Checking NI record and possible missing HRP. Old State pension, claimed from 2008.

FIREmenow

Right thanks all, I have some more information now, and things are getting a bit clearer - both the situation and my understanding of it!  Extra thanks to xylophone, as I didn't see your detailed post and links when I was writing my last reply and have since happened upon it - much appreciated.

She was contracted out into the old DB pension, and the spouse’s pension is two thirds upon death in retirement.

State pension wise, she is being paid the max basic pension, so all good on the HRP front, details below for next tax year from her letter:
Basic SP: 169.50
Pre 97 additional SP: 26.62
less COD: 31.74. therefore zero payable.
Post 97 additional SP: 13.78
GRB: 3.51
Total: 186.79

Using the transitional state pension rules doc from xylophone, if my mum were to die first -
Scenario 2:
a. Dependant reaches State Pension age in single tier
b. Contributor reaches State Pension age OR dies in the [old] system
Section C Contributor (over SPa) dies when Dependant is over SPa:
50% of GRB (3.51*0.5)
Up to 50% of additional State Pension accrued since 2002 (under S2P). (so this would be the part of the post-97 additional pension between 2002 and retirement?)
Up to between 50% and 100% of additional State Pension accrued before 2002 (under SERPS) depending on when the Contributor reached, or would have reached, State Pension age (I can see the percentage was stepped down between Oct 2002 and Oct 2010, but haven’t found what the step was for summer 2008.  All a moot point if it is cancelled out by the GMP and therefore x% of zero!).
Without understanding the exact amounts and GMP impact, 50% of additional SP and GRP would be:  (26.62+13.78+3.51)*0.5 = £21.96/wk
This is limited by the total state pension cap (guess below suggests that’s not an issue).

I'm not clear on how having GMPs impacts on whether the dependant would get a reduced amount of additional pension and if it continues to get increases.

For the pension cap, I'm guessing that it is my dad's GRB unit max that is relevant here as it is 'his' cap, not that it makes much difference (male cap 86 units, female cap 72 units). So from April '24 this is 169.50+218.39+(0.1753*86)= £402.97 Maximum?  Plenty of head room in my dad’s case.
Dad’s state pension calculation for the next tax year:
New SP: 221.20
Protected payment: 18.90
Total: £240.10/wk

So under transitional rules, if my Dad were to die first:
Scenario 1: a. Dependant reaches State Pension age in the [old] system
b. Contributor reaches State Pension age OR dies OR divorces under SPa in single tier
The Dependant will be able to inherit 50% of the additional State Pension which the Contributor would have received, had the Contributor reached State Pension age the day before single tier was introduced.
-Is this one quite open-and-shut?  My mum will receive half of the protected payment = 18.90* 0.5 = 9.45/wk and she’s not in danger of exceeding the max additional SP permitted when combined with her own.

It’s looking like my dad can inherit 56% of my mum’s DBs (aggregated), plus ~half of her additional SP, on top of his own NSP.  
My mum’s would only inherit 3% of his current pension income, so we really need to plan for this possibility.

Thanks in advance for any corrections/confirmations that anyone can provide.  Sorry it’s a long post, I wanted to have a first go at figuring out myself using the great help I had already been given, even if it’s wildly incorrect. It will all help me to eventually explain it to my parents, who have assumed their individual pension  incomes will not change when one of them dies.

xylophone

Have a look at this

https://forums.moneysavingexpert.com/discussion/6338773/inheritance-of-additional-state-pension

In this case, both parties were on the old state pension but have a look at the calculation for inherited COD.

See also

https://www.gov.uk/additional-state-pension/inheriting#:~:text=You may inherit Additional State,entitled to Widowed Parent's Allowance.

With regard to the fact that your mother's COD is higher than her ASP, I suspect that her old DB pension (to 1984) is from an occupational scheme that used "fixed rate" to calculate revaluation of GMP in deferment (rather than the "full rate" used (for example) in public service schemes like LGPS). See para 20 here

https://www.gov.uk/government/publications/new-state-pension-if-youve-been-contracted-out-of-additional-state-pension/the-new-state-pension-transition-and-contracting-out-fact-sheet

If so, then your mother's GMP would have revalued at a fixed rate of 8.5%.

With regard to your father's entitlement to a  survivor's pension from this scheme, have you checked the scheme booklet?

Does he inherit half the GMP and 60% of the excess?

FIREmenow

Thanks again xylophone. The older thread is a great worked example. So we are looking at spousal benefits offer:

70% of pre 97, minus 50% of COD = (26.62*0.7)-(31.74*0.5)= £2.76

50% of GRB = £1.76

Somewhere between 50&70% of post 97 depending on exact amounts pre/post 2002. As all her SERPS was contracted out, so is it likely to all be at 50%? In that case £6.89.

