Aptia misapplying GMP equalisation process for deferred pension

CuriousCrow22

My Deferred DB Pension recently transferred from Mercer to Aptia and I asked them for a valuation. The previous valuation (from Mercer) was £3023.26 p.a., in 2017. The valuation now (in 2025) from Aptia is £3292.80. I expected it to have gone up with inflation (Capped at 5%) which would make it about £4000. I still have the original scheme documentation that states that this is what happens during the deferral period (for the non GMP portion). When I questioned this Aptia claim that this is due to "GMP equalisation" and that they have now revalued the pension based on "3% fixed" for both GMP and non GMP portions. There are I think several things wrong with this.
Firstly, only a small amount of my pension was GMP (less than a quarter). Surely no "equalisation" can unilaterally change 5% to 3% for the other 75% of the pension. Is a pension a contract (legal eagles out there)?. I can see that government legislation can do pretty much anything with the GMP portion but surely the non GMP portion is a contract and changing 5% to 3% is a breach of that contract.
Secondly I have the documentation Mercer sent me at the time of equalisation and it stated categorically that "The value of your total pension has either remained unchanged or has increased as a result of GMP equalisation and GMP conversion". Yet Aptia appear to have decreased my numbers in fact they say "we can confirm that the figures provided to you recently are correct and due to the change in calculation matrix there has been a reduction in figures".
Aptia make it very difficult to contact them (when they do get back to me it is from a "do not reply" email so each time I contact them I have to start again). I also had a look at them on Trust Pilot and 87% of folk gave them one star, many commenting that it would have been zero if Trust Pilot supported that rating. Even given the fact that folk are more likely to post a review on Trust Pilot when they are disatisfied this is a pretty dire rating. I am ready to make a formal complaint to Aptia with a view that this starts the clock ticking to the point where I can escalate it to the regulator, but I want to be 100% sure of my ground before I do. For example I do not want to claim that Aptia are in breach of contract if contract law does not apply to DB pensions...
Finally, others in the same pension scheme as I am in will probably be in the same position and most of them probably do not know it yet. Is there a way I can force Aptia to correct not only the uplifts to my deferred pension but also those of all the others in the scheme that are being diddled?
There is even more to this but this post is long enough already. Looking for advice as to how to approach this.

GMPEqCommenter

It's not clear to me what dates the £3,023.26 p.a. and £3,292.80 p.a. amounts are - could you clarify? Are they:

• The pension amounts at date of leaving, without revaluation
• The pension amount with revaluations to 2017 for £3,023.26 p.a. and 2025 for £3,292.80 p.a.
• The pension amounts with future projections to your Normal Retirement Age
• (Or something else)

Also, are you able to confirm what type of GMP equalisation was done on your Scheme? The key options are:

• GMP conversion
• "Dual Records - Method B"
• "Dual Records - Method C2"

There are some combinations of answers where the pension amounts could make sense.

Edit: One other question: Was Aptia's response about switching to 3% fixed definitely talking about revaluations in deferment rather than pension increases in payment?

Marcon

CuriousCrow22 said:

There is even more to this but this post is long enough already. Looking for advice as to how to approach this.

Absolutely no point trying to pursue it here - you'd need to provide a whole load more information and you've clearly had quite enough pensions jargon/confusion in your life already (and frankly your post verges on the defamatory, especially your suggestion about how other members are being treated - doubtless a product of the frustration you are feeling).

Ultimately the trustees are responsible for the correct running of the scheme, which is trust, not contract, based. You are, and will remain, entitled to the benefits promised under the Trust Deed & Rules of your particular scheme, so the legal distinction doesn't matter too much.

Your complaint at this point (depending on what's happened to date in terms of communication with the administrators) should be that you can't get an answer couched in terms you can understand/which sets your mind at rest. Ask for a copy of the scheme's Internal Dispute Resolution Procedure (it's specific to the scheme, so you can't download any old thing from the internet) and use that, rather than banging your head on a brick wall and getting yourself very upset (quite possibly needlessly - as the post above says, it's may be that the figures 'could make sense') in the process.

