Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • Jayjay08
    • By Jayjay08 28th Nov 18, 5:59 PM
    • 20Posts
    • 1Thanks
    Jayjay08
    Guaranteed minimum pension
    • #1
    • 28th Nov 18, 5:59 PM
    Guaranteed minimum pension 28th Nov 18 at 5:59 PM
    Advice need please.
    Sadly my mum passed away at the beginning of October, I was sorting out her paperwork/finances and I discovered a pension she had been getting from an employer from many years ago. I contacted them on behalf of my father to see if he was entitled to any of the pension she had. They replied saying he would be and to send in birth/marriage/death certificates, which I done and they were duly returned along with a letter stating he could have 15k as a trivial commutation lump sum or he could have £1000 per annum forever. He wanted the lump sum, which they said was taxable, and I returned the form asking for the trivial commutation
    Iv since received a letter stating because of some court ruling in October they are currently unable to offer this lump sum now. Until they work out what his ďtop upĒ might be, if any. They said this is a very new procedure and it could take months, even years before itís completed. I phoned and asked if we could take the lump sum then get the top up later if there was any and they replied no. Basically the only option they are giving me is to take it at £1000 a year or wait until the process is sorted out.
    Iím finding this pretty unacceptable as
    1. My dad needs the money now.
    2. As far as I know the benefit is only available to my dad, so if anything happens to him between now and the process getting sorted will the pension pot be kept by the company?
    3. Is there anything I can do to help him get his lump sum now?

    Any help greatly appreciated.
Page 1
    • dunstonh
    • By dunstonh 28th Nov 18, 6:21 PM
    • 96,399 Posts
    • 64,301 Thanks
    dunstonh
    • #2
    • 28th Nov 18, 6:21 PM
    • #2
    • 28th Nov 18, 6:21 PM
    Sorry for your loss.

    Iv since received a letter stating because of some court ruling in October they are currently unable to offer this lump sum now.
    The court ruling is impacting on a lot at the moment.

    I’m finding this pretty unacceptable as
    1. My dad needs the money now.
    2. As far as I know the benefit is only available to my dad, so if anything happens to him between now and the process getting sorted will the pension pot be kept by the company?
    3. Is there anything I can do to help him get his lump sum now?
    It's not unacceptable I'm afraid. It is an unfortunate consequence due of timing. The trivial lump sum is discretionary. There is no requirement in law for them to offer it. So, if they have chosen to suspend it pending legal opinion and internal calculations, then they are allowed to do so.

    Hopefully, it won't be too long as its not just trivial payments being put on hold but occupational DB transfers as well. It is quite an important issue and wont be something you would expect to put on the backburner.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • xylophone
    • By xylophone 28th Nov 18, 6:25 PM
    • 27,958 Posts
    • 16,859 Thanks
    xylophone
    • #3
    • 28th Nov 18, 6:25 PM
    • #3
    • 28th Nov 18, 6:25 PM
    https://www.pensionsadvisoryservice.org.uk/content/spotlights-files/uploads/Death_benefits_commutation_SPOT014_V1.3.pdf

    See also

    https://www.linklaters.com/en/insights/publications/uk-pensions/2018/october/high-court-confirms-gmp-equalisation-is-required

    TPAS may be able to provide some guidance.

    https://www.pensionsadvisoryservice.org.uk/
    • xylophone
    • By xylophone 28th Nov 18, 6:49 PM
    • 27,958 Posts
    • 16,859 Thanks
    xylophone
    • #4
    • 28th Nov 18, 6:49 PM
    • #4
    • 28th Nov 18, 6:49 PM
    Hopefully, it won't be too long as its not just trivial payments being put on hold but occupational DB transfers as well. It is quite an important issue and wont be something you would expect to put on the backburner.
    http://www.theactuary.com/news/2018/11/pension-industry-split-on-how-to-deal-with-gmp-equalisation/

    While trustees seek legal and actuarial advice on how to deal with GMP equalisation, Aegon warned against delaying transfers from defined benefit to defined contribution schemes.

    The insurance firm also urged the Pensions Regulator to clarify how it expects trustees to respond to transfer value requests, with GMP equalisation set to take “months if not years”.

