SERPS and Contracting out

worn_out

Just an additional question on this. I retired early and received a small pension straight away..Would there have been included in this pension my pre 88 and post 88 GMP. despite the fact I wasn't 65.,,or would that only be added when I became 65 ? I ask this because I also had a pension from a previous employer, payable only at 65 and seperately my Sec 32 GMP with Aviva (Norwich Union) which also only paid out at 65,not when I retired.early.  I 'assume' the early retirement arrangements with my last employer could have included paying the GMP early...is that possible ?

Silvertabby

worn_out said:

Just an additional question on this. I retired early and received a small pension straight away..Would there have been included in this pension my pre 88 and post 88 GMP. despite the fact I wasn't 65.,,or would that only be added when I became 65 ? I ask this because I also had a pension from a previous employer, payable only at 65 and seperately my Sec 32 GMP with Aviva (Norwich Union) which also only paid out at 65,not when I retired.early.  I 'assume' the early retirement arrangements with my last employer could have included paying the GMP early...is that possible ?

Male or female?  Despite the re-equalisation of State pension ages, GMP age remains 60 for women and 65 for men.

That aside, yes, your pension will already include your GMP.  Once you reach SPA, however, your pension provider may make an adjustment to factor in the rules regarding cost of living increases to your GMP elements.  

hyubh

worn_out said:

Just an additional question on this. I retired early and received a small pension straight away..Would there have been included in this pension my pre 88 and post 88 GMP. despite the fact I wasn't 65.,,or would that only be added when I became 65 ?

If you're referring to a private sector DB scheme, typically the GMP revalued to DOR is put into payment as additional excess, but it doesn't have to be. Regardless, as Silvertabby says, there will then be an adjustment at GPD to have the correct GMP/excess split - though frequently this won't actually change the pension in payment immediately, only how it increases going forward.

worn_out

Silvertabby said:

worn_out said:

Just an additional question on this. I retired early and received a small pension straight away..Would there have been included in this pension my pre 88 and post 88 GMP. despite the fact I wasn't 65.,,or would that only be added when I became 65 ? I ask this because I also had a pension from a previous employer, payable only at 65 and seperately my Sec 32 GMP with Aviva (Norwich Union) which also only paid out at 65,not when I retired.early.  I 'assume' the early retirement arrangements with my last employer could have included paying the GMP early...is that possible ?

Male or female?  Despite the re-equalisation of State pension ages, GMP age remains 60 for women and 65 for men.

That aside, yes, your pension will already include your GMP.  Once you reach SPA, however, your pension provider may make an adjustment to factor in the rules regarding cost of living increases to your GMP elements.  

Happen I have my P60's all the way back, and yes it looks like my former employers paid the GMP and stood the annual pay increases on both elements of the GMP, at the CPI rate...even when it was over 3%.. However that seemed to change from 65 which presumably is the DWP picking up the increases in GMP. and my employer only paying the 3% on post '88.  hadn't really realised this and all this topic has only really arisen because CPI rose to 10.1% and has highlighted how little I knew about how it all worked......

Silvertabby

worn_out said:

Silvertabby said:

worn_out said:

Just an additional question on this. I retired early and received a small pension straight away..Would there have been included in this pension my pre 88 and post 88 GMP. despite the fact I wasn't 65.,,or would that only be added when I became 65 ? I ask this because I also had a pension from a previous employer, payable only at 65 and seperately my Sec 32 GMP with Aviva (Norwich Union) which also only paid out at 65,not when I retired.early.  I 'assume' the early retirement arrangements with my last employer could have included paying the GMP early...is that possible ?

Male or female?  Despite the re-equalisation of State pension ages, GMP age remains 60 for women and 65 for men.

That aside, yes, your pension will already include your GMP.  Once you reach SPA, however, your pension provider may make an adjustment to factor in the rules regarding cost of living increases to your GMP elements.  

Happen I have my P60's all the way back, and yes it looks like my former employers paid the GMP and stood the annual pay increases on both elements of the GMP, at the CPI rate...even when it was over 3%.. However that seemed to change from 65 which presumably is the DWP picking up the increases in GMP. and my employer only paying the 3% on post '88.  hadn't really realised this and all this topic has only really arisen because CPI rose to 10.1% and has highlighted how little I knew about how it all worked......

Not as simple as that, I'm afraid.  DWP only pays the increases on pre 88 GMP and over 3% increases on post GMP for those who reached SPA before April 2016.

For those reaching SPA after April 2016 it depends on the private/occupational pension scheme rules.  For example, after a lot of huffing and puffing it was finally decided that public sector pensions would continue to pay full cost of living increases on all elements of GMP.  Private pension schemes have the option to do this, but many have opted to stick to the old rules of nil pre 88 and 3% capped post 88, even though they know that DWP are no longer picking up the slack.

