Pension sharing order include GMP?

PinkPanda_3

Hi

I am looking for advice on questions to ask my pension for a pension sharing order many years ago. It moved to Barnett Waddingham last year and all the figures and notation changed. I haven't had an explanation of the differences as on the phone I was told 'of course its different, the provider has changed' and when I pursued an explanation the lady hung up on me. I feel I am not asking the right questions and they are being evasive.

Cetv this year was 100k less than 2021 and contains the following paragraph:

In relation to your query regarding the categorisation of benefits I would like to confirm that on review of your record and benefits it has been noticed that the previous administrators had split out your benefits incorrectly.
To clarify when your pension sharing order was implemented the pension debit owed to your ex spouse had been deducted from your full pension total but was reflected in the full reduction being taken from your pension in excess of the gmp element.  As this was an incorrect reflection of your pension benefits we had updated each element to include the pension sharing order correctly. 
Unfortunately this correction of your benefits means the transfer value quoted were incorrect as they were overstating the gmp transfer value. Please be assured that your record is now reflecting your pension sharing order correctly and all figures now provided are correct.  So no explanation of the actual calculations.

Previous cetv was 184.5k of which 133.5k was gmp.

Should the sharing include gmp which I had always thought was in lieu of state pension which presumably would not be subject to a sharing order? Obviously the previous administrators thought the same as they took it off the excess. 

They have not advised how either was calculated even though I have asked. Both the leaving statement and earlier cetv show benefits payable from 2025 but the new one states 2030.

I cannot yet get a quote for age 60 as they will only provide 18 months in advance so I have to wait until I am 58.5 to see what effect this has.
I was previously advised to think carefully about a transfer out as the gmp revalued at 60 @7% would have made substantial difference to the total pension if I stayed in but now it seems not. 

Sorry for long post but I can't find anything like this in previous posts. 

hyubh

I would normally expect GMP to be part of the pension debit to be honest, however it's asymmetrical - the ex-spouse doesn't get the share of the GMP rights hived off. I can see what you're saying about where the GMP comes from in the first place, however it is still part of your scheme pension - the fact the GMP hasn't revalued as the equivalent SERPS would have done is witness to that.

That said, if the previous administrator recorded the pension debit wholly against the excess, and they were the administrator when the pension sharing order was processed, this raises the question of whether the divorce calculation was correct in the first place...?

xylophone

of course its different, the provider has changed

This seems to me to be a complete non sequitur.  Why should a member's benefits be any different just because of a change of administrator?

Presumably she either didn't know (or couldn't be bothered to explain) that a change of administrator had involved a full audit and mistakes had been found in the original calculation of your benefits by the previous administrator?

To clarify when your pension sharing order was implemented the pension debit owed to your ex spouse had been deducted from your full pension total but was reflected in the full reduction being taken from your pension in excess of the gmp element. 

This seems to be where the mistake occurred and why your benefits have been recalculated.


According to 


https://www.sharingpensions.co.uk/valuations2.htm


For the scheme member the reduction in retirement benefits of 40% as the results of the pension sharing order will be applied for all types of benefits in that proportion. This means that, for example, a member of a deferred contracted out final salary pension with both GMP rights and excess of GMP rights would have both these benefits reduced by a proportion of 40% of the their determined value, whether this is the CETV from the provider or a valuation to determine a suitably adjusted CETV from a pensions expert based on the circumstances and specific needs of the parties.


 As far as I can see,  if we imagine a CETV of £200,000  comprising GMP of £110,000 and excess of £90,000 and a percentage split of (say) 40% in favour of a spouse.

The spouse is owed £80,000.

This should have been £44,000 of GMP  and £36,000 of excess.

This would have left  the scheme member with GMP of £70,000 and excess  of £54,000.

If the spouse portion were taken entirely from excess, then the scheme member is left with the full GMP but only £10,000 of excess.

They have not advised how either was calculated even though I have asked. Both the leaving statement and earlier cetv show benefits payable from 2025 but the new one states 2030.

Is this because under the new calculation, your  total pension will not cover the revalued GMP if taken early?