    “GMP equalisation won’t reduce anyone’s entitlement, so trustees shouldn’t need to delay quoting or paying transfers for fear of overpayment,” Aegon pensions director, Steven Cameron, said.

    “The most common sense solution is to proceed on the current basis and to make a second installment where future calculations show the transfer value paid understated the member’s entitlement.”
    • minty777
    • By minty777 28th Nov 18, 9:15 PM
    • 194 Posts
    • 160 Thanks
    minty777
    • #5
    • 28th Nov 18, 9:15 PM
    • #5
    • 28th Nov 18, 9:15 PM
    What does this equalisation mean for males and females with a GMP?

    Can someone post some examples of what would change and how?
    • xylophone
    • By xylophone 28th Nov 18, 9:54 PM
    • 27,958 Posts
    • 16,859 Thanks
    xylophone
    • #6
    • 28th Nov 18, 9:54 PM
    • #6
    • 28th Nov 18, 9:54 PM
    https://www.sackers.com/publication/the-high-court-decides-how-to-solve-a-problem-like-gmp-equalisation/#link4

    https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/220482/methodology-document-2012.pdf

    may be of interest.
    • Jayjay08
    • By Jayjay08 29th Nov 18, 8:28 AM
    • 20 Posts
    • 1 Thanks
    Jayjay08
    • #7
    • 29th Nov 18, 8:28 AM
    • #7
    • 29th Nov 18, 8:28 AM
    Thanks again, very much appreciated.
    Can I ask, why wasn’t my dad given the option of how he would have liked the pension paid?
    Instead of £1000 a year, why couldn’t he have taken £4000 a year?
    If anything happens to my dad between us sending this letter back asking for the money and the pension company making us wait while they calculate their adjustments will the pension be lost?
    • xylophone
    • By xylophone 29th Nov 18, 10:12 AM
    • 27,958 Posts
    • 16,859 Thanks
    xylophone
    • #8
    • 29th Nov 18, 10:12 AM
    • #8
    • 29th Nov 18, 10:12 AM
    Instead of £1000 a year, why couldn’t he have taken £4000 a year?
    It appears that your mother had a pension which also provided for her widower.

    A pension is normally paid as a monthly amount for life with a widow/er pension of a certain percentage of that monthly amount also for life.

    The value of the widower's pension has been calculated as under £30,000 so that the administrator has been able to offer commutation as a lump sum (see link in my post above) as the alternative to the life pension.

    It seems that your mother acquired the pension through membership of a pension scheme that was contracted out at least between 1978 and 1997 also that some part of her entitlement was a Guaranteed Minimum Pension.

    If anything happens to my dad between us sending this letter back asking for the money and the pension company making us wait while they calculate their adjustments will the pension be lost?
    You can ask the administrator - if you are in difficulty TPAS may help.
    • sandsy
    • By sandsy 29th Nov 18, 12:32 PM
    • 1,419 Posts
    • 867 Thanks
    sandsy
    • #9
    • 29th Nov 18, 12:32 PM
    • #9
    • 29th Nov 18, 12:32 PM
    Thanks again, very much appreciated.
    Can I ask, why wasnít my dad given the option of how he would have liked the pension paid?
    Instead of £1000 a year, why couldnít he have taken £4000 a year?
    If anything happens to my dad between us sending this letter back asking for the money and the pension company making us wait while they calculate their adjustments will the pension be lost?
    Originally posted by Jayjay08
    He can't take it the way he likes. This type of pension didn't have a pot which offers choices on how income is taken. It offered specified income amounts for your mum, and subsequently, your dad. The scheme rules don't permit it to be taken any other way.
    • AnotherJoe
    • By AnotherJoe 29th Nov 18, 1:00 PM
    • 12,017 Posts
    • 14,057 Thanks
    AnotherJoe
    Thanks again, very much appreciated.
    Can I ask, why wasnít my dad given the option of how he would have liked the pension paid?
    Instead of £1000 a year, why couldnít he have taken £4000 a year?
    If anything happens to my dad between us sending this letter back asking for the money and the pension company making us wait while they calculate their adjustments will the pension be lost?
    Originally posted by Jayjay08

    Simplistically because all he's entitled to is the £1k a year, its at their discretion to pay a lump sum instead (to get rid of the ongoing liability)



