GMP and deferred pension

DT2001 · 3 August 2018 at 11:03PM

I have just seen your post 21 and will reply ASAP.
I am losing track of a few points so will try and concentrate on one at a time.
WTW!!!8217;s latest reply is below to an email with 4 questions only one of which is replied to. I did not provide a calculation so do not understand the 3rd paragraph. I thought my GMP increase was fixed at 7% and therefore calculable. Could this have been changed?

I will now just send one question at a time to WTW.

Unfortunately we are unable to predict the level of Guaranteed Minimum Pension (GMP) due upon reaching age 65.

Therefore we cannot give you any figures based on assumptions as it is not the policy of the Trustees of the Barclays Bank UKRF. The reason for this is that the Trustee cannot predict future increase in inflation and the actuarial factors used in the illustration are reviewed on a regular basis by the Trustee and can be amended at any time, which would mean the actual benefit payable could be higher or lower that the illustration provided. Pensions and tax legislation could also change in the future (as we have seen regularly in recent years) which could also impact on the benefits payable in the future.

From reviewing the calculation you have presented the figures do look relatively in line with what we would expect to pay you upon reaching GMP age. However we are not able to confirm any figures until closer to the time.

xylophone · 4 August 2018 at 9:22AM

Unfortunately we are unable to predict the level of Guaranteed Minimum Pension (GMP) due upon reaching age 65.

But in post 8, WTW say

An early retirement calculation does this "step-up" test immediately at your actual retirement age. It projects the future increases applied to your pension based on assumptions provided by the Scheme Actuary and then compare this to the GMP that will come into payment at age 65, which is known as it revalues at a fixed rate.

I must confess to being quite baffled.

You know the amount of pension that you are currently receiving.

You know that this will be RPI index linked up to 5% up to age 65.

You know that you are entitled to receive a pension at least equal to your GMP at GMP age.

You want to know what calculation will be done at age 65.

Has TPAS provided you with any assistance?

xylophone · 4 August 2018 at 1:57PM

Just a thought - I wonder would any of the members be able to compare notes

http://www.msbrc.co.uk/section661995.html

And is this of interest?

https://www.ompensions.co.uk/media/255923/kb-gmp-bridge.pdf

DT2001 · 4 August 2018 at 2:54PM

Re Post 24
I am in touch with msbrc as I know their current Chairman however they refer Pension matters to WTW. I will follow up as as more questions have come to light which he maybe able to resolve from personal experience.

The GMP bridge is something I need to investigate further as that would explain, I think, Mike F!!!8217;s £14k figure for early retirement. I can then try and apply to my circumstances.

DT2001 · 4 August 2018 at 3:11PM

Re Post 23. I am corresponding with TPAS but have !!!8216;lost!!!8217; their initial reply as I am working off a different computer. I have asked some supplementary questions so will post all replies when I have them. They are very helpful.
In the meantime I!!!8217;ll go back to WTW and point out the latest reply contradicts the 1st. Unfortunately each enquiry is answered by someone different!
I!!!8217;ll also ask for a copy of the Rules of the scheme.

DT2001 · 4 August 2018 at 3:23PM

Re post 23. Just found TPAS reply

It confirms that we can calculate the GMP at 65, which I was beginning to doubt.
I cannot open the document about State Pension Abatement so have asked re that.
A complex subject made more difficult by the administrators.

Schemes were permitted to let any increases on GMP before retirement effectively be absorbed by the non GMP pension for members who left their pension scheme prior to 1 January 1985 with some GMP !!!8211; this is known as full franking. For leavers after 31 January 1984, this practice was prohibited by anti-franking legislation !!!8211; however, there are still common scenarios where full franking is permitted for post 1985 leavers.

For a member retiring before the scheme!!!8217;s Normal Retirement Age there is no minimum pension until the member reaches GMP age when the minimum pension is GMP revalued to GMP age.

Any member who retires at Normal Retirement Age will receive their excess revalued to NRA plus their GMP at GMP age; however, if there is any escalation in payment on the excess pension between retirement and GMP age, the scheme is able to frank these increases against the GMP revaluation. So franking is permitted on the escalation only.

Willis Towers Watson state that they apply a !!!8216;step-up!!!8217; test immediately at your actual retirement age if you retire early from the scheme. If the projected future increases applied to your pension gives a value lower than the value of your GMP at age 65, then a !!!8216;step-up!!!8217; is given at your retirement date.

