
    Doh, yes. So he lost the mirroring of PCSPS increases...?

    Indeed - transferring out may have been even unwiser than he supposed.

    Anyway, we are where we are now. The pension fund, instead of paving my driveway with gold, spectacularly failed to accumulate anywhere enough to even provide a pension like the one it replaced. However, they had to provide a guaranteed minimum (GMP) which, I understand, is roughly equivalent to the original BT one. This is where the confusion begins…


    The GMP is as follows:


    Benefits Annual
    Accrued Pension Escalation

    Pre 6/4/88 £5058 Level
    Post 6/4/88 £656 RIP cap 3%






    He also had a relatively high COPE
    Worse than that – I’ve just been told by HMRC or whatever they call themselves that, despite my having 45 years’ paid up NI contributions, I have to give them another something like £1500 to get the full state pension.
  • High Dairy Queen,

    I thought I would keep you up to-date regarding GMP indexation . Two friends of mine have had a case with the Parliamentary Ombudsman against the DWP regarding not been told by them that they would no longer receive GMP indexation via the state pension calculation as promised in all DWP booklets and all occupational pension scheme booklets. They won their cases and on the 29 October the Parliamentary Ombudsman said they DWP were guilty of maladministration. This has taken four years to come to this conclusion.

    Attached are some paragraphs from their report.

    65. ln order to remedy the injustice we have identified that resulted from the DWPis
    maladministration, we recommend that the DWP should:

    a) Within one month of this report, apologise to Mr ? for the injustice
    (frustration and inconvenience) their actions have caused him;
    b) Within one month of this report the DWP shoutd pay Mr K !!!!in
    recognition of the injustice suffered;
    c) Within three months of this report, review and report back on to us on the
    learning from this investigation, including action being taken to ensure
    that affected individuals receive appropriate communication from the
    DWP about their state pensions. ln particular, the DWP should ensure that
    their literature clearly and appropriately references that some
    individuals, who have large GMPs and reach State Pension Age in the early
    years of the new State Pension, may be negatively affected by the
    changes. The DWP should advise individuals to check their circumstances,
    and should provide instructions for how to do this;
    d) Within three months of this report, review and report back about how
    other individuals who believe they have suffered an injustice as a resut of
    the maladministration we have found can raise any concerns with the DWP
    and have them considered; and

    e) Consider, and report back to us, whether this report and their response to
    our recommendations should be communicated to other interested parties
    such as the Chair of the Work and Pensions Select Committee.

    Notice the Ombudsman only said recommends the DWP should do it an did not say they had to.

    My friends are happy that the DWP are now guilty of maladministration but are not happy with the rest of the report because the Ombudsman has refused to look into why it happened or find out what Parliament were told about the loss of GMP paid via the state pension. From our researches we have not been able to find anything so are now wondering if the law was actually changed and if so have the DWP stopped doing the GMP calculation without the authority of Parliament .

    Possibly some of you can help us and tell me if you ever found any information about loss of GMP indexation being mentioned in DWP/Government publications before the New State Pension became law in May 2014.
  • High Dairy Queen,

    I thought I would keep you up to-date regarding GMP indexation . Two friends of mine have had a case with the Parliamentary Ombudsman against the DWP regarding not been told by them that they would no longer receive GMP indexation via the state pension calculation as promised in all DWP booklets and all occupational pension scheme booklets. They won their cases and on the 29 October the Parliamentary Ombudsman said they DWP were guilty of maladministration. This has taken four years to come to this conclusion.

    Attached are some paragraphs from their report.

