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GMP and the New State Pension

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Hope this is decipherable and makes sense...
I have a GMP from the MNRPF (Merchant Navy) from 1976 to 1981 which is £225 per month (non index linked) I took the pension amount when I left the merchant navy to fund my wreckless youth for a few months but the GMP as I recently discovered still remains
I have just done a state pension forcast which currently stands at £163.07 but can be increased to my maximum of £178.46 if I make voluntary contributions within the next three years to my retirement date (I recently retired so will no longer be paying NI)
Question is, how will the GMP affect the State Pension I actually receive? Is it GMP+NSP which would be £1000 per month or is the £778.26 the maximum amount allowable which would include both the NSP and GMP? 

Comments

  • molerat
    molerat Posts: 34,600 Forumite
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    edited 20 May 2021 at 4:52PM
    The GMP has no effect on your SP, what the forecast shows is what you get.  The annual increase in the GMP pension may be different to the current method when you reach SP age though.
  • xylophone
    xylophone Posts: 45,622 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    my wreckless youth 

    No wrecks because you weren't reckless?:) 

    I have a GMP from the MNRPF (Merchant Navy) from 1976 to 1981 which is £225 per month (non index linked) 

    See below

    http://www.mnrpf.co.uk/mnrpf-and-the-state-pension.php#:~:text=Whilst you were a contributing,Related Pension Scheme (SERPS).&text=This minimum amount is known,females and 65 for males).


    The Guaranteed Minimum Pension system did not start until 1978.

    You are now aged 63? You are male?

    Do you mean that when you left the service, you took some part of your pension but the GMP remained within the scheme and you have been advised that you will be entitled to this GMP pension when you turn 65?

    Or do you mean that you are currently receiving a pension that includes the GMP (or its value when you left service)?

    At all events, you  are entitled to receive your state pension regardless of how much you are receiving from the occupational pension.

    That is to say, you receive the occupational pension and your state pension.

    Some schemes still operate a "clawback" whereby the occupational pension is reduced to take account of the SP but it does not appear that your scheme is one of them.

    Do you have any paperwork indicating your GMP when you left service?



    With regard to the calculation of your state pension, on 6/4/2016 two calculations were done

    Old Rules

    NI years/30 x £119.30 + (Additional State Pension - Deduction for Contracting Out)

    New Rules

    (NI years/35 X £155.65) - Contracted Out Pension Equivalent.

    The deductions above were used once only  to calculate your starting amount which was the higher of the two.


    In your case it appears that your SA was under the amount of a full NSP and that you were under state pension age.

    You  were therefore able to improve your state pension up to (but not in excess of) a full NSP by  NI contributions or credits from 6/4/16 up to the last full tax year before reaching SPA.

  • holderness
    holderness Posts: 83 Forumite
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    Thanks, yes a somewhat less 'w'reckless 63 year old male. After I left the navy in 1981 I took what I thought was my pension in 1982 as a lump sum and didnt know that the GMP part had been left behind until a couple of years ago. I have been in touch with the company now administering the pension of behalf of the MNRPF and they have confirmed the amounts and dates of service and that it is payable from age 65
    I do have an occupational pension from my post navy career and Im just trying to work out if it would be a good idea to build my state pension via voluntary NI payments
  • xylophone
    xylophone Posts: 45,622 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    After I left the navy in 1981 I took what I thought was my pension in 1982 as a lump sum and didnt know that the GMP part had been left behind until a couple of years ago. 

    There have been a couple of other similar cases on the board.

    Once in payment, the GMP will not increase because it all accrued pre 88.

    Im just trying to work out if it would be a good idea to build my state pension via voluntary NI payments

    Just consider that paying around £800 a year will buy you an index linked pension for life.

    Currently the pension is increased under the "Triple Lock" - the highest of CPI,  earnings growth or 2.5%,

  • molerat
    molerat Posts: 34,600 Forumite
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    .........  Im just trying to work out if it would be a good idea to build my state pension via voluntary NI payments
    NI VCs are excellent value, a no brainer in fact.  They pay the equivalent of a 30% annuity, you could not match that on the open market and you are in profit after around 3 years.

  • SomeMadeUpName
    SomeMadeUpName Posts: 373 Forumite
    Fourth Anniversary 100 Posts Name Dropper
    edited 20 May 2021 at 7:16PM
    Im just trying to work out if it would be a good idea to build my state pension via voluntary NI payments
    @holderness Yes
    Almost 100% guaranteed to be a good idea unless you have a current terminal diagnosis.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
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    You could even reduce the outgoing £800 per year for NICs by doing some undemanding little self-employed work so that you pay the much cheaper self-employed NIC rate.  People suggest dog-walking, delivering leaflets, selling on e-bay, all sorts of things.      https://www.gov.uk/self-employed-national-insurance-rates
    Free the dunston one next time too.
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