Deferred Pension help please.

DT2001

I have a deferred Barclays pension in payment. Xylophone and Mike Floutier helped me clarify what would happen at my GMP age (65) and SPA. The waters were muddied by my taking payment from 51. WTW were contradictory but eventually asking the questions in the right way provided a solution. TPAS were also excellent.

My pension in payment increases annually. I have found letters which confirm the same figures for your pension in deferment. So hopefully you’ll get RPI or 5% whichever is lower on the excess amount of your pension and CPI maximum3% on the GMP element.

Turning to the calculation I sympathise as I had a quote in 2008 (2 years before I could potentially 1st drawdown) and the GMP element was paid revalued to that date! In 2011 when I wanted to drawdown I was advised that this method was more generous than the scheme allowed so no longer was available. I suspect no one had thought through the consequences of compounding when Barclays rejigged the number of managers. The rules are complex.

In your case I would ask 2 questions: -
1. Can you see the rules relating to why it uses GMP date rules and not NRD
2. Does it discriminate against women as Barclays NRD for men is 60 and GMP 65 so men would get the 1st method and get the higher payment.

xylophone

In your case I would ask 2 questions: -
1. Can you see the rules relating to why it uses GMP date rules and not NRD
2. Does it discriminate against women as Barclays NRD for men is 60 and GMP 65 so men would get the 1st method and get the higher payment.

I don't think that in this case there is a problem with the GMP.

The OP is female and will reach Scheme NRA and GMP age at 60 - that is set in stone.

Her GMP has revalued according to Fixed Rate (7% in her case) and is as expected.

The problem appears to lie with the calculation of the excess over GMP.

I've no idea what impact the Lloyds case has had on the barclays Scheme.

I received a report on the 27th May 2021 showing the revaluation of the excess to that date of 5353.08 but 
the quote is showing
Guaranteed Minimum Pension 9GMP) built up after 5 April 1988      3948.36
Scheme Pension (over the GMP) built up before 6 April 1997            4955.69
Total Scheme Pension at Retirement                                                   8904.05
At state Pension Age your scheme pension will be reduced by           331.22 a year
I was like yourself under the impression that the excess increased in line with scheme rules up until in Payment and then continued to do so on the same Rule - increase in line with RPI up to a maximum of 5% unless Barclays felt generous to allow it to go higher.

The answer I got regarding the difference between the 5353.08 figure and the 4955.69 figure was that the higher figure was calculated by using the scheme Rules and the 4955.69 by using Statutory Rules - there is no mention at all about this in any of the paperwork I have on this.

But the OP has also been advised

Normal Retirement Date;
 
Guaranteed Minimum Pension at date of leaving + Excess Scheme Revalued to NRD at Scheme Revaluation rate (or Statutory Revaluation if higher) = Annual pension

This puzzles me - perhaps you or Mike F will be able to throw some light?

With regard to escalation in payment, it seems to me that you "have it in one" in your first paragraph. 

DT2001

I see your point but what if OP retired the day before GMP. The excess would be calculated how?
So would it be worth asking for that information and what happens at GMP day?

WTW are producing quotes using a method that isn’t applicable for the OP?

MF’s calc at GMP age reduced his excess back to the figure at 60 by franking it. There was no mention of rejigging the previous calc to Statutory Figures. So the calculation method may only apply at date of retirement.

xylophone

The OP is going to raise the question of the calculation of the excess with WTW.

I assume that if she had drawn her pension before Scheme NRA/GMP age, she would have had to take an actuarial reduction and her position would have been similar to yours?

JAG61NZ

Hi DT2000

I am currently now locked out of my Pension Account.

I can not confirm for definite as I can not run any Reports but I believe when I ran a report to see what would happen early November that the figures were lower. I am sorry but I do not remember which values were different. I ran the Preserved - Early Retirement Report.

DT2001

Having drawn my pension whilst still administered by Barclays in Poole I am unaware of the report options from WTW unfortunately.
If you drew your pension in November, as Xylophone suggest, there would be an actuarial reduction. The amount would hopefully be small as very short time before NRD.
At NRD the GMP element would be revalued to the figure you’ve been told.
If you can get WTW to then confirm exactly what happens at NRD you might have a better option than they are presenting you at 60.
My situation is that at GMP age I’ll get about an £8k increase on revaluation but ‘lose’ about £4K on the increase in the excess due to franking. If the same applies to you then you have no increases to frank.
Hope the above makes sense.

