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Pre-1988 GMP fiasco

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  • xylophone
    xylophone Posts: 45,623 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    because you are taking late retirement, pensions legislation does not require an anti-franking test to be carried out. Instead, pension scheme trustees must be satisfied that members receive fair value when anti-franking does not apply to them and the Trustee takes advice from the Scheme's actuarial advisers to make sure that this requirement for fair value is satisfied.


    https://www.hughespricewalker.co.uk/new-blog-1/2021/11/15/pasa-gmpe-anti-franking-guidance

    Anti-franking applies directly to members who leave before normal pension age and then retire at normal pension age, and to members who leave active service at or over normal pension age (subject to certain additional conditions set out in the Pension Schemes Act 1993). However, the preservation requirements for members taking early or late retirement to receive benefits at least equal in value to those they would have received had they retired at normal pension age means it may have an indirect effect on other members as well.

    Where anti-franking applies, an “anti-franking minimum pension” underpins the member’s scheme pension and this can result in pensions in payment being “stepped up” when a member reaches their GMP age (60 for women; 65 for men), or at retirement when a member remains in active pensionable service after their GMP age.

    It is unusual for scheme rules to prescribe how anti-franking tests should be applied and this has resulted in different techniques being used. 


    You left before NPA (but did not take benefits at NPA) and you did not leave active service.  Perhaps this explains the  comment that

    pensions legislation does not require an anti-franking test to be carried out?

    The explanation in

    https://forums.moneysavingexpert.com/discussion/comment/80193314/#Comment_80193314

    seems to be closest to the Trustees' approach in calculating "fair value"?

    .


  • MABLE
    MABLE Posts: 4,236 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    I have just received a letter from the administrators who deal with my final salary pension for which I am drawing.  They advise a GMP reconciliation with HMRC records has been done and I have been underpaid by £30,000 and will be paid as a one off payment and my pension will increase from April.

    I am at a loss to understand how such a mistake happens.
  • Silvertabby
    Silvertabby Posts: 10,149 Forumite
    10,000 Posts Eighth Anniversary Name Dropper Photogenic
    edited 16 February at 11:05AM
    MABLE said:
    I have just received a letter from the administrators who deal with my final salary pension for which I am drawing.  They advise a GMP reconciliation with HMRC records has been done and I have been underpaid by £30,000 and will be paid as a one off payment and my pension will increase from April.

    I am at a loss to understand how such a mistake happens.
    Oh, let me count the ways ......

    Were your benefits deferred for some time before you started to draw them?  If so, then your GMP figures at deferment may have been incorrectly advised by COEG, or wrongly input to your records.  Even a small error then becomes a big error due to the GMP uprating factors used.

    Over the past years HMRC have been carrying out a huge GMP checking/reconciliation exercise, and notifying pensions administrators of the final (hopefully correct!) GMP figures.  The pensions administrators have then undertaken the huge - and time consuming job - of checking the individual records and correcting any errors.

    Note it works both ways - you may be bemused by your lump sum and increased pension, but someone else will have received a letter advising they have been overpaid......


  • Marcon
    Marcon Posts: 14,487 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper Combo Breaker
    MABLE said:
    I have just received a letter from the administrators who deal with my final salary pension for which I am drawing.  They advise a GMP reconciliation with HMRC records has been done and I have been underpaid by £30,000 and will be paid as a one off payment and my pension will increase from April.

    I am at a loss to understand how such a mistake happens.
    Oh, let me count the ways ......

    Were your benefits deferred for some time before you started to draw them?  If so, then your GMP figures at deferment may have been incorrectly advised by COEG, or wrongly input to your records.  Even a small error then becomes a big error due to the GMP uprating factors used.

    Over the past years HMRC have been carrying out a huge GMP checking/reconciliation exercise, and notifying pensions administrators of the final (hopefully correct!) GMP figures.  The pensions administrators have then undertaken the huge - and time consuming job - of checking the individual records and correcting any errors.

    Note it works both ways - you may be bemused by your lump sum and increased pension, but someone else will have received a letter advising they have been overpaid......


    ... and just wait until the scheme gets cracking on GMP equalisation and tries to explain that to members!
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • MABLE
    MABLE Posts: 4,236 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    edited 16 February at 12:05PM
    MABLE said:
    I have just received a letter from the administrators who deal with my final salary pension for which I am drawing.  They advise a GMP reconciliation with HMRC records has been done and I have been underpaid by £30,000 and will be paid as a one off payment and my pension will increase from April.

    I am at a loss to understand how such a mistake happens.
    Oh, let me count the ways ......

    Were your benefits deferred for some time before you started to draw them?  If so, then your GMP figures at deferment may have been incorrectly advised by COEG, or wrongly input to your records.  Even a small error then becomes a big error due to the GMP uprating factors used.

    Over the past years HMRC have been carrying out a huge GMP checking/reconciliation exercise, and notifying pensions administrators of the final (hopefully correct!) GMP figures.  The pensions administrators have then undertaken the huge - and time consuming job - of checking the individual records and correcting any errors.

    Note it works both ways - you may be bemused by your lump sum and increased pension, but someone else will have received a letter advising they have been overpaid......


    My was deferred for 8 years.  I understand I can ask HMRC to recalculate my tax for the affected years and the administrators are going to give me a breakdown of the figures and then I can see if I should.  


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