DB Clawback / State pension Deduction / Barclays 1964

thebizz

Hi, I am hoping someone can give me a simple explanation around my accrued DB benefits.  I have initially emailed tower watkins who administer the Barclays 1964 scheme but just got directed to read the Scheme booklet (which they couldnt provide).  I think I need to understand a bit more before I call them.
I am currently 51 and the plan is to stop working full time in a year or two.  I have some years in a barclays defined benefit scheme which will make up some of my retirement plan (the rest is dc pension, full contributions to state pension and isa savings).
My understanding is I will get a db pension from 60.  TW said they were unable to tell me whether a reduced pension from 57 is possible or if a 25% cash lump sum would be a posibility.
I have a transfer out amount of 190k which is not worth considering (this was 460k in 2021 when I last checked so looks like that opportunity is gone)
My main concern is understanding the state pension deduction that is part of the scheme and how to incorporate it into my spreadsheet.

This is the information i have (sorry for the messy format)

***Preserved Benefit Detail

• Date of Leaving31/03/2010

• Total pension at Date of leaving (per year)£6,743.58

• Total GMP at date of leaving (per year)£119.08

• Post 1988 GMP at date of leaving (per year)£119.08

• Total excess pension at date of leaving (per year)£6,624.50

• State Pension Deduction (applied at State Pension Age)£842.95

Your preserved pension is the pension you have built up in the Defined Benefit section but not yet started receiving. Your pension comprises of a Guaranteed Minimum Pension (GMP) and usually a pension in excess of the GMP. Generally, if you left the Scheme after 1990 the excess pension is increased each year from the date you left the Scheme until you retire, to help protect it from inflation. This does not apply to some or all of your excess pension if you left the Scheme prior to 1991.

The GMP portion of your pension is increased at GMP payment date, which is age 60 for women and 65 for men.

At State Pension Age your pension will be reduced by a State Pension Deduction. Please refer to the Scheme booklet for further details.

 **
My latest statement shows the below information

**Pension from the 1964 Pension Scheme

Here's what you could receive from the 1964 Pension Scheme at age 60. The estimate is before you take any lump sum at retirement and is shown in today's money terms.

£10,652.04a year Total estimated pension from the 1964 Pension Scheme at age 60

Your current deferred pension from the 1964 Pension Scheme is made up of a Guaranteed Minimum Pension (GMP) of £119.00 a year, not adjusted for inflation, and an excess pension of £10,533.00 a year.

The GMP element is only increased at age 65 to take account of statutory increases up to that date. Your excess pension is increased each year in line with the Rules of the 1964 Pension Scheme.

State Pension Deduction

When you reach your State Pension Age, a State Pension Deduction (SPD) of £842.95, calculated at 31 March 2010, will be applied to your 1964 Pension Scheme pension.

***

For future planning I was going to take £10,652.04 and apply inflation against it but at (probably) 68 it looks like I am going to have to take an amount off it but I do not know how that SPD of £842.95 is going to increase. Is it inflation or a percentage of the state pension, I am confused.

Again, sorry if this is a bit all over the place but any help would be really appreciated

DRS1

Not sure if this helps at all 

Barclays Final Salary pension GMP/Excess revaluation & Anti-franking - Page 5 — MoneySavingExpert Forum

In case I have not linked it properly this is the comment I was trying to show you

"Clearly these State Pension Deductions (SPD) can vary a lot from scheme to scheme.

The Barclays situation, from their "Post 06 DIP Guidance notes 64" says:

"In the scheme a deduction is made to the Barclays pension once a member reaches SPA. The maximum SPD is 50% of the single person's Basic State Pension in force when you leave the Scheme. The maximum will only apply if you have completed more than 40 years of service. The maximum in any individual case is 12.5% of total gross pension entitlement before any reduction for early payment. The amount of the deduction, as shown on your pension quotation, is fixed and does not increase over your retirement.

In my case, I had 21 years and 2 months and 16 days service which equates approximately to 53% of 40 years. Therefore I calculate that my SPD should be around 53% of 50% of £2995.20 (basic state pension in 1994 (my date of leaving)), which = £793.73.

This is obviously very close to the figure quoted by Barclays to me as my SPD which is £792.48. It is gratifying to note also that they clearly state that this figure will not increase."