    If anything happens to my dad between us sending this letter back asking for the money and the pension company making us wait while they calculate their adjustments will the pension be lost?
    Originally posted by Jayjay08

    Thats a very good question. I would ask them that because it would appear if they indefinitely they dont need to pay anyone so it seems to me the consequences of a delay (IANAL ! ) should be down to them.
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • Gazza555
    • By Gazza555 12th Jan 19, 2:44 AM
    • 3 Posts
    • 2 Thanks
    Gazza555
    GMP equalisation investigated in the future
    Hi There, my wife passed on the 2 October I have just received the trustees offer of £150.00 per year. They have told me there will be no lump sum offer while there is this ongoing GMP equalisation decision. my wife pension was over £10.000 how can they only offer £150 per annual. I ask because I have her funeral to pay for and they wont help to pay towards this is there any thing I can do to get the trustees to pay this funeral bill as my wife passed before the 26/10/2018 Thanks gazza.
    • DairyQueen
    • By DairyQueen 12th Jan 19, 7:51 AM
    • 632 Posts
    • 1,056 Thanks
    DairyQueen
    Hi There, my wife passed on the 2 October I have just received the trustees offer of £150.00 per year. They have told me there will be no lump sum offer while there is this ongoing GMP equalisation decision. my wife pension was over £10.000 how can they only offer £150 per annual. I ask because I have her funeral to pay for and they wont help to pay towards this is there any thing I can do to get the trustees to pay this funeral bill as my wife passed before the 26/10/2018 Thanks gazza.
    Originally posted by Gazza555
    Very sorry for your loss.

    Posters on this thread have already explained:

    - that there is no 'pot of money' with a DB pension. These types of schemes are designed to pay an annual income for life to the member and their widow/er.
    - that there is no legal obligation for the pension provider to offer to remove the liability for your widowers's pension from their scheme by offering a lump sum in exchange for future payments.
    - that GMP equalisation is impacting/delaying any such lump sum offers.

    As there is no pot of money there is nothing for the scheme to pay to your wife's estate.

    You would not be offered £150p.a. widower's pension if your late wife's annual pension from this scheme was over £10,000p.a. It is most common for such schemes to provide 50% widow's benefit.

    Are you sure that you haven't included her state pension in the total of £10,000? Was she receiving any other state benefits, such as Attendance Allowance, that you may have included in that figure of £10,000?

    Was she receiving income from any other pension scheme?

    An annual figure of £150p.a. suggests that your wife was receiving approximately £300p.a. in income from this pension. If this is the case then any offer the pension company may make to commute will be a multiple of £150p.a. based on actuarial predictions of inflation and how long you will live (your age and gender, for example, will be relevant).

    As an example:
    My aunt (then age 86) was widowed last summer. She was offered £17,500 in exchange for an annual widow's pension of £2,556 per year (before tax). The pension company had therefore offered her approximately 6 years of inflation-linked income as a lump sum.

    Also, bear in mind that any lump sum you receive will be subject to income tax in the year in which you receive it.

    Did you wife have any other savings/investments? If she had savings then banks will usually release funds to settle funeral expenses in advance of probate.
    • Silvertabby
    • By Silvertabby 12th Jan 19, 10:15 AM
    • 3,618 Posts
    • 5,411 Thanks
    Silvertabby
    Hi There, my wife passed on the 2 October I have just received the trustees offer of £150.00 per year. They have told me there will be no lump sum offer while there is this ongoing GMP equalisation decision. my wife pension was over £10.000 how can they only offer £150 per annual. I ask because I have her funeral to pay for and they wont help to pay towards this is there any thing I can do to get the trustees to pay this funeral bill as my wife passed before the 26/10/2018 Thanks gazza.
    Originally posted by Gazza555
    My sympathies.

    Unfortunately, I doubt there is anything anyone can do to pursuade pension funds to act before this GMP question has been sorted. I know someone has suggested that payments could be made using the old factors, then re-calculated once the correct data is available - but I know from past experience that most fund software won't be able to handle this, meaning that most of the re-calculation would have to be done manually. I doubt many pension funds would be willing to undertake/fund this (huge amount of) extra work.

