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  • FIRST POST
    • DT2001
    • By DT2001 8th Jul 18, 10:34 AM
    • 95Posts
    • 99Thanks
    DT2001
    GMP and deferred pension
    • #1
    • 8th Jul 18, 10:34 AM
    GMP and deferred pension 8th Jul 18 at 10:34 AM
    I am a member of The Barclays Bank 1964 Pension scheme. I took redundancy in Dec 1995 at the age of 35.

    In June 2011, as I had asked for an up to date quotation, I was advised that the treatment of GMP element had changed. Originally (2008 valuation - £6.4k p.a.plus £3.2k GMP) the GMP element was increased by 7% p.a. and payable when I drew my pension. Now (2011) the GMP would be paid without revaluation until I was 65.

    I decided to take my deferred pension in Nov 2011 as once in payment there could (I hope) be no other detrimental changes. My tax free lump sum was restricted to about 0.5% because of the ring fenced GMP element being a high proportion of the pension.

    I have checked a number of threads and wanted to check my understanding of the situation.
    At 65 (7 years time) will the original GMP portion (£1339 - quote not split pre and post 1988) be 'worth' £9.5k?
    If my existing pension (£7559) is below that figure which is likely if inflation stays low will I get an increase to £9.5k?
    As my whole pension is then GMP does this affect any annual increases?
    At 66 and 2 months I reach SPA and am due to have my pension reduced by £666, will this happen as all my pension is GMP?

    I am awaiting a reply from Tower Watson who administer the scheme however I might not be asking all the right questions! With your help I hope I can more fully understand what will happen with my pension and therefore allow me to have a good backup plan.
Page 8
    • MikeFloutier
    • By MikeFloutier 11th Sep 18, 9:22 AM
    • 214 Posts
    • 75 Thanks
    MikeFloutier
    Now, now! I hope that you are not using Tony as a cat's paw!
    Originally posted by xylophone
    I am not ashamed...

    • xylophone
    • By xylophone 11th Sep 18, 10:01 AM
    • 29,208 Posts
    • 17,739 Thanks
    xylophone
    Incidentally - (not Barclays this time..)

    https://forums.moneysavingexpert.com/showthread.php?t=5893220

    I am a bit confused by this as I thought my gmp was increasing at 7.5% per annum, and the quoted figure is also less than what I thought the revalued excess would be.

    I have phoned them, and they say they do not calculate gmp until retirement age of 65.

    Question- at 60 do I just get the revalued excess, them at 65 get the revalued gmp as well?
    Another soul who'll be writing to the administrator

    Gird up now your loins like a man; for I will demand of you, and answer you me.

    • MikeFloutier
    • By MikeFloutier 11th Sep 18, 11:30 AM
    • 214 Posts
    • 75 Thanks
    MikeFloutier
    Incidentally - (not Barclays this time..)

    https://forums.moneysavingexpert.com/showthread.php?t=5893220



    Another soul who'll be writing to the administrator

    Gird up now your loins like a man; for I will demand of you, and answer you me.

    Originally posted by xylophone
    Sounds like a good Job for someone
    • DT2001
    • By DT2001 15th Sep 18, 10:39 AM
    • 95 Posts
    • 99 Thanks
    DT2001
    WTW reply below and my full email to them which is below (I think exactly as post 127).
    I wonder if there are many in a similar position i.e. early retirement and long deferment to build up GMP bearing in mind Mike’s comments about getting his colleague the correct pension.



    Thank you for your email below.

    I can confirm that your understanding of how the pension payable at your GMP and state pension deduction age is calculated is correct. As previously advised we are unable to confirm the exact figures until nearer the time.

    If you have any questions please contact us.

    Kind regards


    Frances Hutcheon
    Pensions Administrator

    The Barclays Team
    Willis Towers Watson





    I refer to our recent correspondence and in particular your email of 18th August enclosing the booklet ‘What happens to your pension when you leave Barclays’ . I would like to put into figures the information that you have provided. I have used the example on page 10 of the booklet that you sent as guidance.
    Can you confirm that the method is correct. If any part is wrong please provide me with an example appropriate to early retirement.


