Minimum Guaranteed Pension

Retired_I.F.A.

You contracted out of serps with the final salary scheme which is keeping to it's g-tee that it's better than serps and you've paid nothing into serps. yet now are now moaning
as if you had been ripped off.:rotfl:

Dunwunderin

Hi,
Thanks for your comments.
However the last comment is not strictly correct.

Although contracted out of Serps, I in fact made small annual payments to Serps automatically. This Additional Pension has built slowly over the years but is oblitered by the Contracted Out Reduction at present..
Therefore, my Additional Pension is too low or my COD is too high and causing me indexation problems.

Who said pensions are easy?

Retired_I.F.A.

Although contracted out of Serps, I in fact made small annual payments to Serps automatically.

So you had a 2nd employed job then that for some reason you paid your NI contributions on that 2nd job annually?

This Additional Pension has built slowly over the years but is oblitered by the Contracted Out Reduction at present..

If the answer to my question is yes, then you are entitled to some serps based on that 2nd job in addition to your final salary scheme.

Who said pensions are easy?

Making sense of them is easier if everyone talks the same language, I'm still baffled as to what COD stands for

EdInvestor

Contracted Out Deduction

Dunwunderin

Hi,
Edinvestor is right----Contracted Out Deduction. This is designed to stop you benefitting twice!

For a period of about 3 years I was contracted IN in a later job as the Company only operated a money purchase scheme. I did receive some credit for this in AP but again not enough to exceed my current COD . So net gain is ZERO.

Retired_I.F.A.

Sorry but I still dont understand your gripe.You got the final salary scheme benefits which included an amount equal to the serps you would have got had you not been contracted out in that job. You got the money purchase pension scheme benefits from the 2nd contracted in job and you got serps for the period in that 2nd job. Yes ?

Dunwunderin

Hi,
No!.
Look at your State Pension "General Increase in Benefits" annual letter.
It states;
Basic State Pension £90.7
Pre 97 AP £ 103.71
COD £125.67
Post 97 AP £ 0.5
GRP £ 5.93

Total payable £ 97.13/week

As my COD is greater than pre 97 AP no benefit is payable for this element. Annual Pension increases are going in here from my GMP

My local Pensions Office says there is a problem but unsure how to solve it. Looks like I need to try the Newcastle upon tyne Pensions Headquarters!

Retired_I.F.A.

Good idea, I for one cant understand your problem besides COD I have no idea whats meant by AP either.

BTW I wont be able to look at mine for another 15 years when I hit 65

Debt_Free_Chick

The COD is greater than the additional pension that would have been paid if you had not been contracted out of SERPS. This is common as the COD is often increased, before retirement, at a fixed rate e.g. 8.5% 7.5% 6.75%. These are the rates that the government specified and the rate applied to your COD depends on when you left the scheme.

In SERPS, your additional pension is based on your career earnings with each year's earnings increased in line with national average earnings (or thereabouts). So .... if your COD has been increasing at 7.5% and NAE has increased by 5%, then your COD is more than your Additional Pension.

In effect, you are getting "a bonus" as you would only have received the Additional Pension if you'd been in SERPS.

From now on (I assume you're 65?), the scheme will increase part of your COD by 3%. The DWP knows this so they know what your COD will be next year. Your Additional Pension will increase in line with RPI and the new COD will be deducted. Once the Additional Pension exceeds the COD, the balance will be paid with your basic State Pension.

You are actually in a slightly better position than you would have been, in SERPS - as you receiving a bigger pension, although it will level out at some point in the future.

Retired_I.F.A.

Doh of course, Seeing the answer I now understand the question.


I'd have sussed it in seconds years ago, rust set in pretty quick when I retired