If you don't get a satisfactory answer once you've completed the IDRP, then you could if necessary go on to the Pensions Ombudsman (not the regulator) with a complaint of maladministration. Hopefully the mere fact that you ask the administrators for a copy of the IDRP will put them on notice that they need to give you a much clearer explanation - and if you ensure the trustees also know you've asked for a copy, that won't do any harm to getting things resolved.

hyubh

CuriousCrow22 said:

My Deferred DB Pension recently transferred from Mercer to Aptia and I asked them for a valuation. The previous valuation (from Mercer) was £3023.26 p.a., in 2017. The valuation now (in 2025) from Aptia is £3292.80. I expected it to have gone up with inflation (Capped at 5%) which would make it about £4000. I still have the original scheme documentation that states that this is what happens during the deferral period (for the non GMP portion). When I questioned this Aptia claim that this is due to "GMP equalisation" and that they have now revalued the pension based on "3% fixed" for both GMP and non GMP portions. There are I think several things wrong with this.
Firstly, only a small amount of my pension was GMP (less than a quarter). Surely no "equalisation" can unilaterally change 5% to 3% for the other 75% of the pension. Is a pension a contract (legal eagles out there)?. I can see that government legislation can do pretty much anything with the GMP portion but surely the non GMP portion is a contract and changing 5% to 3% is a breach of that contract.
Secondly I have the documentation Mercer sent me at the time of equalisation and it stated categorically that "The value of your total pension has either remained unchanged or has increased as a result of GMP equalisation and GMP conversion". Yet Aptia appear to have decreased my numbers in fact they say "we can confirm that the figures provided to you recently are correct and due to the change in calculation matrix there has been a reduction in figures".
Aptia make it very difficult to contact them (when they do get back to me it is from a "do not reply" email so each time I contact them I have to start again). I also had a look at them on Trust Pilot and 87% of folk gave them one star, many commenting that it would have been zero if Trust Pilot supported that rating. Even given the fact that folk are more likely to post a review on Trust Pilot when they are disatisfied this is a pretty dire rating. I am ready to make a formal complaint to Aptia with a view that this starts the clock ticking to the point where I can escalate it to the regulator, but I want to be 100% sure of my ground before I do. For example I do not want to claim that Aptia are in breach of contract if contract law does not apply to DB pensions...
Finally, others in the same pension scheme as I am in will probably be in the same position and most of them probably do not know it yet. Is there a way I can force Aptia to correct not only the uplifts to my deferred pension but also those of all the others in the scheme that are being diddled?
There is even more to this but this post is long enough already. Looking for advice as to how to approach this.

While I agree with your gist, and also that 'change in calculation matrix' is a non-answer (why has Aptia's internal calculation matrix changed?), my main piece of advice would be to ask Aptia very specific questions. All the Trust Pilot stuff etc. isn't relevant.

Ask specifically for,
- The pensionable service dates they hold for you
- The GMP/excess split on leaving
- Method of GMP revaluation
- Whether the excess is subject to a non-statutory/scheme specific underpin
- What happens if you draw your benefits before normal pension age

Even if you still have your original statement of deferred benefits, given there has been at least one administration change since, this information would allow checking data hasn't been corrupted in the meantime.

I also agree with GMPEqCommenter about the nature of the numbers you've quoted - it's very unclear what they are intended to be for.

squirrelpie

FWIW, I was surprised recently that my in-payment pension communications changed from Mercer to Aptia, with no notice that I've seen. As a result of reading this thread I just looked and found https://v3.aptiaoneview.co.uk/CSCPENSIONS/education-centre/7731 which provides some explanation of the reason. Hopefully there won't be any negative consequences from this take-over.

