Pension reduced because of GMP recalculation.

DRS1

GMPEqCommenter said:

PensionsStuff said:

Always makes me laugh when they only give you the final figures , a bit of a summary, and then are like "here's how to complain if you dont agree"  where's the middle ground of just asking questions ? . It would be VERY easy to be more specific in these letters and e.g. explain that its because post 88 GMP increases at a higher rate than the excess and they've been adjusted or whatever

I think you're over-estimating how easy this would be. The key issue is that there isn't just one potential cause - maybe for one member the problem is that the Scheme put too high a Post88 GMP into payment from GMP age, and GMP increases at a higher rate than excess, but for another member the particular section of the Scheme means that excess increases at a higher rate. Meanwhile for a third member the problem isn't just that the wrong excess / GMP split happened at GMP age, but also in their original retirement calculations. A fourth member had both issues affecting their pension in opposite directions, whilst another member had a transfer-in that didn't get the correct deferred GMP revaluation rate.

In theory you could try to output some automated explanation based on what is going on in the underlying models, but a) it would often end up fairly incomprehensible to anyone who didn't already have a good understanding of pensions and b) I wouldn't be comfortable it was working reliably without quite a lot of checking (which is expensive, and money the Trustees are paying to advisors rather than members), and this is one of those cases where an incorrect explanation is likely to be worse than no explanation. 

They have written to the member saying we have overpaid you.  In the circumstances you would expect them to have done some sums to work that out   Assuming they have actually done the sums to justify their letter then it is not unreasonable to ask to see them.  Where exactly is the mistake for this particular member?  All the rest is just irrelevant.

hyubh

GMPEqCommenter said:

PensionsStuff said:

Always makes me laugh when they only give you the final figures , a bit of a summary, and then are like "here's how to complain if you dont agree"  where's the middle ground of just asking questions ? . It would be VERY easy to be more specific in these letters and e.g. explain that its because post 88 GMP increases at a higher rate than the excess and they've been adjusted or whatever

I think you're over-estimating how easy this would be. The key issue is that there isn't just one potential cause - maybe for one member the problem is that the Scheme put too high a Post88 GMP into payment from GMP age, and GMP increases at a higher rate than excess, but for another member the particular section of the Scheme means that excess increases at a higher rate. Meanwhile for a third member the problem isn't just that the wrong excess / GMP split happened at GMP age, but also in their original retirement calculations. A fourth member had both issues affecting their pension in opposite directions, whilst another member had a transfer-in that didn't get the correct deferred GMP revaluation rate.

In theory you could try to output some automated explanation based on what is going on in the underlying models, but a) it would often end up fairly incomprehensible to anyone who didn't already have a good understanding of pensions and b) I wouldn't be comfortable it was working reliably without quite a lot of checking (which is expensive, and money the Trustees are paying to advisors rather than members), and this is one of those cases where an incorrect explanation is likely to be worse than no explanation. 

I think you're conflating GMP equalisation with rectification. Ultimately the latter is premised on accepting HMRC's figures, where they differ from those on admin. You don't need to develop an 'automated explanation' after the rectification calculation has been done, you need to provide back to the member the reasoning used to accept HMRC's figures, i.e. why a rectification calc was performed in the first place. If the administrator either can't do this or can't defend the reasoning on further questions, then that puts in doubt the decision to reconcile in the way they did...

Belenus

xylophone said:

I notice that her COD is greater than her pre 97 ASP - this indicates that at some stage she was a deferred member of a pension scheme where the GMP revalued in deferment at fixed rather than full rate.

Was the scheme from which she receives this pension the only one with a GMP?

Is there pre and post 88 GMP?

Does the COD figure now require a downwards adjustment?

See https://forums.moneysavingexpert.com/discussion/comment/60448917/#Comment_60448917
re the SERPS scheme.

Thanks for your post. I don't really have the answers.

She did have a few other small pensions which were cashed in some years ago. I will look for the paperwork for those but it may have been discarded.

