Pension Equalisation (Barber ruling)

Froggitt2

I was a member of a final salary scheme from 1985 to 1994. I am male. I have just compared my annual benefits at NRD, comparing a 2017 valuation with a 2021 valuation. The 2021 valuation is about 20% lower - I guess if I had had a 2020 valuation, the equalisation would have meant my benefits would be reduced by maybe 25%. Presumably only half of my accrued pension benefits (ie since 1990) would be "equalised" and yet there is a 20%-25% reduction. How is this possible? Have other schemes similarly impacted benefits?
Can someone explain in simple terms what's going on? 

hyubh

Froggitt2 said:

I was a member of a final salary scheme from 1985 to 1994. I am male. I have just compared my annual benefits at NRD, comparing a 2017 valuation with a 2021 valuation. The 2021 valuation is about 20% lower - I guess if I had had a 2020 valuation, the equalisation would have meant my benefits would be reduced by maybe 25%. Presumably only half of my accrued pension benefits (ie since 1990) would be "equalised" and yet there is a 20%-25% reduction. How is this possible? Have other schemes similarly impacted benefits?
Can someone explain in simple terms what's going on? 

That's not how Barber equalisation works (or in the case of non-GMP, how it worked, as this would have been sorted yonks ago). More likely one of the valuations has a data error I'd say...

What has the administrator said when you questioned the difference...? If the reply was 'Barber equalisation', what more exactly did they say...?

xylophone

I was a member of a final salary scheme from 1985 to 1994.

Do you have your statement of deferred benefits on leaving showing

Pre 88 GMP

Post 88 GMP

Excess

What exactly does your scheme booklet say about revaluation  (GMP/Excess) in deferment?

What is Scheme NRD? When do you reach it?

Have you obtained a state pension forecast?

https://www.gov.uk/check-state-pension

Marcon

Froggitt2 said:

I was a member of a final salary scheme from 1985 to 1994. I am male. I have just compared my annual benefits at NRD, comparing a 2017 valuation with a 2021 valuation. The 2021 valuation is about 20% lower - I guess if I had had a 2020 valuation, the equalisation would have meant my benefits would be reduced by maybe 25%. Presumably only half of my accrued pension benefits (ie since 1990) would be "equalised" and yet there is a 20%-25% reduction. How is this possible? Have other schemes similarly impacted benefits?
Can someone explain in simple terms what's going on? 

By 'valuation' do you mean 'cash equivalent transfer value' or the actual amount of pension (per annum) you are projected to receive from your scheme's normal retirement date?

zagfles

Why do you think it's got anything to do with GMP equalisation? Nobody's benefits should be reduced as a result of this.

TVAS

If you were a member of a scheme where males are 65 and females were 60.
You will have 65 60 and 65. The second 65 assumes the scheme equalised to 65 although it could have equalised to 60 (unlikely due to cost) in which case it will be 65 60 60.
The middle date is from 17 May 1990 until the date the scheme equalised the non GMP pension benefits.

I think you are talking about the CETV value (transfer value) and really why do you care? What is important is not the capitalised value it is the value of the benefits accrued which will increase each year by inflation from the date of leaving until the scheme retirement age.

No we cannot explain in simple terms what is going on because we do not have the information.

I can say that in the future your CETV should increase because schemes need to now equalise GMP.

Froggitt2

hyubh said:

Froggitt2 said:

I was a member of a final salary scheme from 1985 to 1994. I am male. I have just compared my annual benefits at NRD, comparing a 2017 valuation with a 2021 valuation. The 2021 valuation is about 20% lower - I guess if I had had a 2020 valuation, the equalisation would have meant my benefits would be reduced by maybe 25%. Presumably only half of my accrued pension benefits (ie since 1990) would be "equalised" and yet there is a 20%-25% reduction. How is this possible? Have other schemes similarly impacted benefits?
Can someone explain in simple terms what's going on? 

That's not how Barber equalisation works (or in the case of non-GMP, how it worked, as this would have been sorted yonks ago). More likely one of the valuations has a data error I'd say...

What has the administrator said when you questioned the difference...? If the reply was 'Barber equalisation', what more exactly did they say...?

How should Barber equalisation work?
Could be data error, but it's not a tuppenny halfpenny company, this is a UK company with hundreds of thousands of staff in the final salary pension scheme.
I've questioned the difference today with the scheme owner. The pensions company administering it previously said this before passing me onto the scheme owner....
Xxxxxxxxxxx revised the way that the scheme calculates deferred benefits for members who had service affected by the equalisation of pension ages Barber decision.  This affected all members who left the scheme before May 2010 and had service on or after 17 May 1990.

zagfles

Is it Sainsburys? I've heard of something similar with them, think it's to do with how the infomation is/was originally given rather than a change to the actual benefits

Froggitt2

xylophone said:

I was a member of a final salary scheme from 1985 to 1994.

Do you have your statement of deferred benefits on leaving showing

Pre 88 GMP

Post 88 GMP

Excess

What exactly does your scheme booklet say about revaluation  (GMP/Excess) in deferment?

What is Scheme NRD? When do you reach it?

Have you obtained a state pension forecast?

https://www.gov.uk/check-state-pension

The "Estimate of deferred benefits" does not split out pre and post 88 GMP. It just shows pension at the date I left, and pension at NRD.
The NRD is 65, which I reach in 2029.
None of the documents I have going back 35 years chat about revaluation in deferment. Nothing about Excess.
You've made me read everything. There's a page on GMP equalisation in the 2019 booklet, talking about doing all the checks and corrections in the coming months.....the good news is.....noone will be worse off and some members might get a small topup to their pension
Yes I have a state pension forecast, I am aware that this scheme was contracted out and will impact my number of years however I'm doing pretty well in making up full years and should get to 35 in a few years time.

Froggitt2

Marcon said:

Froggitt2 said:

I was a member of a final salary scheme from 1985 to 1994. I am male. I have just compared my annual benefits at NRD, comparing a 2017 valuation with a 2021 valuation. The 2021 valuation is about 20% lower - I guess if I had had a 2020 valuation, the equalisation would have meant my benefits would be reduced by maybe 25%. Presumably only half of my accrued pension benefits (ie since 1990) would be "equalised" and yet there is a 20%-25% reduction. How is this possible? Have other schemes similarly impacted benefits?
Can someone explain in simple terms what's going on? 

By 'valuation' do you mean 'cash equivalent transfer value' or the actual amount of pension (per annum) you are projected to receive from your scheme's normal retirement date?

I'm referring to the amount of pension per annum. The cash value appears relatively stable.

Froggitt2

zagfles said:

Why do you think it's got anything to do with GMP equalisation? Nobody's benefits should be reduced as a result of this.

It definitely is....the administrators referred to Barber, and the scheme booklet in 2019 refers explicitly to GMP equalisation and checking/correcting values.
Re benefits being reduced, yes that's what I thought as well, however between the dates of my two valuations, the pension has been reduced by 20-25%.