CuriousCrow22

GMPEqCommenter said:

It's not clear to me what dates the £3,023.26 p.a. and £3,292.80 p.a. amounts are - could you clarify? Are they:

• The pension amounts at date of leaving, without revaluation
• The pension amount with revaluations to 2017 for £3,023.26 p.a. and 2025 for £3,292.80 p.a.
• The pension amounts with future projections to your Normal Retirement Age
• (Or something else)

Also, are you able to confirm what type of GMP equalisation was done on your Scheme? The key options are:

• GMP conversion
• "Dual Records - Method B"
• "Dual Records - Method C2"

There are some combinations of answers where the pension amounts could make sense.

Edit: One other question: Was Aptia's response about switching to 3% fixed definitely talking about revaluations in deferment rather than pension increases in payment?

Thank you for your answer (thank you everyone for your answers I will get to them all but not tonight). I can clarify some but not all...
I left the company in 1995. My "Accrued Pension at Date of Leaving" was £1397.29. I asked in 2017 what the pension was worth and was told "Your annual deferred pension valued at the date of this statement, payable from your Normal Pension Date is £3023.26. I then made the same request a few weeks ago and was told "Deferred pension at 21 February 2025 is £3,292.80". I think that this corresponds to the second bullet of your first bullet list above (sorry I was not clearer).
I cannot really answer the second question - the words "GMP equalisation" and "GMP conversion" were used but not clear what method waqs used,  I don't recognise "Method B" or "Method C2". I will ask this as part of my next communication to Aptia.
Regarding the final question, it would be very strange if they were talking about pension increases in payment, because it was not the question I asked, I challenged their calculation of "£3292.80" based on increases to today, and assuming my normal retirement date. Also the fact that the number I was given (£3292.80) has clearly not had the increases (of inflation capped at 5%) applied to it since the 2017 figure makes me pretty sure that they have applied the lower percentages. The percentages in payment *are* 3% though, and I wonder if their error has been to apply the "in payment" percentages inappropriately during the "deferred" period, when a higher rate 
I will ask them re your "what type of equalisation" question. I'm hoping though that I've posted anough tonight to demonstrate that the pension amounts I posted don't make sense. Certainly not take with the statement that "The value of your total pension has either remained unchanged or has increased as a result of GMP equalisation and GMP conversion". Even just adding the (inflation based) increases between 2017 and the GMP conversion date results in a number higher than £3292.80 (inflation from 2017 to 2022 when the GMP stuff happened is approximately 25%, 20% once the 5% cap is applied)

Marcon

CuriousCrow22 said:

I asked in 2017 what the pension was worth and was told "Your annual deferred pension valued at the date of this statement, payable from your Normal Pension Date is £3023.26.

I then made the same request a few weeks ago and was told "Deferred pension at 21 February 2025 is £3,292.80". 

I wonder if you're looking at two different things here? The estimate you were given in 2017 relates to the pension payable from your Normal Pension Date: £3,023.26.

You might have made the same request a few weeks ago (or thought you had!), but possibly the answer relates to something else: your deferred pension as at 21 February 2025 (ie NOT projected to your Normal Pension Date whereas the estimate in 2017 was projected forward to then).

What is your Normal Pension Date/Age under the rules of the scheme, and how old are you now?

Also you CuriousCrow22 said:

Even just adding the (inflation based) increases between 2017 and the GMP conversion date results in a number higher than £3292.80 (inflation from 2017 to 2022 when the GMP stuff happened is approximately 25%, 20% once the 5% cap is applied)

Where are you getting your inflation figures from? Your figures for 2017 to 2021 look rather high (2022 certainly was high!) - what's the measure of inflation used by your scheme?

GMPEqCommenter

A key point is that "your pension has not changed in value" and "the level of your pension in any given year has not changed" are not the same thing. Considering a simplified example, if you have a pension of £500 in one year and £600 in the next year, and that changes to £525 and £575, you're still getting paid a total amount of money of £1,100 under both approaches. In practice when thinking about "value" actuaries do a more complicated version of this where they allow for things like the fact that it's more useful to have money earlier rather than later and there's a possibility you'll die before you get future payments.