Should my dad's SP figures as if he was still in the old scheme be factored in anywhere, or his protected payment?

Prior to being the HBOS Final Salary scheme, her old DB pension was the Halifax Retirement Fund. Halifax took over her workplace after she had worked there for about 9 years, and she worked about one year more under Halifax then went on mat leave but didn't return.  

The Lloyds pension website directed me to the former scheme details for accrual before 2006, which are here: https://www.lloydsbankinggrouppensions.com/assets/former_scheme_guides/HRF_Scheme_Guide-1051af25484d6c0abe3689ecb462750e2e2b05090a7ba911f14be75ccdda1318.pdf

It states that in deferment - Your Guaranteed Minimum Pension is re-valued in line with the rise in national average earnings each year.

It also says in section 10 that their GMP is better than SERPS/S2P but doesn't elaborate.

The spouse's salary after death is two thirds of the initial amount before any cash was taken and doesn't mention any different calculation for GMP.  

It looks like she has no pension in excess of GMP - seemingly confirmed by the total annual amount of about £1.5k, and that payments have not increased since 2008. It says that pre-88 GMP increases were the State’s responsibility - and the last link in your last post, xylophone, suggests they were frozen from SPA by the government. She also has a very small amount of post-88 GMP from LGPS which is being increased annually within that scheme - in 2013 it was about £71 per year.

Is the lack of excess pension unusual? Could she have commuted it all to a lump sum? Was GMP protected from commutation? She thinks she got a lump sum. It seems small for 10 years of service, but I don't have a good frame of reference for income being paid weekly, or real-terms prices from the 70s and 80s and how well these have kept their value.

I'm getting access to her online record for this pension which might shed some light. 

xylophone

The old DB would have had to pay her at least her GMP revalued from date of leaving to age 60.

From what you have said, it appears that all this pension is GMP? Is this what her annual statement from the scheme shows?

Perhaps she did have an excess over GMP and took a  pension commencement lump sum from the excess?

See https://forums.moneysavingexpert.com/discussion/comment/60448917/#Comment_60448917




With regard to your father, (you say that he was never contracted out), at 6/4/16, two calculations were done to establish his "starting amount" for NSP.

It was the HIGHER of

Old State Pension

NI Qualifying Years/30 x Full Basic ( £119.30) +   SERPS/S2P.

New State Pension

NI Qualifying Years/35 x Full NSP (£155.65).

As your father has a "protected payment" his Old Rules calculation was higher than the New Rules calculation so higher than a full NSP.

Between 6/4/16 and his SPA, his starting amount revalued, £155.65 under the "Triple (double) lock" and the amount over the full NSP  (the protected payment) by CPI.

This will continue (as far as is known) into the future.

FIREmenow

Thanks xylophone,

I have only seen her P60s from that scheme, not any annual statements.  Getting access to the online portal has been tricky, so will have to wait until we are together and can call them.  Hopefully that will give us some extra info, or I will ask for it.

For my Dad's foundation amount:

Old State Pension
NI Qualifying Years/30 x Full Basic ( £119.30) +   SERPS/S2P (call this A).

=39/30 x 119.30 + A

=1.3 x 119.30 + A

= 155.129

New State Pension
NI Qualifying Years/35 x Full NSP (£155.65).

=39/35 x 155.65

=1.1143 x 155.65

= 173.44

His protected payment from April is 18.90, a CPI calculator suggests this would have been about £14.50 in 2016.

So A should equal roughly (173.44 + 14.50) - 155.129 = 32.81

As I understand it from the white paper you shared (scenario 1) my mum should inherit half of this amount, rather than half of the protected payment, "which would be revalued by earnings
from single tier’s introduction until in payment to [mum], and CPI thereafter."  Is that about right?  Are there tables of earnings factors?  I found some up for revaluating GMPs but not from 2016.

I'll see if my dad has a breakdown of his pension calculations when it came into payment a couple of years ago to check this.

xylophone

• • =39/30 x 119.30 + A

    No, apologies! I was careless. I should have put in "Maximum"  30.

    So, if a person (from 6/4/2010) had at least 30 qualifying years, then he/ she qualified for a full Basic State Pension  - he/she couldn't have more than a full basic.

    It is the amount of Grad/SERPS/S2P that varies because of the units/earnings connection. If he/she had been in a contracted out pension scheme, the calculation would have been

    NIQY (max 30)/30 x Full Basic SP + (Additional State Pension - Deduction for Contracting Out)

    
    

    Similarly, I should have used "maximum 35" in the second calculation. If a person had at least 35 qualifying years and had never contracted out, then he /she qualified for a full NSP.

