Pension Equalisation (Barber ruling)

xylophone

Is this (bolded) saying that everything from 85-92 carries on as before, but 92-94 (when I left), there is some deduction to just the GMP element? 

Have a look at this which explains pension age equalisation and GMP equalisation.

https://www.allenovery.com/en-gb/global/news-and-insights/pensions-in-dispute/common-scheme-disputes/equalisation#:~:text=For the period between 17,to a lower retirement age.

When you left the scheme in 1994, you were entitled to a  deferred scheme pension at Scheme NRA   (65).

Within this pension were your pre 88 GMP, your post 88 GMP and the excess over GMP.

The GMP and excess increase at different rates in deferment - see the Barnett Waddingham link.

https://www.jspensions.co.uk/sps-sainsburys/

I think that you should be checking (with Willis Towers Watson) the figures for your pre 88 GMP, post 88 GMP and excess over GMP and asking them to confirm how your GMP is revaluing in deferment.

You know from the booklet how the excess over GMP is revaluing.

If fixed rate is being used for the GMP, they can calculate its value at age 65.

The value of the excess at age 65 cannot yet be calculated because the annual increase depends on the appropriate annual inflation figure in the years up to NRA.

zagfles

Froggitt2 said:

xylophone said:

My NRD was always, to my knowledge, 65. I don't know about women in the scheme, I'd guess 60.

For women, any pensionable service up to 26 September 1992 has a protected retirement age of 60.

For men, this protection runs from 17 May 1990 to 26 September 1992.

Your normal pension age for the payment of these benefits is still 65 but we take this protected service into account when calculating your pension benefit.

Is this (bolded) saying that everything from 85-92 carries on as before, but 92-94 (when I left), there is some deduction to just the GMP element? Which is like 10% of the total pension? ie a deduction applied to a quarter of 10%, ie they want to reduce 2.5% of my pension by an unspecified amount? Lets say they want to reduce it by 20%......thats an overall reduction of 0.5%, whereas they quote I received was an overall reduction of 20%.

No, it's saying all your service except 17 May 1990 to 26 September 1992 is based on age 65. The service in that period is based on 60. So if you take the pension at 65, the service in that period should be uplifted because you're taking it 5 years after the NRA for that period. The Barber stuff isn't just about GMP, it's the entire pension. Basically post 1990 they can't discriminate, so because women had a NRA of 60, they had to give men the same, until it seems 1992 when they increased both to 65.

That's the easy bit. It seems all the changes in the way they do the quotes were down to equalising the GMP part, this is far more complicated because GMPs had to discriminate, because they reflected SERPS which discriminated. It's a bit of a farce really - the courts decided that employers mustn't discriminate in pension provision post 1990, even for the GMP - which replicated SERPS, and so had to discriminate because SERPS accrued differently for men and women, because the state pension age was diffferent! You couldn't make it up. All goes back to the idiot Labour govt of the 70's but that's a rant for another time...

zagfles

xylophone said:

My NRD was always, to my knowledge, 65. I don't know about women in the scheme, I'd guess 60.

I knew a female employee who retired from Sainsburys in the mid eighties when the NRD was definitely 60.

According to below ( information for Final Salary Section active members)

https://www.yumpu.com/en/document/read/38784129/final-salary-section-sainsburys-pensions-website

For women, any pensionable service up to 26 September 1992 has a protected retirement age of 60.

For men, this protection runs from 17 May 1990 to 26 September 1992.

Your normal pension age for the payment of these benefits is still 65 but we take this protected service into account when calculating your pension benefit.

With regard to early leavers, 

Your pension in excess of the GMP will be increased each year until your payment comes into payment as follows

Pension accrued up to 5 April 2009 increased by Retail Price Index (inflation) up to a maximum of 5% per year

Pension accrued from 6 April 2009 increased by Retail Price Index (inflation) up to a maximum of 2.5% per year.

It is silent on how the GMP increases in deferment but as this is a private scheme, it is likely that the "Fixed Rate" method is used (but the OP would have to check this with the administrators). 

See https://www.barnett-waddingham.co.uk/comment-insight/blog/revaluation-for-early-leavers/

If so, given his date of leaving the scheme, OP's GMP should be increasing at 7% per annum.

In this Guide to Retirement https://www.jspensions.co.uk/SPS-sainsburys/documents/#retirementoptionsguide

Guaranteed Minimum Pension

As a member of the Sainsbury’s Pension Scheme, you were contracted

out of the State earnings-related scheme and paid reduced-rate National

Insurance contributions. As a result, HMRC calculates a figure based on

the minimum pension payable to you at retirement which is broadly the

pension you would have received had you not been contracted out. This is

called the Guaranteed Minimum Pension (GMP). The Scheme may need to

adjust members’ GMP figures, to take account of a court ruling that says

defined benefit pension schemes must ensure equal treatment of men

and women’s benefits built up in the Scheme between17th May 1990 and

5th April 1997. We will let you know if this affects you.