Equalisation requires that the male and female pensions be equal, and assuming that they were different to start with that means at least one of them is going to change. One of the approaches, Method B, makes the change by just looking at the male and female pensions at each point in time and paying whichever is higher (and can therefore end up paying a final pension which is higher than either sex would have got originally if it varies over time as to which sex is better off), but Conversion in particular does more reshaping.

It sounds like your pension was equalised using conversion, and probably by doing a one-off calculation for members to create a new pension at date of leaving (it's possible the scheme is intending to do the conversion calculations at the time you actually retire but this sounds less likely given the things the administrator is saying). Did the scheme send you a statement at some point telling you what your pension would be following conversion? If so, was it the same total pension at date of leaving, and were the splits of XS and GMP the same, or had they changed?

It is possible for your pension at date of leaving to change as a result of conversion if you're still deferred. The conversion rules prevent a pension that is already in payment from decreasing, but there's no such protection for a pension that hasn't come into payment yet. In practice most schemes when doing deferred conversion tend to aim to make the pension at NRA equal to the higher of the male and female pension at NRA, on the basis that the actual pension that goes into payment is the thing that really matters. This can result in the pension at date of leaving changing because the rate of deferred revaluations have changed (in particular, the deferred revaluations for males and females are often unequal, so in order to achieve equality you have to change at least one of them).

CuriousCrow22

Marcon said:

CuriousCrow22 said:

There is even more to this but this post is long enough already. Looking for advice as to how to approach this.

Absolutely no point trying to pursue it here - you'd need to provide a whole load more information and you've clearly had quite enough pensions jargon/confusion in your life already (and frankly your post verges on the defamatory, especially your suggestion about how other members are being treated - doubtless a product of the frustration you are feeling).

Ultimately the trustees are responsible for the correct running of the scheme, which is trust, not contract, based. You are, and will remain, entitled to the benefits promised under the Trust Deed & Rules of your particular scheme, so the legal distinction doesn't matter too much.

Your complaint at this point (depending on what's happened to date in terms of communication with the administrators) should be that you can't get an answer couched in terms you can understand/which sets your mind at rest. Ask for a copy of the scheme's Internal Dispute Resolution Procedure (it's specific to the scheme, so you can't download any old thing from the internet) and use that, rather than banging your head on a brick wall and getting yourself very upset (quite possibly needlessly - as the post above says, it's may be that the figures 'could make sense') in the process.

If you don't get a satisfactory answer once you've completed the IDRP, then you could if necessary go on to the Pensions Ombudsman (not the regulator) with a complaint of maladministration. Hopefully the mere fact that you ask the administrators for a copy of the IDRP will put them on notice that they need to give you a much clearer explanation - and if you ensure the trustees also know you've asked for a copy, that won't do any harm to getting things resolved.

Thank you, you have filled in various gaps in my knowledge such as "trust , not contract" (I like to get the terminology correct) and "Ombudsman (not the regulator)". The key point though is  "You are and will remain, entitled to the benefits promised under the Trust Deed and Rules of your particular Scheme". I've only put a summary here, I have kept every document I was ever given regarding this pension and I have run the actual numbers in a spreadsheet and I am very confident that the percentage uplift Aptia say they have applied (3%) is not the one that was 1. Applied previously until 2017 and 2. Promised in the Scheme documentation I still have and 3.Promised again in the "Statement of Deferred Pension Benefit" which I'll quote:
"The pension in excess of the GMP accrued to date of leaving is subject to revaluation for each complete year between the date of leaving and NRD. The rate of revaluation is broadly in line with the increase in the Retail Price Index of the period concerned but subject to a maximum rate of revalution of 5% per annum".
It isn't a complex calculation to estimate (using Excel, with the RPI for each year from a government website, compounded (and yes I remembered to cap 2022 and 2023 down from 11.6% and 9.7% to 5% in both cases).
I will, as you suggest, ask for the IDRP in the first instance. Am I right that once initiated, I must persist with IDRP for a number of weeks (8?) however hard it is made, and only then (if not resolved) can I go to the Ombudsman? To be fair I can play a long game, I've still got over 6 years to my NRD, and no relaistic prospect of retiring until then.

