e petition to have loss of Guaranteed minimum Pension (GMP) indexation reinstated by the DWP

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I have signed the petition but something needs to be done to tell people about what the Government has done. Fact sheets on .gov.uk are just not good enough.

This has just come to my attention

https://www.ombudsman.org.uk/making-complaint/what-we-can-and-cant-help/how-we-have-helped-others/communication-changes-inflation-state-pensions

The complaint

Complainants N and T complained that the DWP failed to communicate that the introduction of the new state pension system could have a negative long-term impact on people.

Marcon

Billopp said:

The loss of GMP indexation has been covered many times over previous years. What I am trying to do is get Parliament to look at it by creating an e-petition which requires 10,000 signatures. See following link to the e petition.

https://petition.parliament.uk/petitions/623532

Restore guaranteed minimum pension (GMP) indexation of the state pension

I want the Government to change the law to reinstate uprating of state pensions in respect of contracted out occupational pensions known as Guaranteed Minimum Pensions (GMP).

More details

I believe it is not fair that the DWP ceased to uprate state pensions in respect of certain pension entitlements when the new state pension was introduced. I believe this with done without adequate consultation or notice, and should be reversed

Sign this petition

The reason I am doing this is that the GMP indexation paid with the state pension was taken away by stealth for people reaching state pension age on and after 6 April 2016 because it was not mentioned in the Green and White papers or debated in parliament. On top of this they did not even bother to tell member of the public affected by the change that they would no longer receive GMP indexation via the state pension so they could plan for the loss.

The DWP were found guilty of maladministration by the Parliamentary Ombudsman on 30 September 2019 for two people who took their cases to the Ombudsman.

 I did a freedom of information request to the DWP in Early 2013 to which you will see they said the following.

https://www.whatdotheyknow.com/request/150015/response/390615/attach/html/2/FoI.2019.response.pdf.html

We are unable to send you any legislation stating that DWP is no longer responsible for 
increases on contracted out schemes pensions because as mentioned above DWP has never 
been responsible for paying those increases. 

Because of the above paragraph I think the DWP ceased paying GMP indexation without it being authorised by parliament so may have done it illegally.

This does not affect people in the public sector as special arrangements were made by the Treasury for public service occupational pension schemes to takeover payment of GMP indexation previously paid by the DWP. 

Possible loss for a woman if inflation was 3% could be up to about £22,000

Beware if you post on this forum again and give any personal details - your full name is visible on the petition to which you've given a link, as you created that petition, so you can be identified.

Billopp

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The above is not relevant to the question of GMP increases.

I would like to point out that it is relevant as one of the reasons given on the GMP Indexation fact sheet not to mention loss of GMP indexation was that people would gain under the new state pension by earning extra state pension if they had been contracted out which only applies to people who were still contracted out just before the NSP started on 6 April 2016 which is mainly people in the public sector.

For people who ceased contracting out prior to 6 April which is mainly people in the private sector they will possibly continue to earn extra state pension but at a much-reduced rate compared to the old and have lost their GMP indexation where people in the public sector have not.

GPP fact sheet 
 https://www.gov.uk/government/publications/new-state-pension-if-youve-been-contracted-out-of-additional-state-pension/guaranteed-minimum-pension-gmp-and-the-effect-of-the-new-state-pension

How you could build up more pension under new State Pension

The new State Pension was introduced in 2016. It means some people who had been contracted out can build up a maximum of over £2,150 a year more pension (based on 2021 to 2022 rates) than they could under the old State Pension.

Out of interest I am attaching a link to correspondence between Stephen Timms Chair of the Work and Pensions Committee and Guy Opperman the Pensions Minister at that time.

https://committees.parliament.uk/publications/22979/documents/168360/default/

If you read it, you will see it is possible to put in a claim for compensation which they are not keen to mention.

Stephen Timms.

The Committee would be grateful for an explanation of the circumstances in which an individual in the target group for the factsheet may be eligible for compensation and what steps should they take to get it. This should be included in a revised version of the factsheet. 

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For people who ceased contracting out prior to 6 April which is mainly people in the private sector they will possibly continue to earn extra state pension but at a much-reduced rate compared to the old and have lost their GMP indexation where people in the public sector have not.

I really don't follow the above at all.

Contracting Out ceased to be possible for DC/Money Purchase Schemes from 6/4/12 and for DB Schemes from 6/12/16.

The S2P scheme (Additional State Pension) was still in existence up to 6/4/16.

Those who were in receipt of the old state pension at 6/4/16 and had been contracted out remained subject to the old ASP/COD system.

The indexing of GMP ended with the NSP but there were special arrangements for Public Service pensions (and certain other schemes apparently) , primarily because of commitments made  by the Government to members of those schemes after reforms in (I think) 2015?

https://www.actuarialpost.co.uk/article/gmp-indexation-the-winners-and-losers-19655.htm

As I have pointed out, there were certain people ( those who were deferred pensioners of contracted out schemes which chose Fixed Rte Revaluation of GMP) which even under the old regime, were unlikely ever to see their GMP indexed through the state pension (or at all events, not until long after SP had commenced in payment).

For other people who had been members of DC schemes in private companies and retired very soon after inception of NSP, there was very definitely a loss from the withdrawal of indexation.

https://commonslibrary.parliament.uk/research-briefings/sn04956/

Did you read the link in my post here?

https://forums.moneysavingexpert.com/discussion/comment/79567815/#Comment_79567815

Billopp

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"The above is not relevant to the question of GMP increases."

