Does GMP compound in deferment - NEW UPDATE

xylophone

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.

In terms of the correct figures, is the position in terms of the final salary element

Pre 88 GMP £386 pa

Post 88 GMP £22

Excess  £3889 (?)

The GMP revalued to 65 at 7%.

Until you reach age 65, the whole of your pension will increase under Scheme Rules - after age 65 the pension will be split into its pre 88 GMP/post 88/GMP/excess and increase as outlinedin my post of 26 May?

With regard to the Money Purchase Scheme, is the position that the total value of the "pot" is to be calculated and you will receive 

 the greater of

(i) the annuity that could be bought with your MP pot
or
(ii)   the revalued GMP 


Your GMP in the above would have been £788 revalued at a fixed rate of 7% for 25(?) years?

If not, what will you receive?

And will the increase in payment be up to 3% CPI or full CPI?

Troytempest

This is correct as far as Final Salary is concerned.

With Money Purchase the bulk of my pot will fund the GMP with the excess available to purchase additional benefits.

xylophone

With Money Purchase the bulk of my pot will fund the GMP with the excess available to purchase additional benefits.

I think that this was probably a Contracted Out Mixed Benefit Scheme.

Some money purchase occupational pension schemes were contracted out on a salary related basis. These schemes, which were relatively rare, were known as contracted out mixed benefit schemes (COMBs). But contracting out on a salary related (defined benefit) basis was abolished on 6 April 2016 to tie in with the introduction of the New State Pension.

COMBs had to provide a certain minimum level of benefit:

• From 6 April 1997 to 5 April 2016 it had to pass the reference scheme test
• Before then it had to, amongst other standards, provide a guaranteed minimum pension

In terms of increase in payment, will the GMP increase only by up to 3% CPI?

What are the "other benefits" offered?  Tax free lump sum?  Annuity? Draw down?

Jonty6262

When the GMP is calculated until 60/65,is it calculated exactly up to your 60th/65th birthday or is it to the end of the tax year that lands before your birthday? 

xylophone

When the GMP is calculated until 60/65,is it calculated exactly up to your 60th/65th birthday or is it to the end of the tax year that lands before your birthday? 

https://www.gov.uk/guidance/how-to-calculate-your-scheme-members-guaranteed-minimum-pension

Troytempest

Whilst I agree that the figures now quoted are correct - especially as confirmed by HMRC, they are not the figures quoted in the 2 letters. As a non expert I think I should have been able to place reliance on the figures provided by the experts.

I will ask for the 'official' complaint form.

xylophone

I will ask for the 'official' complaint form.

Have you read

https://forums.moneysavingexpert.com/discussion/comment/79244310/#Comment_79244310

Troytempest

Certainly have.....and not expecting anything substantial but I am entitled to complain so I have nothing to lose.

xylophone

Let us know how things turn out.

Troytempest

Buck have written again, saying that I have not been disadvantaged as they have the correct figures. They agree that Mercer provided an incorrect split of GMP and non GMP.

I have pointed out that because the GMP compounds at 7% it makes an approx £3k per annum difference in the projections.

I have the formal complaints process and will be going down that avenue.