Guaranteed Minimum Pension

Ianthegolfer

I just received a letter from a long  lost employer. They have said that I have a GMP which I will receive at age 65. It is £4300.
This doesn't say if it's a one off or an annual amount. This was my first job until age of 22. I am now 62. This was because I opted out of serps and entered into a defined benefit pension  for 5 years. I withdrew my payments when I left the job. I just dont know how this works. Any input will be appreciated. 


Ian

Marcon

First port of call is surely contacting whoever sent you the letter? Likely to be an annual pension of £4,300 which may or may not increase in payment depending on whether your scheme membership was pre-April 1988 (no increases) or post April 1988.

Chapter and verse on GMPs if you're feeling brave: https://www.barnett-waddingham.co.uk/comment-insight/blog/what-is-a-gmp/

Ianthegolfer

Yes  I have tired to contact them but apparently long delays. I'll be quite chuffed if its annually, as it's a nice wee extra this close to retirement.
Also. Since that time I will have paid enough NI to earn full state pension regardless of this GMP. 
Does this change anything.

xylophone

You were in a defined benefit pension scheme between 1975 and 1980?

The scheme had contracted out of SERPS and therefore from 1978, had to  guarantee to pay you a pension that was at least as great as you would have received had you remained contracted in to SERPS.

You say that you took a return of contributions when you left the employer so don't understand the GMP.

I recall another  poster who described exactly the same position - he had left with (as far as he remembered) a  refund of contributions and yet was contacted years later to be told that he still had a GMP.

It is likely that the £4300 represents the original GMP when you left  (  about £115?) revalued at 8.5% compound for 43 years - it would be the annual amount payable.

As it is all pre 1988 GMP,  there is no obligation on the scheme to pay any increases on the pension once it comes into payment.

Have you obtained a state pension statement?  A COPE is shown?
https://www.gov.uk/check-state-pension

Ianthegolfer

Yes, I've made enough NI payments for full state pension. 
I have a personal pension as well.

comeandgo

Marcon said:

First port of call is surely contacting whoever sent you the letter? Likely to be an annual pension of £4,300 which may or may not increase in payment depending on whether your scheme membership was pre-April 1988 (no increases) or post April 1988.

Chapter and verse on GMPs if you're feeling brave: https://www.barnett-waddingham.co.uk/comment-insight/blog/what-is-a-gmp/

I cant see a pension where the OP had been repaid his contributions and only was for about 6 years worth £80,000 which would be needed for yearly payment of £4;,300.  I think that is the full value.  

Marcon

comeandgo said:

Marcon said:

First port of call is surely contacting whoever sent you the letter? Likely to be an annual pension of £4,300 which may or may not increase in payment depending on whether your scheme membership was pre-April 1988 (no increases) or post April 1988.

Chapter and verse on GMPs if you're feeling brave: https://www.barnett-waddingham.co.uk/comment-insight/blog/what-is-a-gmp/

I cant see a pension where the OP had been repaid his contributions and only was for about 6 years worth £80,000 which would be needed for yearly payment of £4;,300.  I think that is the full value.  

I can! If OP took a refund of contributions representing the excess over GMP, and the scheme retained the GMP liability (rather than paying a Contributions Equivalent Premium to 'buy him back' into SERPS), then revaluing at 8.5% for over 40 years would fit the bill nicely.

xylophone

I cant see a pension where the OP had been repaid his contributions and only was for about 6 years worth £80,000 which would be needed for yearly payment of £4;,300.  I think that is the full value.  

See my post above. The OP left over forty years ago.

If the GMP was around £115 when he left and will compound at 8.5% up to GMP age (65).....

minty777

Can anyone work this out?a GMP commencing on October 1991 and maturity in February 2023

Pre 1988 GMP on commencement £270.92

Post 1988 GMP on commencement 131.56

Revalue rate 7.50%

garmeg

minty777 said:

Can anyone work this out?a GMP commencing on October 1991 and maturity in February 2023

Pre 1988 GMP on commencement £270.92

Post 1988 GMP on commencement 131.56

Revalue rate 7.50%

Revalue each April 1992 to April 2021 inclusive so 30 revaluations. There is no revaluation in April 2022 as that is the April prior to your GMP state pension age (assumed Feb 2023).

So

Revaluation factor = 1.075^30 = 8.754 to 3 decimal places rounded down

£270.92 x 8.754 = £2,371.20 (rounded down to lower multiple of 52p, ie 1p per week)
£131.56 X 8.754 = £1,151.28 (ditto)

Ianthegolfer

It was actually from 1982