Hopefully the private pension provider and the State Pension have all got the correct figures and she is not missing out.

I will contact the current pension provider and asked for details of the calculations.

Thanks everyone for your contributions. It is a complex subject that I don't fully understand.

Marcon

Belenus said:

xylophone said:

I notice that her COD is greater than her pre 97 ASP - this indicates that at some stage she was a deferred member of a pension scheme where the GMP revalued in deferment at fixed rather than full rate.

Was the scheme from which she receives this pension the only one with a GMP?

Is there pre and post 88 GMP?

Does the COD figure now require a downwards adjustment?

See https://forums.moneysavingexpert.com/discussion/comment/60448917/#Comment_60448917
re the SERPS scheme.

Thanks for your post. I don't really have the answers.

She did have a few other small pensions which were cashed in some years ago. I will look for the paperwork for those but it may have been discarded.

Hopefully the private pension provider and the State Pension have all got the correct figures and she is not missing out.

I will contact the current pension provider and asked for details of the calculations.

Thanks everyone for your contributions. It is a complex subject that I don't fully understand.

You aren't going to get a couple of lines of nice, easy to follow little figures to look at.

Unless you have a burning desire to understand all this (and some people will), is it really worth the effort when there must be so many other things to do which are far more entertaining and rewarding? Plenty of people drive cars and haven't a clue how the braking system works, but are happy to rely on the expertise of others....

Silvertabby

Belenus said:

xylophone said:

I notice that her COD is greater than her pre 97 ASP - this indicates that at some stage she was a deferred member of a pension scheme where the GMP revalued in deferment at fixed rather than full rate.

Was the scheme from which she receives this pension the only one with a GMP?

Is there pre and post 88 GMP?

Does the COD figure now require a downwards adjustment?

See https://forums.moneysavingexpert.com/discussion/comment/60448917/#Comment_60448917
re the SERPS scheme.

Thanks for your post. I don't really have the answers.

She did have a few other small pensions which were cashed in some years ago. I will look for the paperwork for those but it may have been discarded.

Hopefully the private pension provider and the State Pension have all got the correct figures and she is not missing out.

I will contact the current pension provider and asked for details of the calculations.

Thanks everyone for your contributions. It is a complex subject that I don't fully understand.

It depends on exactly what you mean by 'cashed in' and the type(s) of pension.

If these were contracted out DB schemes, and she:

1.  Left before meeting the vesting period (typically 5 years up to 1988, 2 years after) and took a refund of her own contributions......   Her NI rebate for contracting out would have been recovered from the refund, and paid over to COEG to put her back into SERPS/SP2 for that period.

2.  Left with vested pension rights which were later taken as 'small pot' lump sums or similar......  In these cases, the COD calculation will still apply, even though she doesn't have an ongoing pension.

GMPEqCommenter

DRS1 said:

GMPEqCommenter said:

PensionsStuff said:

Always makes me laugh when they only give you the final figures , a bit of a summary, and then are like "here's how to complain if you dont agree"  where's the middle ground of just asking questions ? . It would be VERY easy to be more specific in these letters and e.g. explain that its because post 88 GMP increases at a higher rate than the excess and they've been adjusted or whatever

I think you're over-estimating how easy this would be. The key issue is that there isn't just one potential cause - maybe for one member the problem is that the Scheme put too high a Post88 GMP into payment from GMP age, and GMP increases at a higher rate than excess, but for another member the particular section of the Scheme means that excess increases at a higher rate. Meanwhile for a third member the problem isn't just that the wrong excess / GMP split happened at GMP age, but also in their original retirement calculations. A fourth member had both issues affecting their pension in opposite directions, whilst another member had a transfer-in that didn't get the correct deferred GMP revaluation rate.

In theory you could try to output some automated explanation based on what is going on in the underlying models, but a) it would often end up fairly incomprehensible to anyone who didn't already have a good understanding of pensions and b) I wouldn't be comfortable it was working reliably without quite a lot of checking (which is expensive, and money the Trustees are paying to advisors rather than members), and this is one of those cases where an incorrect explanation is likely to be worse than no explanation. 