CuriousCrow22

Marcon said:

CuriousCrow22 said:

I asked in 2017 what the pension was worth and was told "Your annual deferred pension valued at the date of this statement, payable from your Normal Pension Date is £3023.26.

I then made the same request a few weeks ago and was told "Deferred pension at 21 February 2025 is £3,292.80". 

I wonder if you're looking at two different things here? The estimate you were given in 2017 relates to the pension payable from your Normal Pension Date: £3,023.26.

You might have made the same request a few weeks ago (or thought you had!), but possibly the answer relates to something else: your deferred pension as at 21 February 2025 (ie NOT projected to your Normal Pension Date whereas the estimate in 2017 was projected forward to then).

What is your Normal Pension Date/Age under the rules of the scheme, and how old are you now?

Also you CuriousCrow22 said:

Even just adding the (inflation based) increases between 2017 and the GMP conversion date results in a number higher than £3292.80 (inflation from 2017 to 2022 when the GMP stuff happened is approximately 25%, 20% once the 5% cap is applied)

Where are you getting your inflation figures from? Your figures for 2017 to 2021 look rather high (2022 certainly was high!) - what's the measure of inflation used by your scheme?

Re "I wonder if you are looking at two different things", I did consider that, but once I read the context it was clear that this was not the case (it explains that if I retire before my NRD the amount will be less).

Re: Where are you getting your inflation figures from they are RPIs from a government website, and given I don't know how they might play with year boundaries and compensate I don't intend them to be more than estimates, but however you view it £3023.26 becomes more than £3292.80 after applying the set (even making multiple pessimistic guesses on possible edge effects). The figures I used are (from 2017): 3.6%,3.3%,2.6%,1.5%,4.0%,11.6%(5%),9.7%(5%),3.6%

CuriousCrow22

GMPEqCommenter said:

A key point is that "your pension has not changed in value" and "the level of your pension in any given year has not changed" are not the same thing. Considering a simplified example, if you have a pension of £500 in one year and £600 in the next year, and that changes to £525 and £575, you're still getting paid a total amount of money of £1,100 under both approaches. In practice when thinking about "value" actuaries do a more complicated version of this where they allow for things like the fact that it's more useful to have money earlier rather than later and there's a possibility you'll die before you get future payments.

Equalisation requires that the male and female pensions be equal, and assuming that they were different to start with that means at least one of them is going to change. One of the approaches, Method B, makes the change by just looking at the male and female pensions at each point in time and paying whichever is higher (and can therefore end up paying a final pension which is higher than either sex would have got originally if it varies over time as to which sex is better off), but Conversion in particular does more reshaping.

It sounds like your pension was equalised using conversion, and probably by doing a one-off calculation for members to create a new pension at date of leaving (it's possible the scheme is intending to do the conversion calculations at the time you actually retire but this sounds less likely given the things the administrator is saying). Did the scheme send you a statement at some point telling you what your pension would be following conversion? If so, was it the same total pension at date of leaving, and were the splits of XS and GMP the same, or had they changed?

It is possible for your pension at date of leaving to change as a result of conversion if you're still deferred. The conversion rules prevent a pension that is already in payment from decreasing, but there's no such protection for a pension that hasn't come into payment yet. In practice most schemes when doing deferred conversion tend to aim to make the pension at NRA equal to the higher of the male and female pension at NRA, on the basis that the actual pension that goes into payment is the thing that really matters. This can result in the pension at date of leaving changing because the rate of deferred revaluations have changed (in particular, the deferred revaluations for males and females are often unequal, so in order to achieve equality you have to change at least one of them).

My pension at date of leaving is unchanged. The ratio between GMP and non GMP portions is changed by a small amount (the GMP portion rising by £14). I have run all these numbers through the spreadsheet and (predicatably) they make tiny differences that get nowhere near to explaining the roughly £800 pa their numbers are now out