Do GMP fixed rate increases affect when inflationary increases once in payment start?

Stay_Or_Go

Hello all.

A long time ago I was employed by a company that offered a final-salary pension. Unfortunately I left that company in 1994 and the pension when I start taking it will only offer limited index-linking - there are discretionary increases, but they've been 0% for a long time now and I don't see that changing.

The sole 'guaranteed' part of the pension that will receive some inflationary increases is the post-88 GMP component - which I understand will be at a maximum of 3% a year and paid by the company.

However does the fact that the company has used fixed 7% annual increases on the GMP affect when they might start paying out the inflationary increases from age 65? i.e. does it matter that the fixed rate increases have meant a much bigger GMP then it would otherwise have been?

I can't find anything that says that there could be a delay, but I woke up this morning suddenly paranoid that there might be a rule somewhere saying that this was allowed to happen as otherwise I've been very lucky that the 7% increases have meant the GMP is over twice the amount it would have been under the actual inflationary figures.

Many thanks to all contributors to this thread

xylophone

GMP age for a man is 65 - the deferred pension will revalue according to the rules for GMP and excess up to that age - after GMP age, the pre 88 GMP does not have to be increased by the pension provider but the post 88 must escalate by up to 3% CPI.

Have you obtained a state pension forecast?

Marcon

Stay_Or_Go wrote: »

However does the fact that the company has used fixed 7% annual increases on the GMP affect when they might start paying out the inflationary increases from age 65? i.e. does it matter that the fixed rate increases have meant a much bigger GMP then it would otherwise have been?

No, it doesn't matter!

Stay_Or_Go

Thanks for putting my mind to rest.

I wish I could remember the exact details, but I'm sure I read somewhere that the government used to do something along the lines of waiting for revaluations to catch up in the old days when serps/additional pension was added onto the basic pension. Hence my concern that a company might be allowed to as well in this case where the fixed rate increases meant it was way above what the inflation rated GMP would be. It's good to know they don't

And yes I have obtained a state pension forecast - I will get a full pension at 67 with no further contributions required.

xylophone

I wish I could remember the exact details, but I'm sure I read somewhere that the government used to do something along the lines of waiting for revaluations to catch up in the old days when serps/additional pension was added onto the basic pension.

This was under the old state pension scheme. See post 12

https://forums.moneysavingexpert.com/discussion/4532605/totally-confused-by-contracted-out-deduction-letter&highlight=

Terron

Did you work for DEC?

Stay_Or_Go

xylophone wrote: »

This was under the old state pension scheme. See post 12

forums.moneysavingexpert.com/showthread.php?t=4532605&highlight=

Yes that sounds very much like it - thanks for putting my mind at rest.

Terron wrote: »

Did you work for DEC?

Had to do a google of "DEC pension scheme" - from which I assume you mean Digital Equipment Corporation as someone mentioned a Digital in my very first post where I was considering transferring my company pension out.

Sounds as though there are at least two companies where older defined benefit pensions are lacking some of the post-retirement inflation indexing benefits