ASP vs GMP
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brewerdave
Posts: 8,507 Forumite
I ,like many others I suspect, took the statement that the Govt. were responsible for increases in pre 88 GMP at face value.
HOWEVER, I sat down this morning with my letter from the DWP and my last statement from my pension provider to check that the COD figure shown by DWP was equal to my pre and post 88 GMP.
Good news -it was !!
However, I then looked at how long it would take for the revalued ASP to surpass my total GMP ,when presumably,the DWP would start to pay me some pre 1997 ASP.
To my horror I will have to live to 102 EVEN revaluing at 3% every year! In other words, it'll never get paid!:(
HOWEVER, I sat down this morning with my letter from the DWP and my last statement from my pension provider to check that the COD figure shown by DWP was equal to my pre and post 88 GMP.
Good news -it was !!
However, I then looked at how long it would take for the revalued ASP to surpass my total GMP ,when presumably,the DWP would start to pay me some pre 1997 ASP.
To my horror I will have to live to 102 EVEN revaluing at 3% every year! In other words, it'll never get paid!:(
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Comments
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I presume you reached state pension age under the old rules (ie before April 2016)?
Not sure why you appear to be annoyed by this - it's good news that your GMP will exceed your ASP until you're 102, meaning that your GMP has been revalued at a much higher rate than earnings indexation, and that you'll benefit from this until you're 102! You should be smiling
Unless you ended up getting your GMP "franked"...eg sometimes if you take the pension with the GMP early then they can frank the GMP against the excess. Did this happen? Or was the excess indexed completely separately (which it has to be at NPD I believe).0 -
Did you have a deferred DB pension where GMP revalued at "Fixed Rate"?0
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1. Yes - SPA was prior to April 2016
2. Yes, it was a deferred DB pension taken slightly earlier than scheme age.
3. No "franking" -GMP was revalued at a fixed rate prior to taking the pension.
I wasn't suggesting that I'm worse off by being contracted out -far from it - but I had assumed that, sooner rather than later, I would start to see some ASP - until I calculated the numbers yesterday.
So I have a fixed amount of Company pension (~£5kpa) which will never grow - and no chance of ever seeing any increase in ASP pre 97 in my state pension.
I regard myself as moderately intelligent but found untangling this pension situation challenging -I suspect that the majority of people in this position ,would find it nigh on impossible to understand - and the majority of staff employed by DWP impossible to explain!!0 -
Why 1997? I thought inflation linking capped at 3% was required for GMP pensions in payment for 1988-1997. So, at least in recent years there would be no call for extra ASP. Or am I confused?0
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Why 1997? I thought inflation linking capped at 3% was required for GMP pensions in payment for 1988-1997. So, at least in recent years there would be no call for extra ASP. Or am I confused?
Because the ASP is compared with the total GMP payable - the portion of GMP post 88 but pre 97 in my Company Pension is increased by CPI in April so maintains part of the differential. (I THINK!!) between ASP and my total GMP.
Bunging some more numbers in my spreadsheet this morning suggests (to me ,anyway:rotfl:) that most people with a reasonable amount of pre 88 GMP will be in the same position and never see any ASP paid thru the SP in their (or their children's ) lifetimes !!0 -
See
https://forums.moneysavingexpert.com/showthread.php?t=4532605&highlight=gmp+revaluation%20%20&page=2
post 21 onwards
for the difference between the position had the poster's occupational pension been increased by "Fixed Rate" rather than the correct (in his position) "Full Rate".0 -
Yes, but your GMP has grown at a much higher rate than earnings up till the time you started taking it (otherwise it wouldn't be so much greater than the ASP).brewerdave wrote: »1. Yes - SPA was prior to April 2016
2. Yes, it was a deferred DB pension taken slightly earlier than scheme age.
3. No "franking" -GMP was revalued at a fixed rate prior to taking the pension.
I wasn't suggesting that I'm worse off by being contracted out -far from it - but I had assumed that, sooner rather than later, I would start to see some ASP - until I calculated the numbers yesterday.
So I have a fixed amount of Company pension (~£5kpa) which will never grow - and no chance of ever seeing any increase in ASP pre 97 in my state pension.
Presumably you left a contracted out scheme 2 or 3 decades ago and got fixed rate revaluation at a high rate eg 8% or so? Much higher than inflation anyway. And that differential isn't eroded until you're 102!!
So you get the benefit of a GMP which is higher than your ASP until after you get the telegram from the Queen. Or even King. All that GMP-ASP for a few decades is profit to you!
Hardly anyone understands it. Even people on this board probably don't understand it fully.I regard myself as moderately intelligent but found untangling this pension situation challenging -I suspect that the majority of people in this position ,would find it nigh on impossible to understand - and the majority of staff employed by DWP impossible to explain!!0
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