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    • Nomercer
    • By Nomercer 7th Apr 18, 7:58 PM
    • 5Posts
    • 0Thanks
    No GMP indexation - really?
    • #1
    • 7th Apr 18, 7:58 PM
    No GMP indexation - really? 7th Apr 18 at 7:58 PM
    From 1979 to 1985 I paid into a private sector index linked defined benefit pension scheme and was contracted out of SERPs. I am retiring after April 2016. The pension documentation makes no mention of any part of the indexation being dependent on a third party such as the government so it was an unwelcome surprise when the pension administrators advised me late last year that the GMP part of this pension will not be index linked.
    1 Was I miss sold the pension in 1979 given there was no mention of GMP, government paid indexation etc?
    2 How can one party to a contract unilaterally downgrade the contract without even informing the other party?
    3 Does the pension administrator not have a duty of care to communicate significant changes to their customers?
    My apologies if this has been covered before, but I canít find answers to these questions.
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    • Dox
    • By Dox 10th Apr 18, 9:37 PM
    • 357 Posts
    • 206 Thanks
    GMP equalisation has been rumbling around for years but successive governments have made pronouncements about taking remedial action and then put it into the 'too difficult' pile. Any legal ruling will be more than a tad interesting!

    What is often overlooked is the fact that (depending on how a particular scheme revalues the GMP) that the GMP element of a final salary pension revalues in deferment (i.e. the time between the member leaving active membership of the scheme and their pension coming into payment) at a higher rate than the rest of the pension. You never hear any mention of that when people start complaining they were 'missold' their pension, but given how technical the point is, that's no surprise - but you do wish the media, and indeed the schemes themselves, would ensure people had adequate information presented in a way they stand a sporting chance of understanding.
    • hyubh
    • By hyubh 10th Apr 18, 11:55 PM
    • 2,106 Posts
    • 1,613 Thanks
    The idea of a GMP must have been a good idea when it was introduced, but now many pensioners seem to suffer from lower increases and inequality when their pension includes an element for GMP.
    Originally posted by dampsquib
    This ignores (a) revaluation between leaving and GMP age (b) the government's (generous) 'transitional' treatment for public sector scheme members' with a GMP, who are the biggest number of people as a class that would otherwise be affected.

    As GMP still kicks in at 60 for women, they start to receive lower occupational pension rises than men of the same age, until men also become entitled to GMP at 65. There's a case going to court this year in an attempt to establish if this inequality needs to be tackled by pension schemes.
    More complicated than it may first appear, since GMPs were (are) calculated relative to the number of qualifying years required for a 'full' state pension. Since women's SPA was historically five years before men's, their number of qualifying years was lower, and their GMP accruals consequently affected. Put another way: when a scheme does enter a GMP equalisation exercise, at what point GMPs are equalised makes a crucial difference to the end result.

    The legal case was first mooted by the union at Lloyds, but I gather the union, Lloyds, and their pension scheme trustees are now jointly seeking a legal ruling.
    IMO, if Brexit has any use (I'm a 'soft Remainer, so let's accept the result and get on with it'-type person if it helps!), it will quietly put this issue to pasture, notwithstanding my professional interests for GMP issues to run and run (I work in pensions)...
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