    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
    • xylophone
    • By xylophone 15th Sep 18, 2:33 PM
    • 29,208 Posts
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    xylophone
    Thank you for your email below.

    I can confirm that your understanding of how the pension payable at your GMP and state pension deduction age is calculated is correct. As previously advised we are unable to confirm the exact figures until nearer the time.

    If you have any questions please contact us.

    Kind regards
    When I called, you answered me;
    you greatly emboldened me.


    You can now rest in peace as it were..........
    • MikeFloutier
    • By MikeFloutier 15th Sep 18, 3:02 PM
    • 214 Posts
    • 75 Thanks
    MikeFloutier
    Great news Tony, for you and all on ERD pensions at Barclays, i.e. no full franking.

    I'll feedback how things go regarding their calculations for my GMP date step-up when known; should be around Christmas/New Year.
    • DT2001
    • By DT2001 24th Sep 18, 3:04 PM
    • 95 Posts
    • 99 Thanks
    DT2001
    I had emailed TPAS (the same gentleman as earlier) to get their/his take on matters. He replied as below which is as WTW state. It is better than the worse case scenario detailed in OM explanations of various anti franking situations.
    Quite why WTW cannot provide an example in their booklet for early retirees and save lots of questions is beyond me!
    Now I'll sit back and wait, adjust my target pension pot as I'll have an extra £4.5k'ish at 65 which will increase by RPI, reduced by my SPA deduction at 66 and 2 months.
    I will then have a good idea of how the figures for my actual pension at ERD were calculated.


    TPAS reply
    If early retirement is taken, if there is any escalation in payment on the excess pension between retirement and GMP age, the scheme is able to frank those increases against the GMP revaluation
    • owly1
    • By owly1 21st Dec 18, 8:15 PM
    • 14 Posts
    • 4 Thanks
    owly1
    Lost lump sum to gmp?
    Hi
    I think I’ve just been had or been daft enough not to notice
    I am no expert

    Many years ago I worked for a big company whose DB system I joined in October 1977 before leaving them in 1986 and deferring the pension

    Joining another company and starting a fresh pension I mostly ignored the deferred pension but noted that it was contracted out of serps
    There were regular updates showing the pension was growing with inflation etc.

    Last December I asked what my final pension would be as estimate and was told 6558 pa

    I was interested because the NRA for this pension is 62 which I will become on 27Dec 2018 (as apposed to NRA for my other pensions of 65 and SRA of66)

    In March I got an update (so I could talk with current employer about retirement etc) I was told that my pension actually was 7259 pa with option to reduce to 6755 and get lump sum 11370

    Wow this was better than expected as I did not know there was any lump sum but understood that it was a commutation -I made plans using this data

    I asked for further confirmation and got a letter in May confirming no lump sum and pension of 6558 !?

    I immediately contacted the pension provider who made several corrections and confirmed by letter in June :
    7233 pension or 6755 plus 10781 cash

    They explained the minor difference in cash was their mistake on my leaving / joining dates
    In this letter I misunderstood the complex bit about gmp and revaluations and the need to increase the pension value to 8377 to cover Gmp
    The letter also suggested contact after November when pension would be reviewed (as the quote only valid 3 months from May1)
    Also I didn’t pick up on the point this was an early retirement offer especially as it was less than 6months from NRA

    In early November I made contact by phone and got a written quote :”as per May” we repeat 6558 and no lump sum

    I immediately queried this by phone and explained previous quotes and clarifying June letter.
    Consequently a written reply arrived yesterday and quotes 6768 or 6755 + 293 cash

    Nobody seemed able to explain much of this to me today and the have said they will get the actuary to confirm/ explain - when they are back in Jan 19 but it does have something to do with gmp

    I have this horrible feeling that I missed a major opportunity in May and have now lost a big lump sum. Not sure what the actuary will confirm

    Can’t help feeling they could have been clearer about why the cash lump sum was there and if it could disappear? Normally if you early retire you expect smaller not greater funds
    How can you lose a 10k commute in less than 6 months

    After hours I sent an email to say if it made any difference I would early retire today rather than 6 days time !
    (I had said that verbally but want to back up)
    I have asked for the deeds and rules

    Talked with pensions advisory who said it could be because the two parts of the pension were revalued at different rates ?

