Whose paying for my GMP?

paul_hannah · 15 March 2017 at 3:48PM

reached 59, and asked for figures on my company pension, been paying in for 37 years, and at one point, we were bought out in the late 1970's and given a "special transfer credit" (STC)to invest in a choice of investments, and worded as " to provide an extra annuity depending on investments"
Fast forwards to 2017, my figures for this STC is £103,000, sounds great! especialy as this is on :mad:top of my company pension.
However, the scheme we are with are deducting £66,000 to fund my Guaranteed minimum pension GMP)? Leaving me with a "Pension savings" (PS)of £37,000
A guy i work with is in the same scheme, and joined later than me, so missed out on the STC, but his figures are only slightly less than mine. Ive asked the scheme why, and have been told they cant discuss another members details.
I also asked that as the STC was my choice of investment and could have easily gone belly up returning nothing, or very little, how the GMP would have been financed?
No reply yet, but it seems that by having the GMP , it has reduced my pension pot by £66,000.
I just cant see that by having an extra pot of cash worth £103,000 more than my workmate, doesn't show up as an extra few grand on my annuity figures?

xylophone · 15 March 2017 at 4:41PM

You are now 59 and say that you have been contributing to a pension scheme for 37 years, so since you were 22. You were 22 in 1980?

The GMP system didn't commence until 1978-79.

You were working for the company from the time you were 16/18 but weren't permitted to join the scheme until you were 22?

You say that the "STC" related to a late seventies takeover?

Can you explain the date discrepancies?

Are you a member of a scheme contracted out from 1980-2016?

Have you obtained a new state pension statement?

https://www.gov.uk/yourstatepension?utm_source=Mail-Online&utm_medium=Partnership&utm_campaign=GTKY

Is a COPE shown?

Is the booklet for your scheme on line?

paul_hannah · 15 March 2017 at 5:43PM

Sorry, the document in front of me was regarding an earlier takeover, the actual takeover that triggered the special transfer credit was on 1st December 1988, and yes, i joined the pension scheme at 21, just out of my apprenticeship. (37 years and 8 months)
I am a member of a contacted out scheme from 1988-2016.
my state pension says i need another 7 years to reach the full state pension, although i have paid my NI since starting work in 1974.
COPE is not on any paperwork i have.
dont know if the scheme booklet is online, but i fear i wouldn't fully understand it anyway!

xylophone · 15 March 2017 at 6:37PM

COPE is not on any paperwork i have.

It should be shown on the State Pension Statement.

What is shown as your "starting amount" as at 6 4 2016?

http://www.scottishwidows.co.uk/Extranet/Literature/Doc/FP0587 would be worth a read.

You will be working and paying NI up to state pension age?

In 1988, did the pension scheme at the "original" employer close and were your benefits "bought out" by an insurance company?

You then started to contribute to the "new "employer's contracted out pension scheme?

paul_hannah · 15 March 2017 at 7:16PM

Found my COPE estimate, its £125.58
in 1988, we were simply sold to another company who had their own pension scheme.
I only glanced on the government site, and the figures were 7 more years contributions to reach the full new state pension, so yes, id be paying NI for another 7 years up to 65 years of age.
I had intended to work after taking my company pension.
im currently paying in to a CARE scheme, which the company tried to close last year stating excessive administration costs, and wanted us to leave the CARE scheme and join the Stakeholders scheme.
To "entice" us into the Stakeholders, they increased my percentage contributions from 6.5% to 12%, and reduced the benefits.

xylophone · 15 March 2017 at 10:40PM

Is it the case that your original DB scheme closed and was bought out in a S32 arrangement as here?

http://www.financialadvice.net/s32_buy_out_plan/zone/1288

All your pre 88 GMP would be within the S32 if so.

You then contributed to the new company's DB scheme ( contracted out until April last) and are still contributing? This scheme will hold your post 88 GMP.

Your contributions to your DB CARE scheme have increased partly as a result of contracting out change and partly as a result of a business decision by the company.

paul_hannah · 16 March 2017 at 2:08PM

I do appreciate the reply's, but im still at a loss as to how im paying £66,000 to fund the GMP through the special transfer credit, as the investments could have depleted due to stock market conditions, what would fund the GMP if i 'have this STC?
As for my friend who has paid into the same scheme as me all these years but didnt have the STC, how come his figures are almost as high as mine?

xylophone · 16 March 2017 at 3:06PM

Is this STC in a S32 arrangement as described above?

