Deferring a GMP adjustment?

Daniel54

Short question is can I defer a GMP adjustment to one of my DB pensions,and what happens if I otherwise decline to accept it ?

Background

I have two DB pensions in payment which put me in the higher rate tax band and FP 2012 where I have headroom of £200k.I have additionally a SIPP of £300k which i have no need to take income from but will crystallise before 75

The pension involved was taken at NRD of 60 and was then worth £28k pa before PCLS.I turned 65 last year which will have prompted the adjustment,I guess.

One of the DB pension administrators has written asking for my LTA usage as I am due a GMP adjustment - the amount has not been provided .I understand from my own reading that the GMP can only be taken as an annuity ( no lump sum) and will be a further crystallisation event.

If I am going to erode my LTA then it makes sense to defer the GMP increase at 40% tax and take the maximum available PCLS from the SIPP tax free in priority at the point of crystallisation.?

I will need to go back to the pension adminstrator to ask for the sums involved,but before doing so I wonder if anyone here has knowledge/experience of deferring/declining a GMP adjustment .

Appreciate this is very much a first world problem !

Dox

What's prompted the adjustment is likely to be the outcome of a huge reconciliation exercise undertaken by the DWP and all pension schemes with GMPs.

You can't decline an adjustment; schemes are required to pay you the correct pension. Whether you can defer it for a short period (assuming it is an increase - has the administrator actually said that, or just asked for your LTA usage, which may have led you to believe it will be an increase) is another matter. If you fail to supply the information requested, that might keep the ball in the air for a bit longer, but not indefinitely. You'll receive any underpaid GMP as a lump sum, and as you have correctly identified, it is then paid as part of your ongoing pension.

Daniel54

Thanks for your reply

Which kind of reflects the status of my response which is to say nothing

Their correspondence with me would have ben helped by describing the amounts involved.It is hard to infer that they would make reference to LTA tax liabilities if the the GMP were a reduction.

The latest letter advises that they will cease to try to contact me.

It will not be a lump sum

What happens if I continue to ignore them ?

They do of course have all my details fom the point I put the pension into payment.

xylophone

Are you yet in receipt of your state pension?

marlot

Daniel54 wrote: »

...They do of course have all my details fom the point I put the pension into payment.

They don't know if you have other pensions, so are over the LTA.

Seems strange to be walking away from free money.

Dox

Daniel54 wrote: »

It will not be a lump sum

Any backdated adjustment (assuming it's an increase) will be - how else could they pay that, if you think about it?

The corrected amount will be paid going forward.

Daniel54

Dox wrote: »

Any backdated adjustment (assuming it's an increase) will be - how else could they pay that, if you think about it?

The corrected amount will be paid going forward.

You are of course correct and apologies for my misunderstanding

Daniel54

marlot wrote: »

They don't know if you have other pensions, so are over the LTA.

Seems strange to be walking away from free money.

A quirk of the lifetime allowance .I can take income from my SIPP at 30% up to the lifetime allowance,or I can take the annuity and pay 55% on the amount by which the annuity reduces the remaining LTA.

But I take your point

Daniel54

xylophone wrote: »

Are you yet in receipt of your state pension?

I am entitled to the full NSP and will take this from March 2020.

Silvertabby

GMP age is still 65 for men and 60 for women. Deferring in this scenario is not possible - the pension scheme is just updating their records with the correct GMP figures.

I doubt the increase - if, indeed, it is an increase, will be enough to get into a lather about.

Daniel54

Silvertabby wrote: »

GMP age is still 65 for men and 60 for women. Deferring in this scenario is not possible - the pension scheme is just updating their records with the correct GMP figures.

I doubt the increase - if, indeed, it is an increase, will be enough to get into a lather about.

Thanks,the letters are clear it will be an increase but you are correct that it most likely is a modest amount that is not worth worrying about in the greater scheme of things.

It is however annoying that they have now written to me three times without once stating the GMP involvd,a figure which they surely know


I will write and ask.them for the annuity involved