GMP equalisation workings - Barclays pension

DT2001

MikeFloutier said:

1. Are you concerned that they will reduce your pension at GMP age; ie. 65? or, is it,

2. You’re concerned that it was fully franked during the calculation of your “Early Retirement Statement” (ERD) figures?

Just to be clear before thinking it through.

One reason for asking is that, if it’s “1.” then my firm feeling is that they will have already included any franking in the ERD statement calculations; which I understand you’re happy with??

The only deduction will be your State Pension Deduction, which was mentioned in your ERD statement. 

My concern is that WTW will Frank all of my excess at GMP and I’ll end up with a pension made up of roughly 50% GMP post 88 (with increases at CPI max 3%) and 50% pre 88 (with no increase).

From the ‘agreed’ calculation in 2018 I was expecting partial franking (excess back to actuarially reduced figure at ERA). I have relied on that figure for my retirement planning.

If all my pension becomes GMP I think SPD cannot be applied,

MikeFloutier

DT2001 said:

My concern is that WTW will Frank all of my excess at GMP and I’ll end up with a pension made up of roughly 50% GMP post 88 (with increases at CPI max 3%) and 50% pre 88 (with no increase).

From the ‘agreed’ calculation in 2018 I was expecting partial franking (excess back to actuarially reduced figure at ERA). I have relied on that figure for my retirement planning.

If all my pension becomes GMP I think SPD cannot be applied,

I’d be inclined to ask them if there is any possibility of them reducing your pension at GMP age; and, if so, for what reason.

DT2001

MikeFloutier said:

DT2001 said:j

My concern is that WTW will Frank all of my excess at GMP and I’ll end up with a pension made up of roughly 50% GMP post 88 (with increases at CPI max 3%) and 50% pre 88 (with no increase).

From the ‘agreed’ calculation in 2018 I was expecting partial franking (excess back to actuarially reduced figure at ERA). I have relied on that figure for my retirement planning.

If all my pension becomes GMP I think SPD cannot be applied,

I’d be inclined to ask them if there is any possibility of them reducing your pension at GMP age; and, if so, for what reason.

I have asked if they are partially or fully franking at GMP. 

If they say fully I’ll ask for a copy of the rules that they think apply.
It does seem odd that the leaflet, which we referred to in 2018, only has details (as far as I am aware) of one method of calculation and not an example of an ERA situation.
When I took the pension in 2011 the rules were reinterpreted. I have a letter stating that the rules applying to GMP had been too generous. (I will find the letter later).

MikeFloutier

At the risk of repetition, and maybe I’m missing something:

1. Surely the franking you refer to will have already been calculated and applied in 2011. They have recently done equalisation calculations on these figures and the changes they mention (in your recent post), to be applied between now and your GMP date, relate to your annual split GMP pension increases and their related equalisation calculations.

2. I would definitely ask the clear closed question: “Is there any circumstance in which my pension can be reduced, at GMP date?” Yes or No?

——

I would also mention that my own NRD pension came into payment in 2014, as agreed in the format we’re all familiar with, and the GMP step up went as predicted in 2019, followed by the expected SPD when my State Pension started.

As you can see, this is 3 years after the date you mention ie. 2011, prior to which GMP calculations were apparently worsened.

I’d be interested to see the letter you mention governing this, given our relative drawdown start dates, as it may impact my own position.

DT2001

MikeFloutier said:

At the risk of repetition, and maybe I’m missing something:

1. Surely the franking you refer to will have already been calculated and applied in 2011. They have recently done equalisation calculations on these figures and the changes they mention (in your recent post), to be applied between now and your GMP date, relate to your annual split GMP pension increases and their related equalisation calculations.

2. I would definitely ask the clear closed question: “Is there any circumstance in which my pension can be reduced, at GMP date?” Yes or No?

——

I would also mention that my own NRD pension came into payment in 2014, as agreed in the format we’re all familiar with, and the GMP step up went as predicted in 2019, followed by the expected SPD when my State Pension started.

As you can see, this is 3 years after the date you mention ie. 2011, prior to which GMP calculations were apparently worsened.

I’d be interested to see the letter you mention governing this, given our relative drawdown start dates, as it may impact my own position.

The letter dated 1/6/2011

We refer to your request for a quotation of your deferred pension benefits as at 1/11/2011.

This letter highlights important information you need to be aware of when you take payment of your pension and should be read in conjunction with the enclosed Guidance Notes.

Since your original quotation was issued, in August 2008, there has been a change in how the GMP element of your pension is treated at retirement. The GMP is something we (the Barclays Bank UK Retirement Fund) must pay to you for being contracted out of the State Second Pension (also know as S2P or formerly SERPS), and has special rules regarding increases. Previously (Referring to your 2008 quotation), the amount of GMP accrued during your service with the Bank would have been increased each year from when you left to when you take payment of your pension, and the higher amount was payable immediately. This method of revaluation was more generous than the Scheme rules permitted and following a review of our practices we have aligned our calculations to the Scheme rules. This means that the amount of GMP accrued when you left the Bank is paid without revaluation when your pension commences. The revaluation is applied instead (in accordance with the Scheme rules) when GMP becomes payable in full at age 65.

If you decide to retire earlier than your NPA, then early retirement factors will be applied to take into account the longer payment period. Please note the early reduction factors used are periodically reviewed by the Scheme Trustees and May affect the level of benefits.

Whilst you were a member of the 1964 Pension Scheme you have been contracted out of State Second Pension (S2P), which was formerly known as the State Earnings Related Pension Scheme and which commenced in 1978. Part of your pension earned before 6th April 1997 is designated as Guaranteed Minimum Pension (GMP). The GMP forms part of your scheme pension and must be paid in full from:
your 65th birthday for male members of
your 60th birthday for female members.

In your case to ensure that your remaining scheme pension is equal to your GMP the tax-free cash sum has been restricted.
When you reach State Pension Age your pension will be reduced. The reduction, which wa fixed at the time of your leaving the Bank, is shown on the statement.


I have started a new thread as the Equalisation method was different to the calculation ‘agreed’ by WTW in 2018. I will update that today as WTW have confirmed full franking applies at 65 so my excess might completely disappear (depends on inflation in next two years - £8870 is my current pension exc circa £100 of equalisation - if this increases by 5% this year and 2.5% next the new amount will be £17 more than GMP). If inflation is brought under control more quickly l will get a step up to £9529! At SPA. there will be no SPD, according to WTW, if all my pension is GMP.