Is it in effect a separate pension arrangement from the scheme to which you are currently contributing?

You were contracted out into the DB/FS Scheme of X Co starting in 1979/80.

Because you were contracted out and you and your company paid lower NI contributions, the scheme had to promise to pay you a pension at least as great as you would have received had you been contracted in to SERPS.

This is your GMP.

I am guessing (can you confirm) that in 1988, when your company was taken over by Y Co, your pension rights in the X Co scheme were bought out,their value being whatever the "STC" was at that time.

Because you had a GMP, the "STC" arrangement, whatever it is, had to guarantee to protect and revalue your GMP in deferment.

The value of the "STC" arrangement has grown over the years - it must pay at least your revalued pre 88 GMP at GMP age (65 for a man).

It has been estimated that £66,000 of the fund must be set aside to fund the revalued pre 88 GMP in payment while the rest, the "excess" can fund other pension benefits, PCLS etc.

Your current pension (to which you have contributed since 1988) was contracted out until last April.

It contains your post 88 GMP (up to 1997) and an excess.

Your company must pay you at least your post 88 GMP at GMP age - of course you are likely to be receiving considerably more than this.

I stress, however, that I am only making an educated guess at your situation.

Who is the administrator of the STC and your existing company pension scheme?

Your New State Pension "starting amount" has taken your GMPs into account - what is your "starting amount"? Is it around £119.30?

paul_hannah · 16 March 2017 at 5:25PM

Here is a transcript from Portland pensions dated 1997
"The pension accrued in the H&P scheme prior to the 1st December 1988 was transferred to the NabCo retirement plan and subsequently the JaCo scheme as a money purchase account. The special Transfer credit you were granted on transferring to the NabCo retirement plan was also transferred into a JaCo money purchase account."

Please excuse my lack of understanding,
perhaps i should have put more details in my first post.
Once our company had been taken over, the pension was transfered into the new scheme, anyone with 5 years in the old scheme was given the STC.
i simply needed to understand that as my Special transfer, which i was always told was my "Share" of the old scheme once it was wound up, was invested in stock market shares or building society (my choice) would provide "extra pension" should investments be favourable, but what would have funded my GMP if stock market had dropped?
Our funds were with Portland pensions, but have been with JLT benefit solutions for quite a few years now.
Other people who had not been granted the STC are with the same company and dont seem to be needing £66,000 to fund their pension?

hyubh · 16 March 2017 at 9:26PM

paul_hannah wrote: »

what would have funded my GMP if stock market had dropped?

The insurer/scheme - see link xylophone previously gave, half way down.

Our funds were with Portland pensions, but have been with JLT benefit solutions for quite a few years now.

More likely JLT are just the administrator.

Other people who had not been granted the STC are with the same company and dont seem to be needing £66,000 to fund their pension?

If they have pension benefits for employment before 1988, then presumably they still have pensionable service for that period (with a GMP attached), rather than (as you do) a money purchase account (with a GMP attached). Surely you aren't expecting to have the pre-88 GMP 'for free'? GMP won't be something colleagues get in addition to their scheme pension, rather it will be an element of it.

paul_hannah · 16 March 2017 at 11:11PM

"Surely you aren't expecting to have the pre-88 GMP 'for free'? "
honestly, i wouldnt know?
what benefit is it anyway?

To be honest, i still don't understand a thing about pensions, who does except the few? But i honestly didn't see why im footing the bill for my company opting out of the SERPS, it wasn't a choice offered to me, and now the GMP is being funded by my investments.
Other guys i work with have exactly the same pension as me, except they were not in the old pension scheme for the required 5 years to obtain the Special transfer credit ( they were apprentices that had no previous pension) and this is what i fail to grasp,
Weve all asked for quotations for early retirement at 55, (i'm now 59, but used my own aged 55 quotes for comparrison) and their lump sum and annual pensions are very close to mine with my £103,000 STC (were all on the same salary, very little overtime involved)

Whose paying for my GMP?

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