I would like to point out that it is relevant as one of the reasons given on the GMP Indexation fact sheet not to mention loss of GMP indexation was that people would gain under the new state pension by earning extra state pension if they had been contracted out which only applies to people who were still contracted out just before the NSP started on 6 April 2016.

For people who ceased contracting out prior to 6 April which is mainy people in the private sector they will possibly continue to earn extra state pension but at a much reduced rate compared to the old and have lost their GMP indexation  where people in the public sector have not.

GMP fact sheet

https://www.gov.uk/government/publications/new-state-pension-if-youve-been-contracted-out-of-additional-state-pension/guaranteed-minimum-pension-gmp-and-the-effect-of-the-new-state-pension

Out of interest I am attaching a link to correspondence between Stephen Timms Chair of the Work and pensions Committee and Guy Opperman the pensions minister at that time.

If you read it, you will see it is possible to put in a claim for compensation which the DWP don't want to mention.

"Effectiveness of the factsheet in reaching the target group The review suggests that the factsheet had limited success in reaching its target group. In a letter to the Committee of 18 January 2022, DWP Permanent Secretary, Peter Schofield said nobody had so far applied for compensation. The Department had received four letters in response to the factsheet, none apparently from people who might be eligible for compensation.12 The analytic review of the factsheet sent to the Committee on 2 March 2022 said, the factsheet had had 6,922 ‘unique page views’, which seems low number given that the Department estimated that 50,000 people would be worse off in 2017-18 alone.13 Only 19 people had used the on-page search function, which is ‘very low’. 14

https://committees.parliament.uk/publications/22979/documents/168360/default/

Billopp

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"For people who ceased contracting out prior to 6 April which is mainly people in the private sector they will possibly continue to earn extra state pension but at a much-reduced rate compared to the old and have lost their GMP indexation where people in the public sector have not."

What I am trying to explain is that people who ceased being contracted out prior to
6 April 2016 and were back in the state additional pension who are still working and are earning extra state pension is that what they are earning now from the state pension is much less than what they would have earned if the old state pension had continued.

Billopp

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This has just come to my attention

https://www.ombudsman.org.uk/making-complaint/what-we-can-and-cant-help/how-we-have-helped-others/communication-changes-inflation-state-pensions

"The complaint

Complainants N and T complained that the DWP failed to communicate that the introduction of the new state pension system could have a negative long-term impact on people."

The two people mentioned are both friends of mine I helped take their cases to the Parliamentary Ombudsman.

I was copied into all the correspondence between them and the Parliamentary Ombudsman and have copies of the two reports which don't appear on the Parliamentary Ombudsman website.

For some reason the Ombudsman did not tell Parliament or produce a press release.

The Ombudsman asked the DWP to send copies of the reports to the Work and pensions Committe which they never did until asked by Stephen Timms Chair of the Work and Pensions Committee.

He only asked for the reports after I contacted him just after he had become chair of the Work and pensions Committee.

 

hyubh

Billopp said:

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"For people who ceased contracting out prior to 6 April which is mainly people in the private sector they will possibly continue to earn extra state pension but at a much-reduced rate compared to the old and have lost their GMP indexation where people in the public sector have not."

What I am trying to explain is that people who ceased being contracted out prior to
6 April 2016 and were back in the state additional pension who are still working and are earning extra state pension is that what they are earning now from the state pension is much less than what they would have earned if the old state pension had continued.

That's only true if they only had a small amount of contracted out service in the first place, therefore could have both a GMP and SERPS/S2P and enough SERPS/S2P to go beyond the nSP amount. That may be technically possible, but it isn't a large population at all (once you had contracted out years, you didn't start accruing SERPS/S2P afterwards as if you started from zero, the contracted out years would generally still count to limit contracted in ASP accrual). The vast majority of nSP losers are full time employees who never contracted out at all, and so were on course to go materially beyond the nSP level almost by definition.

Billopp

hyubh
"That's only true if they only had a small amount of contracted out service in the first place, therefore could have both a GMP and SERPS/S2P and enough SERPS/S2P to go beyond the nSP amount."

"The vast majority of nSP losers are full time employees who never contracted out at all, and so were on course to go materially beyond the nSP level almost by definition."

I fully agree with what you say in the second paragraph and most probably have not been told that they will now earn less state pension under the new than the old which can be over £145 pw less so that they can plan for the loss. 

Not strictly true as GMP ceased accumulating in April 1997 and could have been entitled to a full GMP so definitely not small, if contracted out from when contracting out started which many would have been.

Before the new state started on 6 April 2016 there were about 11 million people entitled to GMPs when including the public sector.

Many private sector pension schemes closed down their final salary pension schemes from about 1997 so are contracted back into the new state pension and started earning additional state pension which was at a much more generous rate than now being earned under the NSP as under the old state people could earn about £145 pw more than under the NSP.

Accrual rate under the NSP is much less generous than the old when you take into account the state additional pension. 

The people who gain from the NSP who were still  contracted out as at the 5  April 2016 who are now able to earn extra years at the new accrual rate which they would not have been entitled to do under the old state pension.

Most probably about 80% of these are in the public sector as most private sector schemes have closed down to future accrual before the NSP started.