Guaranteed Minimum Pension (GMP) and cash in value

KeiserSoze

Hi

Looking to retire in a couple of years aged 55 and as part of my portfolio I've a very small DB pension with a normal pension age of 65 but you can start taking it at 55, with an adjustment. 

So I wrote to the provider asking for a quote to see how much I would get at 55 and they responded that there's something in place called the GMP and as my projected payment would be below that I can't access the pension until 2030 at the earliest, when I'll be 58.

OK fair enough, wasn't aware of this but this was from a job I left 30 years ago. I've now asked for a valuation for the pension, my thinking being I could take it out and put it into my bigger DC pot.

Has anyone had dealings with a GMP and will I still be able to withdraw the funds to move elsewhere straight away? Obviously I'll get the provider's response in a month or so but wanted to hear the thoughts of others. 

Cheers! 

dunstonh

Has anyone had dealings with a GMP and will I still be able to withdraw the funds to move elsewhere straight away?

It is a safeguarded benefit and it will need an IFA to provide advice on it.  In most cases, the GMP is best left where it is but you would need to check the figures.

xylophone

Sometime between around 1990 and 1995 you were a member of a Defined Benefit Pension Scheme.

The Scheme was "contracted out" of the State Earnings Related Pension Scheme.

This meant that you paid NI at a lower rate so building entitlement to only the Basic (not Additional) State Pension.

However, the Scheme had to guarantee that at age 65 (it would have been 60 were you female), you would receive a pension at least as

great as you would have received had you been contracted in to SERPS . This was the Guaranteed Minimum Pension. 

The GMP requirement ended 5/4/97 when the government of the day introduced the replacement Reference Scheme Test. 

  However, any GMP earned before 6th April 1997 had to be maintained, and clearly identifiable. 
 


When you left, you should have received a statement of deferred benefits showing your GMP and excess over GMP at the date of

leaving service.

The  pension scheme was obliged to revalue your GMP  in deferment - see

https://techzone.abrdn.com/public/pensions/Tech-guide-guaranteed-min-pen#:~:text=free cash calculation.-,Revaluation before retirement,member of the pension scheme

and note

Because GMP is a promise to pay a certain amount of defined benefit pension from age 60/65, if benefits that include GMP rights are paid early, the member's total pension must at least meet the revalued GMP benefit promise from age 60/65. 

With regard to the excess, 

Leavers on or after 1 January 1991

Revaluation extended to cover the whole of the member's pension, in excess of the GMP.  Annual increase applicable was the increase in the Retail Price Index (RPI), capped at 5% (sometimes known as 5% Limited Price Indexation - LPI).

This post may be of interest

https://forums.moneysavingexpert.com/discussion/comment/18024759/#Comment_18024759

You have requested a CETV from the administrator with a view to a transfer out . See

https://assets.publishing.service.gov.uk/media/5a80b577ed915d74e33fbf54/pension-benefits-with-a-guarantee-factsheet-jan-2016.pdf