GMP revaluation at age 65 for men

Jacklob

Hi, I,m aware that this is a complex issue so could you please give me some specific advice based on my husband’s circumstances.

Lloyds Bank pension scheme 2. Post 1988 GMP at date of leaving £284pa. I understand that this was included in my husbands pension paid at age 60 as excess pension. This pension will convert to GMP at age 65 which my husband attained in June. This then will be revalued to £2672 based on a fixed rate revaluation. ( this has always been quoted on his paperwork).

The scheme pension paid from NRD of 60 was £2797 and has been increasing each year at 3% pa (this included the GMP at date of leaving and a bridging pension which will cease at state pension age). 

If we ignore “GMP equalisation”at this point for simplicity. 

Upon attainment of 65 is this revalued GMP of £2672 just part of his current pension which is now £3303pa, so nothing changes? or is the difference between the GMP at date of leaving and the revalued GMP of £2672 paid “in addition” to his current pension.

I have a financial background but I find GMP very confusing.

This pension has gone through GMP equalisation and I can provide these figures if needed, however at this point could someone just clarify the above assuming this “equalisation” did not take place.

thankyou in advance.

FIREDreamer

Jacklob said:

Hi, I,m aware that this is a complex issue so could you please give me some specific advice based on my husband’s circumstances.

Lloyds Bank pension scheme 2. Post 1988 GMP at date of leaving £284pa. I understand that this was included in my husbands pension paid at age 60 as excess pension. This pension will convert to GMP at age 65 which my husband attained in June. This then will be revalued to £2672 based on a fixed rate revaluation. ( this has always been quoted on his paperwork).

The scheme pension paid from NRD of 60 was £2797 and has been increasing each year at 3% pa (this included the GMP at date of leaving and a bridging pension which will cease at state pension age). 

If we ignore “GMP equalisation”at this point for simplicity. 

Upon attainment of 65 is this revalued GMP of £2672 just part of his current pension which is now £3303pa, so nothing changes? or is the difference between the GMP at date of leaving and the revalued GMP of £2672 paid “in addition” to his current pension.

I have a financial background but I find GMP very confusing.

This pension has gone through GMP equalisation and I can provide these figures if needed, however at this point could someone just clarify the above assuming this “equalisation” did not take place.

thankyou in advance.

If it is like my pension, when you hit 65 the £3,303 (all non GMP) will split into £2,672 (GMP) plus £631 (non GMP) - sadly you don’t get an increase of £2,672 into your pension.

Any temporary pension which ceases will reduce the non GMP only.

Jacklob

thankyou for that, clarifies the situation for me.

With regard to the “equalisation”. I understood that this was highly unlikely to increase pensions significantly, however my husbands changed dramatically. In December 2021 his £2959 pension increased to £4104 and he got a one off payment of £2902. I’m not complaining but really don,t understand this.

xylophone

https://www.lloydsbankinggrouppensions.com/trustee/gmp


https://www.lloydsbankinggrouppensions.com/

After you retire, your pension will be increased broadly in line with price inflation to a maximum of 5% in April each year. You’ll receive a statement each year, which will show each increase amount.

Based on when you retire in the year, a proportionate increase will be paid on the next annual review date.

This increase will be in accordance with the Scheme rules and any relevant statutory requirements. Increases won't apply to any pension given up for a cash sum payable on retirement.

When you reach age 65 (men) or 60 (women), your pension may include a Guaranteed Minimum Pension (GMP) element which increases differently. Your pensions increase statement will then include details of your GMP and how it is increased.

You mention a "bridging pension" - can you explain further?

Is it to do with this

The State Pension Deduction

The State Pension Deduction is a deduction that may be made to your Scheme pension to take account of entitlement to a State Pension. It will only apply if you joined the Scheme after June 1974 and you’ll be contacted if this applies to you. The State Pension Deduction is calculated using your pensionable service up to 31 March 1997 and fixed when you actually leave the Scheme, based on the level of Basic State Pension applicable at the time. It applies from your State Pension age.

With regard to the pension increase your husband has been receiving, are you sure that it has not been increasing each year by up to 5%

CPI?

Is your husband's GMP all post 88?

If so, the scheme's obligation is to increase this by up to 3% CPI after GMP age - the excess increases by up to 5%.

Has your husband obtained a State Pension Forecast?

https://www.gov.uk/check-state-pension

If so, what exactly does it say?

What is the COPE shown?

Marcon

Jacklob said:

thankyou for that, clarifies the situation for me.

With regard to the “equalisation”. I understood that this was highly unlikely to increase pensions significantly, however my husbands changed dramatically. In December 2021 his £2959 pension increased to £4104 and he got a one off payment of £2902. I’m not complaining but really don,t understand this.

You and a huge proportion of scheme members, and plenty of advisers! Lloyds was the leading case on GMP equalisation, but that doesn't mean anything became simple to understand. 

See https://www.barnett-waddingham.co.uk/comment-insight/briefings/lloyds-high-court-rules-gmp-equalisation/

Jacklob

thank you zylophone

!!!!!! confirmed that there is “no state pension deduction”however there is a “bridging pension” of £180 revalued in deferment to £341 upon age 60. Then it is increased in payment each year then it is removed from the scheme pension at state pension age. So it is currently £464 which will be removed next June.

Jacklob

The bridging pension has been increasing by RPI so it had a 8.9% increase in April, similar to the state pension. The rest has a capped at 5%. All GMP post 88.  I will do a state pension forecast and report back. Thankyou

Jacklob

His state pension forecast shows a full pension and that it can,t be improved any more. I can,t see a COPE amount now but in 2021 it stated £77.73. He has 50 full years.

Jacklob

Does anyone know why he had such an increase after GMP equalisation, could any mistake have been made?

xylophone

The COPE was used only once  (6/4/16) to establish his starting amount for state pension.

It was the higher of (A)

Old Rules

NI qualifying years/30 (max) x Full Basic State Pension + (Additional State Pension - Deduction for Contracting Out).

(B)

(NI qualifying years/35 (max)  x Full New State Pension) - Contracted Out Pension Equivalent.

At that point, his starting amount was either equal to/more than/ less than a full NSP.


If equal to, any further NI contributions would not have improved his pension which would simply have revalued in each

succeeding year under the triple (double) lock rule.


If more than, any further NI contributions would not have improved his SP - the amount equal to full NSP would have revalued

under triple/double lock rule with the balance ("protected payment") by CPI.


If less than, any further qualifying years up to SPA would have improved the pension up to (but not in excess of) a full NSP.


With regard to the GMP equalisation, https://www.lloydsbankinggrouppensions.com/trustee/gmp, each member of the scheme

in the  affected group would have had to have been  considered on an individual basis and any payment calculated in accordance

with the method chosen by the scheme.

Presumably your husband can request details from the Administrator.

Marcon

Jacklob said:

Does anyone know why he had such an increase after GMP equalisation, could any mistake have been made?

Of course a mistake could have been made - but that doesn't mean it was. There's little point going on posting here, since the only people who have all the facts in relation to your husband's pension are the administrators of the scheme. He needs to go back to them and ask for clarification/reassurance - but perhaps before doing that, he (you!) needs to read the communication he will have been sent advising him of the impact of GMP equalisation on him.