Guaranteed Minimum Pension

Ianthegolfer

Sounds EXACTLY the situation. I'll come back with my resulting info.

If they cant find your records, how can they k ow what has been done.?

steve0510

Marcon said:

Ianthegolfer said:

It was actually from 1982

Then it won't increase once in payment.

It may do.  There are some schemes out there that do increase pre 88 GMP.  Definitely worth the OP contacting the company who issued the letter to clarify.

mikemillar

Hi - looking for some help as I have just received a letter I do not understand from my pension provider. Here is the letter - apparently it means that I will be worse off on my 65th birthday which is the opposite of what i was expecting. Can anyone else understand it?
Changes to scheme pension at my GMP of day/month/year.
Legistlation requires us to separate the part of your pension represented by the GMP as this element is treated differently. After we have made the adjustments for your GMP, your pension split is detailed below:
GMP Post 5/4/1988: £xxx.xx
Excess pension: £xxxxx.xx
Total Abatement: £xxx.xx (deducted at state pension age)
Total: is the sum of the above.
There follows an explanation that explains nothing.
Any advice is most welcome
Mike

xylophone

You were a member of a Contracted Out Salary Related Pension Scheme.
I am guessing that you were able to draw your pension at age 60.

The pension that you received at that point consisted of an amount that included your Guaranteed Minimum Pension and the excess over GMP.

Your scheme contracted out of the State Earnings Related Pension Scheme - you and your employer paid less NI in return for the pension scheme's guarantee to pay you a pension at least as great as you would have received had you remained contracted in and received additional state pension with your basic state pension.

Once you reach age 65  ( the  age that a  male  is entitled to receive the GMP - it used to align with SPA but no longer does), your scheme separates the amount that represents the GMP from the balance  (the "excess") because after age 65, increases on your GMP are treated differently from those on the excess.

The scheme is only obliged to increase the post 88 GMP by up to 3% CPI (or just possibly RPI )even if inflation is higher than that - the "excess" will increase under scheme rules.

You have been accustomed thus far to have the whole of your pension increase under scheme rules.

Abatement does not relate to the GMP - I suspect that your scheme still operates "clawback" = see http://www.web40571.clarahost.co.uk/archive/saga/2000_and_before/990202.htm

Some schemes did away with it many years ago.

The amount of the abatement varies from scheme to scheme.

Barclays "state pension adjustment" is rather more modest than that applied by HSBC.

The reason that it takes place at age 65 is that this used to be male SPA.

Some schemes have made an adjustment that involves not operating abatement until the pensioner actually reaches his SPA.

xylophone

Have you obtained a state pension forecast?
https://www.gov.uk/check-state-pension

mikemillar

Thank you, Xylophone. That's much clearer and yes it looks like clawback.
I check my pension forecast regularly. I may decide to pay more in shortly.
Regards
Mike

xylophone

 I may decide to pay more in shortly

What exactly does your forecast say?

Ianthegolfer

I've found this on their official website.Still waiting for an official reply to my querie. 

QUOTE 

New Section service between 6 April 1978 and 5 April 1988 GMP earned prior to 6 April 1988 will be increased each year if you are resident in the UK. This element will be increased by the rise in the Consumer Prices Index (CPI) for the 12 month period ending the preceding 30 September, but the increase amount is added to your State Pension and not your pension payable from the MNOPF.

Any other amounts of MNOPF pension in respect of this period do not receive guaranteed increases.

END QUOTE 
I have no further pension I  respect of this period, as the regulations demanded that it was withdrawn.

xylophone

New Section service between 6 April 1978 and 5 April 1988 GMP earned prior to 6 April 1988 will be increased each year if you are resident in the UK. This element will be increased by the rise in the Consumer Prices Index (CPI) for the 12 month period ending the preceding 30 September, but the increase amount is added to your State Pension and not your pension payable from the MNOPF.

This looks like information relating to pre New State Pension.

Under the old  SP system, at state pension age, the GMP was split into pre and post 88 GMP.

The occupational pension scheme was not responsible for inflation linking pre 88 GMP - what happened was that  your pre 88 GMP was deducted from an amount representing what you would have earned in additional state pension and the balance was paid with the state pension.

The  additional state pension amount increased with inflation each year but the pre 88 GMP amount stayed the same.

Thus inflation linking on the pre 88 GMP was indeed paid with the state pension.

With regard to post 88 GMP, the occupational scheme was responsible for inflation linking up to 3% - if inflation were over 3%, then the state inflation linked the balance and this was paid with the state pension.

See https://forums.moneysavingexpert.com/discussion/comment/60875313/#Comment_60875313

https://forums.moneysavingexpert.com/discussion/comment/61084659/#Comment_61084659

This mechanism ceased to exist with the advent of the new state pension.

What exactly does your state pension forecast have to say?

xylophone

https://www.thisismoney.co.uk/money/pensions/article-7676597/Why-Guaranteed-Minimum-Pension-not-rising-line-inflation.html