They have written to the member saying we have overpaid you.  In the circumstances you would expect them to have done some sums to work that out   Assuming they have actually done the sums to justify their letter then it is not unreasonable to ask to see them.  Where exactly is the mistake for this particular member?  All the rest is just irrelevant.

The sums will exist, but they will be deep in a model that will not be remotely comprehensible to the average member (and buried in the middle of a lot of other sums that aren't relevant for this particular member but still exist because the model needs to work for every single member in the rectification project). They therefore need interpretation before they are of any use.

hyubh said:

GMPEqCommenter said:

PensionsStuff said:

Always makes me laugh when they only give you the final figures , a bit of a summary, and then are like "here's how to complain if you dont agree"  where's the middle ground of just asking questions ? . It would be VERY easy to be more specific in these letters and e.g. explain that its because post 88 GMP increases at a higher rate than the excess and they've been adjusted or whatever

I think you're over-estimating how easy this would be. The key issue is that there isn't just one potential cause - maybe for one member the problem is that the Scheme put too high a Post88 GMP into payment from GMP age, and GMP increases at a higher rate than excess, but for another member the particular section of the Scheme means that excess increases at a higher rate. Meanwhile for a third member the problem isn't just that the wrong excess / GMP split happened at GMP age, but also in their original retirement calculations. A fourth member had both issues affecting their pension in opposite directions, whilst another member had a transfer-in that didn't get the correct deferred GMP revaluation rate.

In theory you could try to output some automated explanation based on what is going on in the underlying models, but a) it would often end up fairly incomprehensible to anyone who didn't already have a good understanding of pensions and b) I wouldn't be comfortable it was working reliably without quite a lot of checking (which is expensive, and money the Trustees are paying to advisors rather than members), and this is one of those cases where an incorrect explanation is likely to be worse than no explanation. 

I think you're conflating GMP equalisation with rectification. Ultimately the latter is premised on accepting HMRC's figures, where they differ from those on admin. You don't need to develop an 'automated explanation' after the rectification calculation has been done, you need to provide back to the member the reasoning used to accept HMRC's figures, i.e. why a rectification calc was performed in the first place. If the administrator either can't do this or can't defend the reasoning on further questions, then that puts in doubt the decision to reconcile in the way they did...

I don't think I'm conflating with equalisation, but I am focussing more on the rectification stage of GMP rec than the reconciliation stage (as you're probably aware, but for the benefit of those reading who aren't, there are two stages to a GMP rec process - there's the reconciliation where you say "we have a GMP of X, but HMRC have a GMP of Y, why are they different and do we need to change to HMRC's?", and then there's the rectification where you say "because we've agreed that the GMP should actually be Y, this is how the overall pension needs to change"). I agree that it's not that hard to say "we thought the GMP was X but it's actually Y" - the hard bit is explaining why the GMP actually being Y means your pension has changed by Z, and I thought that was what was being asked for.

PensionsStuff

GMPEqCommenter said:

DRS1 said:

GMPEqCommenter said:

PensionsStuff said:

Always makes me laugh when they only give you the final figures , a bit of a summary, and then are like "here's how to complain if you dont agree"  where's the middle ground of just asking questions ? . It would be VERY easy to be more specific in these letters and e.g. explain that its because post 88 GMP increases at a higher rate than the excess and they've been adjusted or whatever

I think you're over-estimating how easy this would be. The key issue is that there isn't just one potential cause - maybe for one member the problem is that the Scheme put too high a Post88 GMP into payment from GMP age, and GMP increases at a higher rate than excess, but for another member the particular section of the Scheme means that excess increases at a higher rate. Meanwhile for a third member the problem isn't just that the wrong excess / GMP split happened at GMP age, but also in their original retirement calculations. A fourth member had both issues affecting their pension in opposite directions, whilst another member had a transfer-in that didn't get the correct deferred GMP revaluation rate.