    If he/she had been contracted out, the calculation would have been

    (NIQY(max 35)/35 x Full NSP) - Contracted Out Pension Equivalent.

    
    

    In your father's case, his old rules calculation gave him Full Basic + SERPS/S2P (Amount A).

    
    

    The new rules gave him a  Amount B (full NSP). 

    
    

    A was higher than B so A was his "starting amount".   It was more than a full NSP.  The amount over the full NSP was his "protected payment".

    Back in 2016 he would have been around five years   younger than SPA?

    The full NSP portion of his "starting amount" increased up to coming into payment by the "triple lock" (double in one year o/a  the "lockdown connection") and the "protected payment" by CPI.

    It has increased similarly since.

    
    

    See simplified statement re inheriting state pension here. https://www.gov.uk/new-state-pension/inheriting-or-increasing-state-pension-from-a-spouse-or-civil-partner

    There is also this by the indefatigable Djuna Thurley (pensions expert in chief)?

    https://researchbriefings.files.parliament.uk/documents/CBP-8635/CBP-8635.pdf
    

    which may clarify the White Paper.

    I have only seen her P60s from that scheme, not any annual statements.
    

    I am wondering whether she receives only a P60 because all this pension is pre 88 GMP. As such, the scheme has no obligation to increase it so presumably she has received exactly the same amount since she brought the pension into payment at age 60?

    On that basis, the annual scheme increase letter received by pensioners could only show no increase so the Administrators don't trouble with sending one?

    I am assuming that she does receive such a letter from LGPS?

    
    
  
  

FIREmenow

Thanks xylophone.
Ah ok, I should have realised that for basic state pension at least, that was too good to be true!

So for 39 qualifying years capped at 30/35
Basic = 1x 119.30 + SERPS/S2P
New= 1 x 155.65

If I've understood it correctly will, the simplified webpage seems to miss out a nuance in Djuna Thurley's paper and the white paper that I based my calculation on:

Where the survivor reached SPA in the old system and the deceased reached SPA in the new one, or died under SPA after April 2016, the old rules continue to apply, but only contributions made by the deceased before April 2016 will count. The maximum amount the survivor will be able to inherit is 50% because the deceased’s SPA will be after 5 October 2010.

As shown in Example 1.4: Scenario 1, additional State Pension. 

John and Jane of the white paper.

As you say, the portion of additional that makes oldSP up to newSP (£36.35)has increased by the triple lock and the protected part by CPI since 2016. But if my mum inherits it (half of it), the whole of the original figure is revalued from 2016 by earnings until my dad's death, and CPI thereafter. As earnings have only been the highest rate in the triple lock a few times it won't grow as much as it has as part of NSP, but that is in keeping with the old rules and will still be higher than getting just half of the protected payment, as couples who both reach SPA after 2016 under transitional rules do.

Only getting the P60 because there is nothing new to say could be the reason. That pension seems to have gone up £10 pa in 15 years, and that was in a single year.

From her local LGPS authority, she gets a booklet that contains the last year's P60, the next year's calculation and a schedule of payments and predicted tax for the next year, so it's much clearer!

xylophone

As far as I can make out, in your parents' case,  as your mother reached SPA in the old system and your father in the new,  in the event of her predeceasing him,  he would be entitled to an amount equal to what he would have received had widowerhood occurred in the old system.

If your father predeceased your mother,  the old rules would continue to apply BUT only  his contributions made pre 6/4/16 would be taken into account.  The amount  would be a maximum of 50% of contributions because his death would have occurred post 5.10. 2010.

   As you say, it  would be revalued by earnings from single tier’s introduction until in payment  to your mother and CPI thereafter.

FIREmenow

Thanks xylophone.
And in this case, all of my dad's state pension was accrued prior to 2016 anyway as he retired early.

Back in 2016 he would have been around five years younger than SPA?

He was six and a bit tax years younger.

His SP award notice and statement of details just has the NSP figure and protected payment (£16.09 in 2022). I guess DWP only break that down if/when it is needed, as was the case in one of the older threads you linked to.

I feel like I know enough on the state pension front to give us an idea now - thanks so much for your help!

Now I want to get to the bottom of the old DB, and brush up on LGPS to explain it to them - I have a deferred LGPS pension so that is more familiar.

xylophone

I feel like I know enough on the state pension front to give us an idea now - thanks so much for your help!

Just one thing that might be worth investigating and that is your mother's pre 97 ASP/COD.

I am still puzzled by the  fact that ir seems that your mother's Lloyds pension was revalued in deferment by S148 orders and yet she has ended up with a COD greater than her ASP.

https://researchbriefings.files.parliament.uk/documents/SN02674/SN02674.pdf

It might be worth asking DWP for the calculation relating to her COD.