Of course there are two periods when some pension related figure can increase (the period of deferment and the period of retirement so the bit in bold may not be a complete answer.

thebizz

Thank you DRS1 that is so useful.  So it looks like the maximum 12.5% is applied to me for the dates I left (842.95/6,743.58) and my years service and the state pension in 2010 would have been more than that. 
So now I need to clarify whether this number will increase during the defered years up to 68.  The statement leaves some doubt but I am starting off with a better understanding for speaking to TW.

DRS1

Not sure but I think the annual rate for the basic state pension in April 2010 would have been £5077.80.  £97.65 per week.

DT2001

thebizz said:

Hi, I am hoping someone can give me a simple explanation around my accrued DB benefits.  I have initially emailed tower watkins who administer the Barclays 1964 scheme but just got directed to read the Scheme booklet (which they couldnt provide).  I think I need to understand a bit more before I call them.
I am currently 51 and the plan is to stop working full time in a year or two.  I have some years in a barclays defined benefit scheme which will make up some of my retirement plan (the rest is dc pension, full contributions to state pension and isa savings).
My understanding is I will get a db pension from 60.  TW said they were unable to tell me whether a reduced pension from 57 is possible or if a 25% cash lump sum would be a posibility.
I have a transfer out amount of 190k which is not worth considering (this was 460k in 2021 when I last checked so looks like that opportunity is gone)
My main concern is understanding the state pension deduction that is part of the scheme and how to incorporate it into my spreadsheet.

This is the information i have (sorry for the messy format)

***Preserved Benefit Detail

• Date of Leaving31/03/2010

• Total pension at Date of leaving (per year)£6,743.58

• Total GMP at date of leaving (per year)£119.08

• Post 1988 GMP at date of leaving (per year)£119.08

• Total excess pension at date of leaving (per year)£6,624.50

• State Pension Deduction (applied at State Pension Age)£842.95

Your preserved pension is the pension you have built up in the Defined Benefit section but not yet started receiving. Your pension comprises of a Guaranteed Minimum Pension (GMP) and usually a pension in excess of the GMP. Generally, if you left the Scheme after 1990 the excess pension is increased each year from the date you left the Scheme until you retire, to help protect it from inflation. This does not apply to some or all of your excess pension if you left the Scheme prior to 1991.

The GMP portion of your pension is increased at GMP payment date, which is age 60 for women and 65 for men.

At State Pension Age your pension will be reduced by a State Pension Deduction. Please refer to the Scheme booklet for further details.

 **
My latest statement shows the below information

**Pension from the 1964 Pension Scheme

Here's what you could receive from the 1964 Pension Scheme at age 60. The estimate is before you take any lump sum at retirement and is shown in today's money terms.

£10,652.04a year Total estimated pension from the 1964 Pension Scheme at age 60

Your current deferred pension from the 1964 Pension Scheme is made up of a Guaranteed Minimum Pension (GMP) of £119.00 a year, not adjusted for inflation, and an excess pension of £10,533.00 a year.

The GMP element is only increased at age 65 to take account of statutory increases up to that date. Your excess pension is increased each year in line with the Rules of the 1964 Pension Scheme.

State Pension Deduction

When you reach your State Pension Age, a State Pension Deduction (SPD) of £842.95, calculated at 31 March 2010, will be applied to your 1964 Pension Scheme pension.

***

For future planning I was going to take £10,652.04 and apply inflation against it but at (probably) 68 it looks like I am going to have to take an amount off it but I do not know how that SPD of £842.95 is going to increase. Is it inflation or a percentage of the state pension, I am confused.

Again, sorry if this is a bit all over the place but any help would be really appreciated

As I understand it (and I am in receipt of a Barclays pension) the SPD is fixed at the time of leaving and will not alter. The only time it is not deducted in full is if your pension is either made up of only GMP or the excess above GMP is less than the SPD (likely to be in my case because of long term low inflation) in which case the excess disappears and the recipient receives just the GMP.

Did you resign or take a redundancy package? I left in the mid nineties and if you resigned then you could take your pension at 60 but if you took redundancy it depended on the terms offered. I had the option of a actuarially reduced pension anytime from 50-60 - 50 being the earliest you could take a pension when I left and despite the rules increasing to 55 a month prior to my 50th birthday it was considered a pre-existing contract.

 I have had 2 occasions to ask information of WTW and the information I received was contradictory (so much so I took my case to the trustees and received a compensatory payment of £1k). The key is to get hold of the rules for the scheme as they override any mis information you are given (the trustees have a duty to all members to treat them equally).