Assuming you reached SPA after April 2016, have you asked your pension provider which option they are using?

worn_out

Silvertabby said:

worn_out said:

Silvertabby said:

worn_out said:

Just an additional question on this. I retired early and received a small pension straight away..Would there have been included in this pension my pre 88 and post 88 GMP. despite the fact I wasn't 65.,,or would that only be added when I became 65 ? I ask this because I also had a pension from a previous employer, payable only at 65 and seperately my Sec 32 GMP with Aviva (Norwich Union) which also only paid out at 65,not when I retired.early.  I 'assume' the early retirement arrangements with my last employer could have included paying the GMP early...is that possible ?

Male or female?  Despite the re-equalisation of State pension ages, GMP age remains 60 for women and 65 for men.

That aside, yes, your pension will already include your GMP.  Once you reach SPA, however, your pension provider may make an adjustment to factor in the rules regarding cost of living increases to your GMP elements.  

Happen I have my P60's all the way back, and yes it looks like my former employers paid the GMP and stood the annual pay increases on both elements of the GMP, at the CPI rate...even when it was over 3%.. However that seemed to change from 65 which presumably is the DWP picking up the increases in GMP. and my employer only paying the 3% on post '88.  hadn't really realised this and all this topic has only really arisen because CPI rose to 10.1% and has highlighted how little I knew about how it all worked......

Not as simple as that, I'm afraid.  DWP only pays the increases on pre 88 GMP and over 3% increases on post GMP for those who reached SPA before April 2016.

For those reaching SPA after April 2016 it depends on the private/occupational pension scheme rules.  For example, after a lot of huffing and puffing it was finally decided that public sector pensions would continue to pay full cost of living increases on all elements of GMP.  Private pension schemes have the option to do this, but many have opted to stick to the old rules of nil pre 88 and 3% capped post 88, even though they know that DWP are no longer picking up the slack.

Assuming you reached SPA after April 2016, have you asked your pension provider which option they are using?

My retirment date was 2015, so not affected thankfully..

worn_out

Just an added comment on this...when I moved jobs to local govt in 1988 it was compulsory to opt out of serps..no choice...what wasn't said at the time was that upon retirement the scheme would only ever pay a max of 3% on this element, regardless of what CPI was.. As the years have gone by this is costing me £5.50pw and will ultimately cost me several £000 , (assuming I don't pop my clogs early). The DWP say the max 3% was to save company schemes from being burdoned with higher inflation pay outs...I mean to say it's not as if it would break the bank, these amounts (in my case anyway) are around £40pw...

Silvertabby

worn_out said:

Just an added comment on this...when I moved jobs to local govt in 1988 it was compulsory to opt out of serps..no choice...what wasn't said at the time was that upon retirement the scheme would only ever pay a max of 3% on this element, regardless of what CPI was.. As the years have gone by this is costing me £5.50pw and will ultimately cost me several £000 , (assuming I don't pop my clogs early). The DWP say the max 3% was to save company schemes from being burdoned with higher inflation pay outs...I mean to say it's not as if it would break the bank, these amounts (in my case anyway) are around £40pw...

Looking at your earlier posts, you reached SPA  before April 2016.   

The difference between 3% and CPI has always been added to your State pension, so you haven't missed out.

worn_out

Silvertabby said:

worn_out said:

Just an added comment on this...when I moved jobs to local govt in 1988 it was compulsory to opt out of serps..no choice...what wasn't said at the time was that upon retirement the scheme would only ever pay a max of 3% on this element, regardless of what CPI was.. As the years have gone by this is costing me £5.50pw and will ultimately cost me several £000 , (assuming I don't pop my clogs early). The DWP say the max 3% was to save company schemes from being burdoned with higher inflation pay outs...I mean to say it's not as if it would break the bank, these amounts (in my case anyway) are around £40pw...

Looking at your earlier posts, you reached SPA  before April 2016.   

The difference between 3% and CPI has always been added to your State pension, so you haven't missed out.

When I get my annual state pension statement, my OAP gets CPI and my serps  gets increased by the  full cpi...rate.  My last DWP statement showed my post '88 at £49.23 but my local Govt pension says it is only paying me £44.36.

Obviously I don't get both. But because I have some pre 1988 GMP which is a lot higher than the serps equivalent , and the way the system works is they add the post 88 and pre 88 together and if that is higher than the serps total figure you don't get any additional pension from the DWP.  Had I not been forced to contract out of serps by my local govt pension scheme I would be getting my post '88 GMP at £49.23 , and not the £44.36 .. That's what I'm saying...albeit not as clear as it could be....

dunstonh

Just an added comment on this...when I moved jobs to local govt in 1988 it was compulsory to opt out of serps..no choice...what wasn't said at the time was that upon retirement the scheme would only ever pay a max of 3% on this element, regardless of what CPI was.

Defined benefit schemes were contracted out.   That was the standard.  Hence no choice.

As the years have gone by this is costing me £5.50pw and will ultimately cost me several £000 , (assuming I don't pop my clogs early). 

But you shouldn't look it like that as you would need to factor in that you paid a pittance in during your working years, and you also paid lower NI and received a bridging pension.

you are looking at one small negative of the arrangement but you are massively up in the other areas.