GMP and deferred pension

mrschaucer · 30 August 2018 at 4:24PM

DT2001 wrote: »

WTW latest

I can confirm that The Scheme Trust Deed and Rules is a large document containing many attachments and deed’s of variation, sometimes too large to send via email.

Dropbox? (Other similar interwebby things are available ...)

enthusiasticsaver · 30 August 2018 at 4:36PM

I am too reading this with interest as I reach my GMP at the beginning of 2020 and am a deferred member of the Barclays 1964 pension scheme. I have never managed to get definitive answers from TWW and they seem to indicate that it is up to government legislation what happens when I reach GMP age and then again when my state pension pays out 6 years later. I plan to write to them 6 months before and see what they say. All of my pension is GMP and is pre 1988.

enthusiasticsaver · 30 August 2018 at 4:40PM

DT2001 wrote: »

Whilst waiting for WTW, patiently - Mike, Cornwall is a great place to be. We are just outside Plymouth, only downside is friends from the SouthEast seem to think it is too far to travel. Still, house prices are lower so more money to invest for retirement. Tony

We are also in Cornwall, just outside Plymouth. Lovely part of the world to live. Takes us 4.5 hours to drive back to the south east where a lot of our family still live.

xylophone · 30 August 2018 at 4:54PM

We are also in Cornwall,

Does this county have a fatal attraction for Barclays refugees?:)

MikeFloutier · 30 August 2018 at 4:59PM

If anyone wants a copy of the trust deed and subsequent variations (up to Oct 2013) please pm me your email and I'll send them. There are five files totalling around 1.5MB; not even a big photo!!

xylophone · 30 August 2018 at 5:20PM

I am too reading this with interest as I reach my GMP at the beginning of 2020 and am a deferred member of the Barclays 1964 pension scheme.

You are female?

Then your GMP age (60) aligns with Scheme Pension Age, also 60.

You are sure that your pension consists solely of pre 88 GMP?

The scheme has no obligation to pay any increase on pre 88 GMP in payment.

Have you obtained a new state pension statement?

MikeFloutier · 30 August 2018 at 5:55PM

xylophone wrote: »

It is not possible to disentangle GMP from private/occupational scheme provision.

I agree that there is some entanglement, in that:

1. The scheme are responsible for paying both the final salary pension (that was agreed prior to contracting out days) AND the GMP, which, as you say, was designed to replace the additional state pension (SERPS), the GMP being funded by an NIC rebate of 3.4% to the employer; with an extra 1.4% going direct to employee (which could be used to fund his pension)

2. Not really sure what further legal entanglement there is although the administration certainly seems to have created plenty.

However I'm starting to be persuaded by the idea of two separate parts to my Barclays pension:

1. My Final Salary pension (which pre-dates opting out), which is obliged to pay me a pension of 2/3rds of my final salary (pro-rated to my service), and, in addition,

2. My GMP which is defined as follows - A GMP is the minimum benefit a UK occupational pension scheme must provide for a member (or a surviving spouse or civil partner following the death of a member) in relation to periods of service during which that member was in employment which was contracted out of the State Earnings-Related Pension Scheme (SERPS) between 6 April 1978 and 5 April 1997.

The reason I'm happy to consider them as independent entities is that my FS DB pension was in place 5 years before "opting out" began. THEN in 1978 we were opted out and got a GMP (to replace SERPS) funded by the employer NIC rebate of 3.4% mentioned above.

A sort of proof of this would be seen if an employer offered a DB scheme giving say 1% of final salary as a pension. Assuming they had opted their staff out they would be in the position of having pay the GMP without any meaningful hope of franking.

So how on earth is it possible to mix the two up in any way. What is the justification?

MikeFloutier · 30 August 2018 at 6:23PM

So much for theory. On the anecdotal front, I just dug out some figures shared with me by a Barclays 1964 scheme retiree who had been following the big thread.

In 2016 WTW had quoted him just under £9,500 at SPA. He made his own estimate based on the Barclays booklet, just as I did.

Then, having escalated things to TPAS, they agreed a figure of around £14,500 (after State Pension Deduction)

As my old friend Roger Ashdown, a securities clerk I worked with in the late '70s, used to say - Don't let the b****** grind you down. I can still picture him saying it through gritted teeth

xylophone · 30 August 2018 at 7:17PM

So how on earth is it possible to mix the two up in any way. What is the justification?

it seems to me that whether one likes it or not the fact is that they are inextricably linked because of decisions made by Government when it was decided that there should be some sort of earnings related pension as well as basic state pension.

It was possible for occupational schemes (pre SERPS) to contract out of the Graduated Pension Scheme by providing Equivalent Pension Benefits - you could say that the Government was protecting workers by requiring employers who wanted to contract out to make provision at least as good as would have been made by the state

In addition to the above was the question of increases in that part of an occupational pension which related to GMP once age 60/65 ( formerly SPA) was reached - these were linked to State Pension under the old state pension scheme.

We now have a new state pension but those old arrangements cast a long shadow - it is still the case that Barclays has no obligation to index link pre 88 GMP in payment and post 88 GMP only up to 3%.

As for regarding the occupational pension as somehow separate from GMP I don't think that this can be correct - schemes have always been at pains to emphasise that GMP is part of the occupational pension, not in addition to it.

hyubh · 30 August 2018 at 8:41PM

MikeFloutier wrote: »

I'm starting to be persuaded by the idea of two separate parts to my Barclays pension:

1. My Final Salary pension (which pre-dates opting out), which is obliged to pay me a pension of 2/3rds of my final salary (pro-rated to my service), and, in addition,

2. My GMP

Unlikely. More likely the GMP was not addition to, but came out of the 'pension of 2/3rds of my final salary (pro-rated to my service)' (presumably by that you mean an accrual rate of 1/60 final salary, up to a maximum of 40 years).

While anti-franking legislation muddied the waters, this was still with respect to making GMP and excess 'independent entities' only after leaving, and therefore, only after the 1/60 final salary x years of reckonable service calculation has been performed to calculate the total pension on becoming a preserved pensioner.

A GMP is the minimum benefit a UK occupational pension scheme must provide for a member (or a surviving spouse or civil partner following the death of a member) in relation to periods of service during which that member was in employment which was contracted out of the State Earnings-Related Pension Scheme (SERPS) between 6 April 1978 and 5 April 1997.

Yes, but calculated (like SERPS) as a sort of CARE pension where the pensionable pay is your NI'able earnings. So, the fact your scheme pension was a final salary one doesn't really make the contrast between the excess and GMP, since the GMP was salary-related too (some private sector schemes even used NI'able earnings as their own definition of pensionable pay, or at least made it relevant, e.g. anything nothing up to the LEL being pensionable).

The reason I'm happy to consider them as independent entities is that my FS DB pension was in place 5 years before "opting out" began. THEN in 1978 we were opted out and got a GMP (to replace SERPS) funded by the employer NIC rebate of 3.4% mentioned above.

A sort of proof of this would be seen if an employer offered a DB scheme giving say 1% of final salary as a pension. Assuming they had opted their staff out they would be in the position of having pay the GMP without any meaningful hope of franking.

A scheme (sponsoring employer) didn't 'hope' of franking - rather, it would be the natural thing to do when considering GMP to come out of the total scheme scheme pension. It's anti-franking rules (introduced well after contracting-out began) that - by definition - meant you now had to see GMP and excess as 'independent identities' in deferment and not just when the GMP came into payment.

GMP and deferred pension

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