J&J Defined Contribution scheme with GMP element - GMP Conversion queries

123Lottie

Hi

im after some advice please on a letter I received from Mercer about my old J&J pension which I haven’t touched yet which was worth around 130k a couple of years ago. 

i looked into transferring it to a SIPP or to my current workplace contribution pension in 2021 but realised that no IFA would recommend this due to the GMP element.

I’m really ignorant in pension matters, I have tried to look into this myself but the more I read the more confused I get.

so what I wanted to know was if the GMP conversion goes ahead would this mean my pension would then become one that I could transfer more easily?

in the letter it says 

Any advice on this subject would be really gratefully received

thank you

hyubh

123Lottie said:

Hi

im after some advice please on a letter I received from Mercer about my old J&J pension which I haven’t touched yet which was worth around 130k a couple of years ago. 

i looked into transferring it to a SIPP or to my current workplace contribution pension in 2021 but realised that no IFA would recommend this due to the GMP element.

I’m really ignorant in pension matters, I have tried to look into this myself but the more I read the more confused I get.

so what I wanted to know was if the GMP conversion goes ahead would this mean my pension would then become one that I could transfer more easily?

in the letter it says 

Any advice on this subject would be really gratefully received

thank you

This is about converting from one sort of DB pension to another, so no, this won't remove the 'safeguarded benefits' status as such.

Silvertabby

Converting the GMP could give the option of a higher tax free lump sum through commutation (giving up some of the annual pension in return for  one-off tax free cash).

No GMP = no GMP test needed.  ie, with a GMP the annual pension can't be reduced/commuted below the GMP level 

xylophone

i looked into transferring it to a SIPP or to my current workplace contribution pension in 2021 but realised that no IFA would recommend this due to the GMP element.

https://forums.moneysavingexpert.com/discussion/6352080/old-work-pension-with-a-gmp-element-due-to-opting-out-of-serps-is-this-then-a-db


See https://researchbriefings.files.parliament.uk/documents/CBP-8427/CBP-8427.pdf

Did you check  again on on your State Pension position?

When do you reach SPA?

Were you a member of the scheme both before and after  6/4/97?

https://www.gov.uk/government/publications/pension-benefits-with-a-guarantee-and-the-advice-requirement/pension-benefits-with-a-guarantee-and-the-advice-requirement

Where a person has accrued a Guaranteed Minimum Pension (GMP) in respect of contracted-out employment between 6 April 1978 and 5 April 1997, this is a right to a level of pension income calculated by reference to their earnings in that employment, which is revalued either by a fixed revaluation rate or in accordance with national average earnings before coming into payment, and then inflation linked during payment.

Pension benefits which represent, or include, a GMP are therefore safeguarded benefits.

Similarly, pension benefits accrued after 1997 under a scheme contracted out under the “Reference Scheme Test” (also known as section 9(2B) rights) must guarantee a minimum level of annual income, calculated by reference to salary. Such benefits are therefore safeguarded.