I confirm that £1,339 increased by 7% per annum for 29 complete tax years between 12/1995 and 05/2025 gives a figure of £9,525 pa.

You asked whether Barclays can apply the !!!8220;State Age abatement!!!8221;. I have found a reference to State Pension Deduction under the rules of the Scheme in the following document: https://www.pdffiller.com/jsfiller-desk7/?projectId=207328019&expId=3667&expBranch=2#d1a7edd6946949589ff25f8a4103f3d4 at the bottom of page 3 to the top of page 4.

This document should not be relied upon, however, and the scheme administrators should be asked to confirm the current rules that apply to you..

DT2001 · 5 August 2018 at 4:28PM

Re Post 24 and GMP bridging, I do not think it is applied at all.
I!!!8217;ve worked back using WTW!!!8217;s reply on the 6th July. Assuming an actuarial reduction at .65 (which it was for age 51 in 2008) I needed a £10k starting point at retirement. I know the GMP was £1339 and the non GMP was £7396. So the forecast I ncrease that WTW talk about from ERD to NRD needed to be £1265.
I reckon a 2% pa increase on the £7396 took me to £8660.
There cannot have been any accounting for GMP revaluation.

In Mike F!!!8217;s ER quote (from his thread Snowman assumed TW had made a mistake post 31 additional note 3) there has to be bridging. As the focus on Mike!!!8217;s thread turned to NRD I cannot see if the !!!8216;correctness!!!8217; of the ERD quote was truly tested.
It seems odd as his quotes are 2 years after my pension was drawn.

xylophone · 5 August 2018 at 5:14PM

If you choose to take early retirement from the Scheme, a test is carried out to ensure that upon reaching age 65 your total pension amount would be enough to cover the level of GMP that you are entitled to.

In order to calculate an early retirement pension, your excess, or non-GMP, benefits are revalued to the date the calculation is produced and then assumed future increases are applied up to your Normal Retirement Age (NRA) of 60. Your GMP (as at your date of leaving) is then added to this value and an early retirement reduction factor is then applied to these benefits. This gives you your Total Pension amount (at your early retirement date).

Your GMP benefits are not revalued before age 65, regardless of whether you take early or normal retirement.

However, as your GMP benefits could receive a large increase when you reach age 65, a test is carried out to determine whether your benefits are entitled to receive a "step up". This test involves comparing the increases applied to your pension between your actual retirement date and age 65 against the increase in the GMP.

An early retirement calculation does this step-up test immediately at your actual retirement age. It projects the future increases applied to your pension based on assumptions provided by the Scheme Actuary and then compare this to the GMP that will come into payment at age 65, which is known as it revalues at a fixed rate. If the value of your GMP is higher than a step up will be given at your retirement date.

Your "retirement date" was in 2011 when you drew your actuarially reduced pension - was the " step up" (a "bridge") applied then?

Or does the "retirement date" mean something other than your early retirement date?

I think that you do need to clarify the abatement question - I cannot open the link either.

You need to clarify with WTW what calculation will be done when you reach age 65?

DT2001 · 18 August 2018 at 3:45PM

Having failed to get replies to emails with multiple questions I have sent 3 separate ones.
1. Was a theoretical one asking if at SPA the whole of my pension was GMP would the abatement apply.
2. Their application of franking rules.
3. The calculation at 65

The only reply is below which relates to question 2 above!

I have asked for the Rules as it would appear that I need those to try and get clarification.

I now know the worst case scenario and the likely scenario having read your comments and those of Mike f and Snowman on that thread. It is complex however the booklet from Barclays could be so much better. I Will persevere.

I can confirm that your pension is made up of Guaranteed Minimum Pension (GMP) and pension excess.

Your GMP is not payable until age 65. From retirement to age 65 your pension has been treated as pension excess and received increases in line with RPI up to 5%.

From 65 your pension will be split into revalued GMP and pension excess.

We cannot confirm what the split of your pension will be GMP and excess until closer to your 65th birthday.

xylophone · 18 August 2018 at 7:52PM

I can confirm that your pension is made up of Guaranteed Minimum Pension (GMP) and pension excess.

Your GMP is not payable until age 65. From retirement to age 65 your pension has been treated as pension excess and received increases in line with RPI up to 5%.

From 65 your pension will be split into revalued GMP and pension excess.

We cannot confirm what the split of your pension will be GMP and excess until closer to your 65th birthday.

All of which you knew already....:)

GMP and deferred pension

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