In theory you could try to output some automated explanation based on what is going on in the underlying models, but a) it would often end up fairly incomprehensible to anyone who didn't already have a good understanding of pensions and b) I wouldn't be comfortable it was working reliably without quite a lot of checking (which is expensive, and money the Trustees are paying to advisors rather than members), and this is one of those cases where an incorrect explanation is likely to be worse than no explanation. 

They have written to the member saying we have overpaid you.  In the circumstances you would expect them to have done some sums to work that out   Assuming they have actually done the sums to justify their letter then it is not unreasonable to ask to see them.  Where exactly is the mistake for this particular member?  All the rest is just irrelevant.

The sums will exist, but they will be deep in a model that will not be remotely comprehensible to the average member (and buried in the middle of a lot of other sums that aren't relevant for this particular member but still exist because the model needs to work for every single member in the rectification project). They therefore need interpretation before they are of any use.

hyubh said:

GMPEqCommenter said:

PensionsStuff said:

Always makes me laugh when they only give you the final figures , a bit of a summary, and then are like "here's how to complain if you dont agree"  where's the middle ground of just asking questions ? . It would be VERY easy to be more specific in these letters and e.g. explain that its because post 88 GMP increases at a higher rate than the excess and they've been adjusted or whatever

I think you're over-estimating how easy this would be. The key issue is that there isn't just one potential cause - maybe for one member the problem is that the Scheme put too high a Post88 GMP into payment from GMP age, and GMP increases at a higher rate than excess, but for another member the particular section of the Scheme means that excess increases at a higher rate. Meanwhile for a third member the problem isn't just that the wrong excess / GMP split happened at GMP age, but also in their original retirement calculations. A fourth member had both issues affecting their pension in opposite directions, whilst another member had a transfer-in that didn't get the correct deferred GMP revaluation rate.

In theory you could try to output some automated explanation based on what is going on in the underlying models, but a) it would often end up fairly incomprehensible to anyone who didn't already have a good understanding of pensions and b) I wouldn't be comfortable it was working reliably without quite a lot of checking (which is expensive, and money the Trustees are paying to advisors rather than members), and this is one of those cases where an incorrect explanation is likely to be worse than no explanation. 

I think you're conflating GMP equalisation with rectification. Ultimately the latter is premised on accepting HMRC's figures, where they differ from those on admin. You don't need to develop an 'automated explanation' after the rectification calculation has been done, you need to provide back to the member the reasoning used to accept HMRC's figures, i.e. why a rectification calc was performed in the first place. If the administrator either can't do this or can't defend the reasoning on further questions, then that puts in doubt the decision to reconcile in the way they did...

I don't think I'm conflating with equalisation, but I am focussing more on the rectification stage of GMP rec than the reconciliation stage (as you're probably aware, but for the benefit of those reading who aren't, there are two stages to a GMP rec process - there's the reconciliation where you say "we have a GMP of X, but HMRC have a GMP of Y, why are they different and do we need to change to HMRC's?", and then there's the rectification where you say "because we've agreed that the GMP should actually be Y, this is how the overall pension needs to change"). I agree that it's not that hard to say "we thought the GMP was X but it's actually Y" - the hard bit is explaining why the GMP actually being Y means your pension has changed by Z, and I thought that was what was being asked for.

GMPR calculations just... aren't that complicated?

At the end of the day, you have a current pension of X made up of Excess X1 and GMp X2, you know that it in fact should be Excess Y1 and GMP Y2 to equal a total of Y instead. How you got there is in the background,  but you factually need "end" numbers easily accessible for several reasons including system updates and figures to provide to a payroll team. In simple terms , there will be a column on an output excel file with these comparative numbers on. Providing these within a communications merge to a member is incredibly simple, its just as simple as adding their name, or title, or their reference number, its a data item to be added.

I suppose the end point is in my view the only thing worse than giving members too much information and confusing matters and using complicated terminology... is providing basically no information and a "trust me bro" approach to any changes