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GMP confusion

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  • xylophonexylophone Forumite
    34.3K posts
    Part of the Furniture 10,000 Posts Name Dropper
    ✭✭✭✭✭
    GMP was (and is) very difficult to explain in the kind of media soundbites that most of us understand.
    Some people were winners under the nSP rules, some were losers. Some will benefit from the transition rules and others won't. Nobody can amend their employment history of decades ago.

    Very true - and this does come across in the very detailed and thorough NAO report.
  • hogweedhogweed Forumite
    104 posts
    Part of the Furniture 10 Posts Combo Breaker
    Thanks everybody – sadly, for me the most important thing you’re teaching me is that I haven't a hope in hell of understanding any of it.



    Also, whatever the rights and wrongs, I’m stuck with it all now.
    Fortunately, I live fairly frugally!


    Best wishes
    Roger
  • If you study the paragraphs at the end you will see that that the DWP are supposed to contact everyone affected to tell them about non payment of GMP indexation including any of you who are affected. This does not affect me as I started receiving my state pension in 2005.

    When I mentioned had anyone seen mention of GMP indexation not being paid I did not make myself clear, what I was asking was had anyone seen it mentioned in legislation that GMP indexation would not be paid. This would have had to have happened before it became law in May 2014 under the 2014 Pension Act.

    Have any of you thought about that the law might not of actually been changed to do away with GMP indexation and that the DWP are not paying GMP indexation with the approval of Parliament and may be doing it illegally.
    That is why I am asking if any of you seen non payment of GMP indexation actually mentioned in legislation not just articles in the press and reports by Natioal Audit Office, Treasury and Work and Pensions Committee which were all done after the 2014 Pension Act had become law in May 2014 .

    I don't know if any of you are aware of the 2011 pension act which became law in November 2011 which very clearly explained that GMP indexation a person would receive after state pension age was to be consolidated into the starting pension so that the GMP calculation after a person reached state pension age would not have to be done. The bit about GMP indexation did not have a start date as it would be decided some time in the future.
    Page 20 explains the old system for GMP indexation very well which for some reason the DWP now deny ever happened.

    Then read pages 21 to 28 which explains consolidation of GMP indexation after state pension age.
    As I said it did become law in November 2011 so why was it not used in the 2014 pension act/

    https://webarchive.nationalarchives.gov.uk/20110601202012/http://www.dwp.gov.uk/docs/pensions-bill-mpip.pdf


    c) Within three months of this report, review and report back on to us on the
    learning from this investigation, including action being taken to ensure
    that affected individuals receive appropriate communication from the
    DWP about their state pensions. ln particular, the DWP should ensure that
    their literature clearly and appropriately references that some
    individuals, who have large GMPs and reach State Pension Age in the early
    years of the new State Pension, may be negatively affected by the
    changes. The DWP should advise individuals to check their circumstances,
    and should provide instructions for how to do this;
    d) Within three months of this report, review and report back about how
    other individuals who believe they have suffered an injustice as a resut of
    the maladministration we have found can raise any concerns with the DWP
    and have them considered;
  • Dairy Queen.

    Some people were winners under the nSP rules, some were losers. Some will benefit from the transition rules and others won't.

    Nearly all public sector because their occupational pensions have been made to taker over the GMP indexation previously paid via the state pension

    Not seen a reduction in occupational pension because of employers NI rebate like most people in the private sector have,

    Possibly also being able to burn off some of the period for being contracted out by earning extra state pension. Most probably less than 1000,000 people in the private sector in final salary schemes open to future accrual as final salary.

    Most probably over 10 million people who were contracted in prior to 6 April 2016 who had GMPs who are now accumulating at a lower rate than they did under the old system.

    See article done by Institute of fiscal studies from which you will see for people who are contracted in low earners will receive about £42 pw less under the NSP and high earners about £57 pw less.

    I don't think the DWP has explained to anyone who was contracted in how much less they will receive under NSP

    Of those people who gain under NSP most probably 90% are in the public sector because they have not seen a reduction in their occupational pension like the private sector or loss of GMP indexation like the private sector.

    A Single-Tier Pension: What Does It Really Mean? July 2013
    https://www.ifs.org.uk/comms/r82.pdf

    Page 50
    • The relative advantage of the current system is also greater for those
    expecting to contribute for more than 35 years. The maximum amount of
    state pension income that someone in this cohort could receive under the
    proposed system is £146.30 per week. This compares with a maximum of
    £213.60 per week under the current rules for a high earner and £189.04 per
    week for a low earner (both with 49 years of contributions).
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