Bit baffled by Guaranteed Minimum Pension

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  • greenglide
    greenglide Posts: 3,301 Forumite
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    At the moment, only those public sector pensioners who reach SPA before April 2021 get full protections. Mr S is ok, but I don't reach SPA until April 2022. I think the theory behind this decision is that 'us youngsters' have the benefit of being able to increase our pensions from the old basic State pension to the full single tier pension by working/paying NI from 2016 onwards.
    The original reasoning was supposed to be tied in with equalisation and extension and was up to 2019, wasnt it?


    I have never understood why this should be the case despite having a fair bit around it.
  • hyubh
    hyubh Posts: 3,532 Forumite
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    greenglide wrote: »
    The original reasoning was supposed to be tied in with equalisation and extension and was up to 2019, wasnt it?

    I have never understood why this should be the case despite having a fair bit around it.

    The initial equalisation issue is straightforward: if there is no longer the mechanism for the balance of full PI to be paid through the state pension, then given GMP ages are different between men and women (and the scheme will pay - and always has paid - full PI for pensioners under GMP age), women reaching GMP age under nSP would lose out if the scheme didn't now pay full PI on GMPs in payment.

    However, you can't then simply say, well pay full PI on GMP up to age 65 for both men and women, due to the two sexes having different GMP accrual rates. It's a complete mess...
  • brewerdave
    brewerdave Posts: 8,511 Forumite
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    I was just reading this thread and thinking that there should be a book written about State Pension and its interaction with contracted out DB pensions .......how about " GMP for Dummies" -I would certainly buy it ,having recently battled with the concepts of pre 88 GMP,post 88 GMP, ASP,COD, indexation pre SPA etc etc:eek:
  • Silvertabby
    Silvertabby Posts: 9,039 Forumite
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    brewerdave wrote: »
    I was just reading this thread and thinking that there should be a book written about State Pension and its interaction with contracted out DB pensions .......how about " GMP for Dummies" -I would certainly buy it ,having recently battled with the concepts of pre 88 GMP,post 88 GMP, ASP,COD, indexation pre SPA etc etc:eek:


    It would still be the size of War & Peace !
  • Silvertabby
    Silvertabby Posts: 9,039 Forumite
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    hyubh wrote: »
    The initial equalisation issue is straightforward: if there is no longer the mechanism for the balance of full PI to be paid through the state pension, then given GMP ages are different between men and women (and the scheme will pay - and always has paid - full PI for pensioners under GMP age), women reaching GMP age under nSP would lose out if the scheme didn't now pay full PI on GMPs in payment.

    However, you can't then simply say, well pay full PI on GMP up to age 65 for both men and women, due to the two sexes having different GMP accrual rates. It's a complete mess...


    There must a good (or bad?) reason why GMP age didn't increase with SPA age - but I've never been able to fathom it.
  • woolly_wombat
    woolly_wombat Posts: 819 Forumite
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    Silvertabby wrote: »
    There must a good (or bad?) reason why GMP age didn't increase with SPA age - but I've never been able to fathom it.

    Lobbying from employers who didn't want to fund fixed rate GMP revaluation for wimmin up to SPA perhaps?

    Some of us can still remember the bitter opposition to part-timers' membership of employer pension schemes in the 1990s.
  • hyubh
    hyubh Posts: 3,532 Forumite
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    woolly_wombat wrote: »
    Lobbying from employers who didn't want to fund fixed rate GMP revaluation for wimmin up to SPA perhaps?

    Not really - GMP age not matching SPA isn't an issue in itself, since the old statutory late retirement factor for GMP still applies, regardless of SPA going up. This is different from the state pension itself, where 'normal pension age' rising hasn't involved any 'late retirement factor' to offset it.

    The cause of problems around GMP equalisation is squarely the government, whose preferred posture over the past 20-25 years has been to ignore the issue.
  • hyubh
    hyubh Posts: 3,532 Forumite
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    Silvertabby wrote: »
    There must a good (or bad?) reason why GMP age didn't increase with SPA age - but I've never been able to fathom it.

    What would be the good reason be for it to have changed...? GMP accrual ceased long ago - saying GMP ages ('NPAs') should be retrospectively altered is like saying LGPS membership from the 1970s and 1980s should retrospectively earn 2014 scheme benefits instead of the pension applicable to the scheme rules of the time...
  • woolly_wombat
    woolly_wombat Posts: 819 Forumite
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    hyubh wrote: »
    Not really - GMP age not matching SPA isn't an issue in itself, since the old statutory late retirement factor for GMP still applies, regardless of SPA going up

    Do you have a link please hyubh?

    Can I defer my pension from a company that I left in 1985 until I am 65, and if so would the GMP continue to revalue by 8.5% pa, the same as it would if I were male?

    The scheme is underfunded so how would I be affected if it ended up in the PPF?
  • xylophone
    xylophone Posts: 44,496 Forumite
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    edited 8 August 2018 at 1:18PM
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    Can I defer my pension from a company that I left in 1985 until I am 65

    GMP revaluation is not the same as late retirement increase on GMP.


    http://www.legislation.gov.uk/ukpga/1993/48/section/15/enacted



    You are female? Your GMP age is 60 so as far as I can see the GMP revaluation at 8.5% would not continue beyond GMP age - only the GMP late retirement increase could apply?

    Was Scheme Pension Age 60? Would your Scheme pay late retirement increases on excess scheme pension if you deferred beyond NPA?

    https://www.pensionprotectionfund.org.uk/TechnicalGuidance/Pages/Guaranteed_Minimum_Pension.aspx

    https://www.pensionprotectionfund.org.uk/TechnicalGuidance/Documents/Part_D_Scheme_questionnaire_and_glossary.pdf
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