    65. ln order to remedy the injustice we have identified that resulted from the DWPis
    maladministration, we recommend that the DWP should:

    a) Within one month of this report, apologise to Mr ? for the injustice
    (frustration and inconvenience) their actions have caused him;
    b) Within one month of this report the DWP shoutd pay Mr K !!!!in
    recognition of the injustice suffered;
    c) Within three months of this report, review and report back on to us on the
    learning from this investigation, including action being taken to ensure
    that affected individuals receive appropriate communication from the
    DWP about their state pensions. ln particular, the DWP should ensure that
    their literature clearly and appropriately references that some
    individuals, who have large GMPs and reach State Pension Age in the early
    years of the new State Pension, may be negatively affected by the
    changes. The DWP should advise individuals to check their circumstances,
    and should provide instructions for how to do this;
    d) Within three months of this report, review and report back about how
    other individuals who believe they have suffered an injustice as a resut of
    the maladministration we have found can raise any concerns with the DWP
    and have them considered; and

    e) Consider, and report back to us, whether this report and their response to
    our recommendations should be communicated to other interested parties
    such as the Chair of the Work and Pensions Select Committee.

    Notice the Ombudsman only said recommends the DWP should do it an did not say they had to.

    My friends are happy that the DWP are now guilty of maladministration but are not happy with the rest of the report because the Ombudsman has refused to look into why it happened or find out what Parliament were told about the loss of GMP paid via the state pension. From our researches we have not been able to find anything so are now wondering if the law was actually changed and if so have the DWP stopped doing the GMP calculation without the authority of Parliament .

    Possibly some of you can help us and tell me if you ever found any information about loss of GMP indexation being mentioned in DWP/Government publications before the New State Pension became law in May 2014.
  • xylophonexylophone Forumite
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    Possibly some of you can help us and tell me if you ever found any information about loss of GMP indexation being mentioned in DWP/Government publications before the New State Pension became law in May 2014.

    https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/482871/impact-of-new-state-pension.pdf

    Have you seen the NAO report linked in post 9 above? It uses 2015-16 BSP figures in illustrations - it is quite obvious that DWP were aware of the GMP effect earlier than this and also clear that communication to those affected was less than adequate.

    This report reviews the Department’s approach to assessing and communicating the changes to Guaranteed Minimum Pensions resulting from the introduction of the new state pension.
    4.1 This part considers the assessment of the impact of pension reforms by the Department for Work & Pensions (the Department), and how it has communicated the impacts to people who will be affected.

    4.8 In March 2015 we wrote to the Department to highlight a lack of publicly available information and guidance on the scenarios under which pensioners might receive less pension under the new state pension. We found that it had not communicated the scenarios in which people could be worse off. We recommended that the Department review its communication strategy and distribute clear guidance, including scenarios relating to the end of contracting out and the indexation of Guaranteed Minimum Pensions’ increases.
  • DairyQueenDairyQueen Forumite
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    Billopp wrote: »
    High Dairy Queen,
    ...
    Possibly some of you can help us and tell me if you ever found any information about loss of GMP indexation being mentioned in DWP/Government publications before the New State Pension became law in May 2014.
    I recall old threads on which xylophone (the forum's GMP maestro) posted several references to GMP indexation from government papers discussing the nSP. The government was certainly aware. Steve Webb (Pensions Minister in Cameron's government) was definitely aware.

    The changes to GMP indexation were not widely publicised and, tbh, GMP was (and is) very difficult to explain in the kind of media soundbites that most of us understand. Of course, it was also very convenient to marginalise the government's welching on their undertaking to those who had been contracted-out. Their (new) position being that they were not liable, and never had been, for contracted-out amounts. This despite (as xylophone demonstrated) official documents which proved otherwise. Indeed, the government had always provided the top-up indexation on GMP until the intro of the nSP. It had never been the contracted-out scheme's responsibility but the government adopted a new and misleading narrative that suggested that it (the government) had never undertaken this responsibility.

    I am not surprised that the Ombudsman found in favour of your friend. However, I also think it highly unlikely that it will make any difference. The government has now washed its hands of contracting-out and its legacy, other than the nominal COPE amount applied to the SP of those in transition. There is no way that any compensation will be forthcoming, nor will any reintroduction of GMP indexation.

    Some people were winners under the nSP rules, some were losers. Some will benefit from the transition rules and others won't. Nobody can amend their employment history of decades ago.
    One thing to bear in mind is that (for some GMP periods of employment) the revaluation rates were very generous as a prolonged low inflation rate was not foreseen when they were set. For some people, those generous revaluation rates in deferment will go a a long way to offset the lack of indexation once the GMP is in payment.
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