Does GMP compound in deferment - NEW UPDATE

Troytempest

Have checked COPE - it is £60.93 per week.

I was a member of both schemes as the FS continued for a while whilst my division of the company moved to Money Purchase. Buck have confirmed that GMP revalues at 7%. But that the bulk of the Final salary GMP which is pre 88 will not revalue once in payment.  A small part of the FS and all of the Money purchase will revalue at CPI once in payment.

Troytempest

Think I have come to the end of the road here. Going to write to the Trustees to try and obtain copies of benefits on date of leaving and enquire how 2 different administrators can have such different GMP's.

xylophone

Come back and let us know.

With regard to increase in payment, as regards the FS pension, it would normally be the case that at GMP age, the pre 88 GMP would be calculated, the post 88 GMP would be calculated and the excess would be calculated.

The pre 88 would not increase in payment, the post 88 would increase by up to 3% CPI and the excess would increase by whatever the scheme rules states.

As regards the Money Purchase, if what you are receiving is the better of revalued GMP or the annuity that could be purchased with the fund, is it certain that this will increase by more than 3% CPI?

Certainly obtain details at date of leaving for both schemes and also copies of the scheme guides/rules.

NowhereGirl12

This sounds similar to my situation - apologies if I have misunderstood.

I received quotations for my (deferred pre-1996 pension) at age 55 that were lower than I expected as the GMP element hadn't increased as I was expecting. https://forums.moneysavingexpert.com/discussion/comment/77697592#Comment_77697592

However since then I have discovered that the quotations don't include the GMP "Step-up" which will take place at GMP retirement age (60 for women and 65 for men) - the quotations don't seem to include this until you are within one year of your GMP age. So although my quotations now say it would be in the region of £3600k per year the GMP will 'step-up' at age 60 to make it around £6k a year which is much more in line with what I had been expecting based on my own calculations.

xylophone

However since then I have discovered that the quotations don't include the GMP "Step-up" which will take place at GMP retirement age (60 for women and 65 for men) 

This possibility was suggested to the OP - see

https://forums.moneysavingexpert.com/discussion/comment/79210089/#Comment_79210089

With regard to the pension you have been quoted, are you sure that it includes your revalued GMP?
In  one scheme previously discussed on the forum,  if a deferred pension is taken before GMP age, it includes the GMP at date of leaving the scheme rather than revalued GMP up to the date of drawing the pension.
There is then an adjustment at GMP age.

as suggested in answer to your post here

https://forums.moneysavingexpert.com/discussion/comment/77697592#Comment_77697592

Has the actuarially reduced pension been based on unrevalued GMP plus excess revalued to date?

However, in the OP's scheme, this does not appear to be the case.

Troytempest

Yes, not the same as my situation. They have used the 7% revaluation but the starting figures were different to my expectation.

xylophone

Yes, not the same as my situation. They have used the 7% revaluation but the starting figures were different to my expectation.

This appears to because of the discrepancy between Mercer's  and Buck's understanding of your situation.

You are going to write to the Trustees in the hope and expectation of clarification.

Troytempest

Yes, letter sent on Friday and already acknowledged.

Will report back when I have news.

Troytempest

Have had a reply from the Trustees.

They say an error was made by Mercer in the letter of 2012. They quoted the Final Salary GMP which was in fact the total GMP figure from both Final Salary and Money Purchase. They say the GMP figures from Buck are correct and that they have been agreed with the HMRC.

The issue for me is the letter of 2012 from Mercer which includes the following.


The 2012 letter states - ' I confirm that at the date of leaving the scheme your final salary pension was £4677 pa. Of this £1196 was in respect of GMP which increases at 7% pa for each complete tax year until retirement. The remaining £3480 increases by CPI up to 5% pa'

The letter concludes by estimating a Final Salary pension of £13.5k. In fact using the correct figures it will be about £3k per year short of this - a substantial difference.

Do I have any chance of any form of compensation or redress. Surely I should be able to expect that Professional administrators know what they are doing?

hyubh

Troytempest said:

Do I have any chance of any form of compensation or redress. Surely I should be able to expect that Professional administrators know what they are doing?

The Pensions Ombudsman has a distinction between actual 'financial loss' and 'non-financial injustice', with the latter including 'loss of expectation'. Unless you've actually made a financial commitment on the understanding of the higher pension, then in those terms you'd be suffering a loss of expectation. See here for the sorts of award the PO gives when ruling that 'significant' non-financial injustice has occurred:

https://www.pensions-ombudsman.org.uk/sites/default/files/publication/files/Updated-Non-financial-injustice-September-2018-2_0.pdf

That said, if you wished to complain in the hope of compensation, you must first do so through the scheme's internal dispute resolution process (IDRP) - Buck or the Trustee will be able to give the details of how to. (The idea here isn't to suppress members' rights, it's to get things sorted at source as much as possible to avoid swelling the Ombudsman's case load.)

PS - just checking recent determinations in the general area, here's a recent one that the Ombudsman ruled against granting compensation for:

https://www.pensions-ombudsman.org.uk/sites/default/files/decisions/CAS-32925-V0X2.pdf