BT State Pension Offset, and maximum tax free cash with pension increase conversion

SuzyD1

Hi, 
Wonder if anyone can help, I took my BT pension aged 58 in 2016. I had an AVC pot and chose to take the maximum tax free cash with pension increase conversion, which means that part of the annual payment receives annual increases and part receives no annual increase. Now I am 66 and about to receive state pension, a state pension offset amount of £900 is to be deducted from my BT pension each year.
I have no idea how they work out this figure, but also wonder which part of my pension it will be deducted from, the part that receives the annual increase or the part that doesn’t as I have just received my first payslip for the new monthly pension payment, which has reduced by the offset amount but no mention of this appears on the payslip, so I just have a new reduced gross amount.
I wonder if has any experience of this? Like everything pension related, it is all as clear as mud.
Thank you.

xylophone

See

https://forums.moneysavingexpert.com/discussion/6312865/btps-state-pension-offset

SuzyD1

Hi Xylophone, 
Thank you for that link. I am asking all this as myself, but it is actually my husbands query. We have been back through papers from his time of taking early retirement, and found a s2p offset figure on his Benefit Statement from 2015. Can I ask are we correct in thinking this State pension Offset figure will continue to increase every year even though he is now 66 and in receipt of State Pension.
Ta.

xylophone

https://www.btps.co.uk/MediaArchive/SchemeDocuments/BTPS Your Pension Guide for members with AVCs.pdf

What is the State Pension Offset?

The State Pension Offset deduction is a permanent reduction to your annual BTPS pension when you reach State Pension age, irrespective of whether you claim the State Pension or not. It’s important to look at the figure we provide in your Pension Quote, or on your portal quote, for your State Pension Offset amount. The figure will rise broadly in line with National Average Earnings (known as Section 148 Orders) each year, so it will be higher when you reach State Pension age. When you die, the pension your spouse or civil partner gets may be reduced by up to 50% of your State Pension Offset amount. You may be taking your BTPS pension several years before you reach State Pension age, so it’s important to factor in this future reduction when making your pension choices.

It appears that the SPO rises in line with S148 Orders.  

S148 orders are used to revalue GMPs in deferment up to age 60/65 (formerly State Pension Age for women/men).

There is no indication in the Guide that the SPO increases after SPA but you could check with the administrator.