GMP and deferred pension
Comments
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https://www.pensionsandannuities.co.uk/The_transfer_value_calculation.htm
https://www.royallondon.com/about/media/news/2018/may/five-good-reasons-to-transfer-and-five-good-reasons-not-to-royal-london/
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/495377/pension-benefits-with-a-guarantee-factsheet-jan-2016.pdf
Read through all the above.
thanks I have read through this and it is a good start to consider my options. Another question is the statement stated I opted out of SERPS during the period I was in this pension scheme. Will this impact on my state pension?. I have worked for over 35 years.,0 -
I opted out of SERPS during the period I was in this pension scheme. Will this impact on my state pension?.
Contracted out.....see link in post 80 of this thread.
You can obtain a state pension statement here
https://www.gov.uk/check-state-pension0 -
I have a Coop Pension (PACE Complete). It is classed as Contracted Out Defined Benefits Scheme. I left the Coop in 1995. I recently asked for a transfer value statement and they provided one on the basis I would be retiring at 55 which is not the case.
This won't have affected the CETV - sounds like you got two things, a CETV and an early retirement quote.There are a few issues I am taking up with them but I am also considering transferring this pension into my main pension to consolidate it as the costs in my main pension are only 0.4%.
This doesn't give a reason to transfer out or not. The decision to give up your defined benefits with PACE should come first, then the question of what DC arrangement to transfer into only after that. (Your 'charges' with PACE are nil by the way.)Currently the pension is estimating a deferred GMP pension of £330
Assuming PACE uses fixed rate GMP revaluation, this is revaluing by 7% every year to age 65, no estimating required. Shame a higher proportion of your pension isn't GMP, eh ;-)and a pension for benefits accrued in the former scheme( in excess of GMP ) of £2330. The said they factored in a 30% pension reduction on the basis I will be retiring early.(I wont be)
If you really wanted to you could request an estimate at NPA, however you should be able to work it out yourself - statutory revaluation on excess for someone who left in 1995 is CPI capped to 5%, so the guessing aspect is whether inflation will ever top 5% between now and your normal pension age in the scheme.Is it considered a risk financial decision to move a defined pension into a lifestyle fund to purchase units and leave myself open to the market fluctuations? Sorry to be vague on this but pensions are not my strong point.
Of course, that's why the law says you will need to take financial advice.0 -
This won't have affected the CETV - sounds like you got two things, a CETV and an early retirement quote.
This doesn't give a reason to transfer out or not. The decision to give up your defined benefits with PACE should come first, then the question of what DC arrangement to transfer into only after that. (Your 'charges' with PACE are nil by the way.)
Assuming PACE uses fixed rate GMP revaluation, this is revaluing by 7% every year to age 65, no estimating required. Shame a higher proportion of your pension isn't GMP, eh ;-)
If you really wanted to you could request an estimate at NPA, however you should be able to work it out yourself - statutory revaluation on excess for someone who left in 1995 is CPI capped to 5%, so the guessing aspect is whether inflation will ever top 5% between now and your normal pension age in the scheme.
Of course, that's why the law says you will need to take financial advice.
I was pretty naive in 95:) thanks for the comments. I have got a bit to think about.0 -
How does this look
Calculation re P 10
Pension at date of leaving membership of the scheme 31/12/1995
Designated GMP portion £1339
Non GMP portion £4661.32
Total deferred pension £6000.32
Estimated pension at 1/11/2011
Designated GMP portion £1339
Non GMP portion (including annual increases since leaving active membership) £7396
Total deferred pension £8735
Reduced by an actuarial figure of 0.626 £5468
Estimated actuarially reduced value of Non GMP portion at 1/11/2011
£7396 * 0.626 (figure from 2003 quote) £4629
Actual pension paid at ERA (1/11/2011) including an element of step up £6571
less estimated pension just actuarially adjusted £5468
Amount of adjusted non GMP increases step up £1103
Estimated total pension on day before 65th birthday (20/5/2025)
This assumes total pension increases from £7559 (as of today) by 2.5% p.a. £8985
Estimated pension at GMP payment date (21/5/2025)
GMP portion (£1339 revalued at 7% for each complete tax year since
leaving active service) £9529
Non GMP portion (see note 1 below) £4629
estimated total pension in payment from age 65 from the scheme £14158
Estimated pension at SPA (66 and 2 months) = £14158 plus increase since GMP age by £218 (Non GMP portion increased by RPI say 2.5%,
Pre 88 GMP (£4873.67) by 0% and post 88 GMP (£4655.33) by CPI, say 2.2%) less SPD £666 - £13710
Note 1
Increases in pension from retirement date are offset against GMP revaluation therefore non GMP
portion reverts to actuarially adjusted value at drawdown on 1/11/2011
This is also known as a 'step-up' and in this example is £5173
I was a little confused at the stage of my first version of "page 10" for your situation. I'm guessing the reason was, that there are TWO step-ups, in the case of an ERD situation, one at ERD date (which NON-GMP based) and the other at GMP date (which IS GMP related).
In my first version I mistaken called your ERD step-up "GMP related", which I corrected in the 2nd.
Regarding your version of "page 10":
1. My feeling is that the issue mentioned above, whilst helpful for our understanding of the background, isn't needed in "page 10". As has been said, GMP only steps up at GMP date; so I'd suggest leaving it out altogether - for the sake of brevity/clarity.
2. I'd leave out the SPD paragraph. I know they have a very brief note of it in "page 10" BUT that was before GMP date and SPA got separated. Your paragraph is much longer - just a thought on the brevity/clarity front.
Given how hard they appear to find it to understand stuff I'm thinking that less is more.
Finally, another point occurred to me. Is the GMP portion of £1,339, included in your pension, subject to actuarial reduction? - bearing in mind it has to be in payment (un-revalued) for an extra 9 years?0 -
I have submitted the question without tweaking it too much on the basis that they will either manage not to answer it at all or we will glean a little more information which will allow another question based on less guess work.
TPAS advise that some of the variations to the Trust deeds after my leaving date will be relevant as the 'rules' can be amended until the date of an event especially to comply with law changes.
WTW sent variation 55, on its own, in response to the 1st request for the Trust Deeds. This states that the amendments only apply to active members with 2 exceptions. On WTW website my query is marked as completed!!
Thankfully I have 7 years to sort thisMikeFloutier wrote: »
Finally, another point occurred to me. Is the GMP portion of £1,339, included in your pension, subject to actuarial reduction? - bearing in mind it has to be in payment (un-revalued) for an extra 9 years?
Yes, if the email of 6th July is correct as the actuarial reduction is after adding in the original GMP.
It is of course a notional figure until 65?0 -
It is of course a notional figure until 65?
Not notional, just unrevalued in the ERD calculation?0 -
I have submitted the question without tweaking it too much
Looking forward to the response.
I guess this is where the rubber hits the road, it's certainly what I've been waiting for and the reason I joined this thread.
It's going to be a great barometer for how I approach things at Christmas. Just make sure you get it sorted by then! :rotfl:0 -
Looking forward to the response.
I guess this is where the rubber hits the road,
Now, now! I hope that you are not using Tony as a cat's paw!:eek:0 -
This discussion has been closed.
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