    Ok first of all does this all make sense and is there more info I need to supply / find /ask for ?

    If they stick to where they are do I have any redress ? How and with whom?

    Does it make any difference if I retire today rather than in 6 days ?
    (Reality say everybody is closed for Xmas)

    Does it make any difference if I don’t draw the pension say till after 65 (has the gmp killed the lump sum for ever)

    Comments /commiserations/ alcoholic suggestions all appreciated

    Regards
    Owly
    • MikeFloutier
    • By MikeFloutier 21st Dec 18, 8:46 PM
    • 214 Posts
    • 75 Thanks
    MikeFloutier
    Hi Owly, you mention various figures that your pension provider has suggested. Have you worked out what your pension should be.

    Also you mention that an early retirement pension should logically be less than a NRA pension. However, since your NRA is some years before your GMP date, it's likely that your ER figures include a representation of revalued GMP whereas your NRA quote would be sans GMP revaluation until 65 and so probably smaller. That was my experience with Barclays.
    • xylophone
    • By xylophone 21st Dec 18, 9:25 PM
    • 29,208 Posts
    • 17,739 Thanks
    xylophone
    See also

    https://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/18/what-is-a-gmp/

    https://www.barnett-waddingham.co.uk/comment-insight/blog/2012/07/24/revaluation-for-early-leavers/

    And have you obtained a new state pension forecast?

    https://www.gov.uk/check-state-pension
    • xylophone
    • By xylophone 21st Dec 18, 9:42 PM
    • 29,208 Posts
    • 17,739 Thanks
    xylophone
    And remember that your scheme is obligated to pay you at least your revalued GMP at GMP age- (60F/65M).

    And your scheme will not permit you to commute pension for lump sum if it would take your pension below GMP.
    • MikeFloutier
    • By MikeFloutier 24th Dec 18, 10:34 AM
    • 214 Posts
    • 75 Thanks
    MikeFloutier
    As promised, I can now feedback the results of my enquiries to Barclays/WTW regarding my "step-up" due at my GMP date on 3 Feb 2019.

    The last page of the (now closed) thread about this can be found at - https://forums.moneysavingexpert.com/showthread.php?t=4736856&page=10 .

    On post #165 the estimated "step-up", that we all agreed was reasonable, was shown as £5,363.31.

    This morning I received a letter from WTW stating that my step-up would be £5,362.72.

    This is very pleasing and will be an additional encouragement to others waiting for Step-ups to their Barclays FS pensions.

    I'd like to say a big thank you to all who have helped me through this maze; especially Xylophone, Snowman & Mrs Chaucer and not forgetting Martin Lewis who started all this and has been such a great champion of the individual over the corporation.

    Thank you one and all!
    • xylophone
    • By xylophone 24th Dec 18, 10:58 AM
    • 29,208 Posts
    • 17,739 Thanks
    xylophone
    that we all agreed was reasonable, was shown as £5,363.31.
    This morning I received a letter from WTW stating that my step-up would be £5,362.72.
    The cheapskates.....

    Happy Christmas!
    • DT2001
    • By DT2001 26th Dec 18, 9:06 PM
    • 95 Posts
    • 99 Thanks
    DT2001
    Mike, thanks for the update. Enjoy!
    BW to you and Xylophone for 2019. Your guidance and patience in this very complex area has been excellent.
    • xylophone
    • By xylophone 27th Dec 18, 11:00 AM
    • 29,208 Posts
    • 17,739 Thanks
    xylophone
    BW to you and Xylophone for 2019.
    Have a happy and successful 2019.
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