In this connection see

https://techzone.abrdn.com/public/pensions/Tech-guide-guaranteed-min-pen

Of course, as with any pension rights, the payment of GMP will be governed by the rules of the pension scheme that holds them. This means that permission may be needed from the scheme trustees or the sponsoring employer if the member wants to draw retirement benefits before the earlier of age 60/65 or the pension scheme's contractual pension age.

Because GMP is a promise to pay a certain amount of defined benefit pension from age 60/65, if benefits that include GMP rights are paid early, the member's total pension must at least meet the revalued GMP benefit promise from age 60/65. 

https://www.barnett-waddingham.co.uk/comment-insight/blog/what-is-a-gmp/

If a member asks to take early retirement, a check should be made to see if the early retirement pension will be sufficient to cover GMP at entitlement age. If not, the member may be barred from retiring or from taking the maximum cash lump sum, or if the scheme rules allow, the member could receive a ‘step up’ at GMP entitlement age.

PinkPanda_3

@hyubh thank you for clarifying.
At the time I did not question it. I was just given a cetv amount, with a pre and post annual pension value.

I only queried now because all previous values at leaving date were expressed as pre and post 1988 GMP, and pre Apr 97 in excess of GMP, but when it moved provider it shows pre barber, post barber pre 1997, preserved pre 1988 gmp and preserved post 1988 gmp. It was when I asked the customer support to explain the difference and what it meant they ended the call.

Although the total is the same some of both gmp amounts has moved into the other amounts. I have assumed the pre 97 excess has somehow been split between the pre and post barber too.  Figures are at leaving date, so seems to have been redistributed even before the sharing order calculation comes into it.

Marcon

PinkPanda_3 said:

@hyubh thank you for clarifying.
At the time I did not question it. I was just given a cetv amount, with a pre and post annual pension value.

I only queried now because all previous values at leaving date were expressed as pre and post 1988 GMP, and pre Apr 97 in excess of GMP, but when it moved provider it shows pre barber, post barber pre 1997, preserved pre 1988 gmp and preserved post 1988 gmp. It was when I asked the customer support to explain the difference and what it meant they ended the call.

Although the total is the same some of both gmp amounts has moved into the other amounts. I have assumed the pre 97 excess has somehow been split between the pre and post barber too.  Figures are at leaving date, so seems to have been redistributed even before the sharing order calculation comes into it.

That's not just infuriating, it is plain rude. I'd make a formal complaint and ask for a written explanation of exactly what has happened, the impact on your pension and confirmation that the pension sharing order was correctly implemented in the first place.

You might not want to wade through this quagmire alone. Free, impartial and expert help (not east to interpret any written stuff you receive which does your head in!) is readily available: https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-problems

PinkPanda_3

@xylophone
Thank you for the links. Looks like i have some reading to do.
That may be what has happened with the retirement dates. The leaving amount was not huge having been deferred since 1994.

Original excess 610,
pre 88 gmp 56
post-88 gmp 500

The new format shows
Pre barber 380
Post barber pre 97 559
Preserved pre 88 gmp 23
Preserved post 88 gmp 204
but also states at date of leaving so pre sharing order. 

The order was 60%, expressed as 2579 debit applied and 1793 post deduction 

I will definitely query the way it was calculated, and how the reworking of that is reflected in the current value as gmp revalues at different rate from the excess

xylophone

Let us know how you get on - it may help others if a similar situation arises.

I haven't come across your exact circumstances on the boards before but there have been a number of posts concerning mistakes discovered on change of administrator/errors in GMP etc.

xylophone

gmp revalues at different rate from the excess

Yes - see Techzone link in my previous.

There is also the question of increases once the pension is in payment.

Have you obtained a state pension forecast?

https://www.gov.uk/check-state-pension

xylophone

And the best of British  in extracting the GMP equalisation method of calculation.

https://www.wtwco.com/en-GB/insights/2019/02/questions-you-are-too-afraid-to-ask-about-gmp-equalisation

PinkPanda_3

Thank you @Marcon. I will contact moneyhelper before I write to the administrator. I do find most of the info I have found online both complicated and almost a foreign language 😅 

PinkPanda_3

Thank you @xylophone

I will update when I get a response but judging by the last time I wouldn't hold your breath 😄

I have checked and I have full state pension. And I have several times tried to read about equalisation but some how never quite get it 🤣