It uses fixed rates for GMP ie 7% in OPs case. Excess uses statutory revaluation orders here

https://www.legislation.gov.uk/uksi/2020/1332/made

Froggitt2

Thrugelmir said:

xylophone said:

An estimate will include certain assumptions. If these change then the projected amount will. The amount you will receive in 2029 is not guaranteed. Inflation has fallen over the past 3 years. 

The "statement of deferred benefits on leaving the scheme" is not an estimate.

It is a statement of how the pension entitlement stood at date of leaving.

The scheme booklet would normally state how benefits (GMP/excess) revalue in deferment.

I'm questioning the "estimated" pension payable in 2029 not the separately notified amount as the date of leaving service. Which are two different figures. 

I have the amount at date of leaving, and the current value of the pension payable in 2029. It's that current valuation from 2017 and 2021, that has gone down by 20%. I don't think anywhere there is an estimated value in 2029.

Froggitt2

zagfles said:

Froggitt2 said:

xylophone said:

My NRD was always, to my knowledge, 65. I don't know about women in the scheme, I'd guess 60.

For women, any pensionable service up to 26 September 1992 has a protected retirement age of 60.

For men, this protection runs from 17 May 1990 to 26 September 1992.

Your normal pension age for the payment of these benefits is still 65 but we take this protected service into account when calculating your pension benefit.

Is this (bolded) saying that everything from 85-92 carries on as before, but 92-94 (when I left), there is some deduction to just the GMP element? Which is like 10% of the total pension? ie a deduction applied to a quarter of 10%, ie they want to reduce 2.5% of my pension by an unspecified amount? Lets say they want to reduce it by 20%......thats an overall reduction of 0.5%, whereas they quote I received was an overall reduction of 20%.

No, it's saying all your service except 17 May 1990 to 26 September 1992 is based on age 65. The service in that period is based on 60. So if you take the pension at 65, the service in that period should be uplifted because you're taking it 5 years after the NRA for that period.

OK. So if I retire at 65, my pension should have increased with the equalisation/revaluation, as in effect I'm deferring two years of service for five years? 

zagfles

Froggitt2 said:

zagfles said:

Froggitt2 said:

xylophone said:

My NRD was always, to my knowledge, 65. I don't know about women in the scheme, I'd guess 60.

For women, any pensionable service up to 26 September 1992 has a protected retirement age of 60.

For men, this protection runs from 17 May 1990 to 26 September 1992.

Your normal pension age for the payment of these benefits is still 65 but we take this protected service into account when calculating your pension benefit.

Is this (bolded) saying that everything from 85-92 carries on as before, but 92-94 (when I left), there is some deduction to just the GMP element? Which is like 10% of the total pension? ie a deduction applied to a quarter of 10%, ie they want to reduce 2.5% of my pension by an unspecified amount? Lets say they want to reduce it by 20%......thats an overall reduction of 0.5%, whereas they quote I received was an overall reduction of 20%.

No, it's saying all your service except 17 May 1990 to 26 September 1992 is based on age 65. The service in that period is based on 60. So if you take the pension at 65, the service in that period should be uplifted because you're taking it 5 years after the NRA for that period.

OK. So if I retire at 65, my pension should have increased with the equalisation/revaluation, as in effect I'm deferring two years of service for five years? 

It increases with revaluation anyway - that's to reflect inflation. It might have increased for GMP equalisation. And the 2 years should increase at 65 due to the deferral.

Are you registered on the online WTW system? Have you run a quote for "early retirement" at 65? Does it show more than the "total scheme pension at NRD" quote?

Froggitt2

zagfles said:

Froggitt2 said:

zagfles said:

Froggitt2 said:

xylophone said:

My NRD was always, to my knowledge, 65. I don't know about women in the scheme, I'd guess 60.

For women, any pensionable service up to 26 September 1992 has a protected retirement age of 60.

For men, this protection runs from 17 May 1990 to 26 September 1992.

Your normal pension age for the payment of these benefits is still 65 but we take this protected service into account when calculating your pension benefit.

Is this (bolded) saying that everything from 85-92 carries on as before, but 92-94 (when I left), there is some deduction to just the GMP element? Which is like 10% of the total pension? ie a deduction applied to a quarter of 10%, ie they want to reduce 2.5% of my pension by an unspecified amount? Lets say they want to reduce it by 20%......thats an overall reduction of 0.5%, whereas they quote I received was an overall reduction of 20%.