It is one step at a time with WTW and then use TPAS.

We (MF and myself) got there after sometime with Xylophone’s help so fingers crossed.

JAG61NZ

Yes its all turned out a bit different to my expectations.

I ran the Report for Deferred Benefits yearly for an up to date revaluation of my excess and anticipated the figure I receive this May 2021 to be added to my GMP revaluation figure - which I have know for many years as it is fixed rate 7% accumulative.

The scheme reverting to the law - Stat requirements instead of the scheme rules was a surprise.

I am now concerned that the way forward for me may be the same.

Under the scheme I have inflationary protection on both GMP and Excess BUT under the compulsory Law requirements my GMP only.

The figures I had for the scheme revaluation were higher but because they look at the nearest RPI figure released to the Review date, if you look at those monthly historic dates they are all up and down, to be honest a generic figure representing the whole year is fair and logical. I lost someone else may win.

JAG61NZ

Another thought I have to consider is the tax free lump sum. Of course I will not get this as tax free because it will be taxed as income when it arrives in New Zealand. 

I have heard talk that transfer values are good at the moment am I right in thinking that one pound of pension buys a certain amount of transfer and does that flow through to the Tax free lump sum. It may be worth me taking a bit of this.
It looked as though it was coming out of the excess pot.

When I draw my Pension it will be taxed in the UK as well as New Zealand, in fact I have already paid provisional tax on this Pension here in NZ for this tax year. I will continue to be taxed at emergency until HMRC give me a correct tax code so it may be sometime before I actually see some real money. I will then have to try to claim any UK tax paid as NZ have Pension taxing rights. So some real money might be a good thing if the pension sacrifice is not too bad

DT2001

It is just a matter of ensuring the same rules are applied to everyone and if not why (amended scheme rules). I reminded myself that it was a non contributory scheme, I had little concept of its value at 18 and it makes a positive difference to me even if 12.5% less than I was quoted a few years beforehand.

Transfer values have been high and a couple of colleagues have taken the money and are happy. No idea how it would work for you in NZ.

There is double taxation relief with NZ so any paid here should be offset against tax due in NZ.
Again, not sure, but think once set up you’ll get personal allowance here so tax free in U.K. and just pay whatever rate in NZ.

If you’ll pay tax on 25% lump in NZ why take it unless needed for something specific?

xylophone

Let's go back to basics.

You are a deferred member of a Contracted Out Salary Related Pension Scheme.

You were an active member of the Scheme between May 1988 and November 1996.

Barclays uses Fixed Rate Revaluation for GMP.

All your GMP relates to post 1988 service.

You reach Scheme NRA  in December 2021.

Scheme NRA is 60.

As a female, your GMP age is also 60.


You will be 60 in December and plan to bring your pension into payment.



With regard to the increases on your GMP and excess over GMP in deferment see

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


Once your Barclays Pension comes into payment (presumably the first receipt will follow your 60th birthday ), there is a statutory requirement that your GMP must be increased by up to 3% CPI by the Scheme.

Your pension was all accrued before 1997  but note while there is no statutory requirement for your excess to  be increased in payment, Barclays Scheme Rules require that it should be increased in payment.

Therefore you will receive both GMP increase and excess increase on your pension in payment (under Scheme Rules this is  RPI or 5% whichever is lower.) 

Therefore what you need to know is the total pension at retirement broken down to show the revalued GMP and the revalued excess at NRD.

It seems to be the amount of the revalued excess that is causing the problem so this is what you need to clarify.

I have no idea what action may have been taken in respect of the Lloyds judgement as it relates to the Barclays Scheme.

https://www.willistowerswatson.com/en-GB/Insights/2019/02/questions-you-are-too-afraid-to-ask-about-gmp-equalisation#:~:text=GMP often receives a higher,deferment than non GMP benefits.&text=There is no statutory requirement,pension under their scheme rules.