No, it's saying all your service except 17 May 1990 to 26 September 1992 is based on age 65. The service in that period is based on 60. So if you take the pension at 65, the service in that period should be uplifted because you're taking it 5 years after the NRA for that period.

OK. So if I retire at 65, my pension should have increased with the equalisation/revaluation, as in effect I'm deferring two years of service for five years? 

It increases with revaluation anyway - that's to reflect inflation. It might have increased for GMP equalisation. And the 2 years should increase at 65 due to the deferral.

Are you registered on the online WTW system? Have you run a quote for "early retirement" at 65? Does it show more than the "total scheme pension at NRD" quote?

Yes, just run with early retirement two weeks before my 65th birthday, and the annual amount is back up to where I would have expected it to be, maybe 10% higher than the 2017 estimate. The NRD quote is 25% less than this early retirement quote. 

I'm not sure what this now means, if I retire early, I get more than I would retiring at 65? 

zagfles

Froggitt2 said:

zagfles said:

Froggitt2 said:

zagfles said:

Froggitt2 said:

xylophone said:

My NRD was always, to my knowledge, 65. I don't know about women in the scheme, I'd guess 60.

For women, any pensionable service up to 26 September 1992 has a protected retirement age of 60.

For men, this protection runs from 17 May 1990 to 26 September 1992.

Your normal pension age for the payment of these benefits is still 65 but we take this protected service into account when calculating your pension benefit.

Is this (bolded) saying that everything from 85-92 carries on as before, but 92-94 (when I left), there is some deduction to just the GMP element? Which is like 10% of the total pension? ie a deduction applied to a quarter of 10%, ie they want to reduce 2.5% of my pension by an unspecified amount? Lets say they want to reduce it by 20%......thats an overall reduction of 0.5%, whereas they quote I received was an overall reduction of 20%.

No, it's saying all your service except 17 May 1990 to 26 September 1992 is based on age 65. The service in that period is based on 60. So if you take the pension at 65, the service in that period should be uplifted because you're taking it 5 years after the NRA for that period.

OK. So if I retire at 65, my pension should have increased with the equalisation/revaluation, as in effect I'm deferring two years of service for five years? 

It increases with revaluation anyway - that's to reflect inflation. It might have increased for GMP equalisation. And the 2 years should increase at 65 due to the deferral.

Are you registered on the online WTW system? Have you run a quote for "early retirement" at 65? Does it show more than the "total scheme pension at NRD" quote?

Yes, just run with early retirement two weeks before my 65th birthday, and the annual amount is back up to where I would have expected it to be, maybe 10% higher than the 2017 estimate. The NRD quote is 25% less than this early retirement quote. 

I'm not sure what this now means, if I retire early, I get more than I would retiring at 65? 

This is my understanding - could be wrong: "scheme pension at NRD" doesn't account for any early/late uplift. So, as NRD for part of the pension is 60 and part 65, it won't be the amount you'd get at 65 (or on any date), because if you took it at 65 you'd get late retirement uplift on part and if you took it at 60 you'd get early retirement reduction on part, and in between you'd get a combination. It's basically a theoretical number, although it might be used for spouse benefit etc if you were to die before taking it. But when you run a quote for "early retirement" on a date, it accounts for the early/late retirement reduction/uplifts. It looks like previous quotes (2+ years ago) included the late retirement factor, but they've now removed it. When I checked what the "pension at leaving" should be, the current quotes look correct (final pensionable pay * pensionable service/60), so the previous ones must have included an uplift.

I don't fully understand what's going on though, when I ran a quote for retirement at 60 it seemed to be similar to the "pension at NRD" ie no early retirement reduction on the NRD 65 part. Unless they're projecting GMP increases forwards as they know what they'll be...or possibly an adjustment for GMP equalisation.

mark55man

This thread has been  real roller coaster!!.  
OP - good luck and I hope you manage to make this work for you,  I would be tempted to "early" retire well in advance to ensure you get the early retirement figure, although at GMP revaluation rates don't go too early.  There was a thread on here ages ago that stuck in my mind, that sometimes increases in pension income occur on the anniversary of you joining the scheme or at tax years, whereas payment calculation is on your birthday.  Therefore building a timeline of quotes around join day/month, tax year, birthday.
It may be nugatory, but doing it for my DB scheme did show some non-linearity. 

zagfles

Statutory revaluation uses whole number of years or deferment, GMP revaluation uses tax years. See this thread https://forums.moneysavingexpert.com/discussion/5962314/rules-on-using-occupational-pensions-revaluation-orders/p1