    I may be able to explain the difference between your late wife's pension of £10K per annum and your offer of £150 per annum. To be sure, could you post the to/from dates of your wife's pensionable service, your date of marriage and which pension scheme she was a member of. Just the relevant years, and just 'public sector pension' (if that is the case) will do.
    Last edited by Silvertabby; 12-01-2019 at 12:49 PM.
    • Gazza555
    • By Gazza555 12th Jan 19, 7:04 PM
    • 3 Posts
    • 2 Thanks
    Gazza555
    Argos Sainsbury pension
    Hi There, Thanks for your post what it was my late wife was offered £10.223.00 from an old pension she forgot about from argos on February 2018. because sainsburys were taking over the pension and she was turning 55. She passed on 2 October 2018 and I have been dealing with a company JLT regarding her pension they have not told me how much the pension pot is they wrote to say because of GMP equalisation exercise there will be no lump sum offer just now but this may change in the future. So currently the offer of trivially commute your benefits would not be an option An annual pension of £151.56 has been offered which would mean I will never live to see this pension paid out. I was hoping this pension pot would help me pay her funeral bill. Will their be a chance when this GMP is sorted out to be offered a lump sum and is there a time scale on that ruling. Many Thanks Mr G.
    • Silvertabby
    • By Silvertabby 12th Jan 19, 7:15 PM
    • 3,618 Posts
    • 5,411 Thanks
    Silvertabby
    Hi There, Thanks for your post what it was my late wife was offered £10.223.00 from an old pension she forgot about from argos on February 2018. because sainsburys were taking over the pension and she was turning 55. She passed on 2 October 2018 and I have been dealing with a company JLT regarding her pension they have not told me how much the pension pot is they wrote to say because of GMP equalisation exercise there will be no lump sum offer just now but this may change in the future. So currently the offer of trivially commute your benefits would not be an option An annual pension of £151.56 has been offered which would mean I will never live to see this pension paid out. I was hoping this pension pot would help me pay her funeral bill. Will their be a chance when this GMP is sorted out to be offered a lump sum and is there a time scale on that ruling. Many Thanks Mr G.
    Originally posted by Gazza555

    So, this £10K was a one-off lump sum triviality payment, not a pension of £10K per year. That does make sense. Depending on the scheme factors, I would hazard a wild guess at about £3K (taxable) if you take your spouse's pension under triviality rules. Unfortunately, there doesn't appear to be a time scale on the resolution of the GMP problem, so it's likely to be many months before you will be able to take the one-off payment - provided that the scheme will allow you to defer payment until then.

    In the meantime, are you also under State pension age? If so, have you claimed the DWP bereavement payments?
    Last edited by Silvertabby; 12-01-2019 at 7:22 PM.
    • Gazza555
    • By Gazza555 12th Jan 19, 7:32 PM
    • 3 Posts
    • 2 Thanks
    Gazza555
    Gmp
    Hi there, Many thanks for getting back I am 50 years old. I have not tried for DWP funeral payment I was hoping this money she was offered in May 2018 would come to me as a lump sum and pay for the funeral so your saying there is a chance I may get offered a lump some in a few months once the GMP equalisation process has been granted because JLT has stated that this could be investigated in the future. once the equalisation process has been granted. Many Thanks.
    • Marcon
    • By Marcon 12th Jan 19, 7:44 PM
    • 619 Posts
    • 458 Thanks
    Marcon
    ... your saying there is a chance I may get offered a lump some in a few months once the GMP equalisation process has been granted because JLT has stated that this could be investigated in the future. once the equalisation process has been granted. Many Thanks.
    Originally posted by Gazza555
    I'm sorry to dash your hopes, but Silvertabby didn't say 'a few months' - she said 'many months'. It has been in the Government's 'too difficult' pile for years. The problem is so complicated that most schemes will not take any action until they receive some sort of Government guidance on how to resolve an issue which has been a thorn in the side of pensions schemes for several decades.

    Some schemes are being more pragmatic and offering retirement benefits (with or without lump sums) with the caveat that these will be revisited at some future point and if necessary a top up will be paid. Might be worth asking JLT if the scheme in question has any plans to do this.
    • Silvertabby
    • By Silvertabby 12th Jan 19, 8:20 PM
    • 3,618 Posts
    • 5,411 Thanks
    Silvertabby
    Hi there, Many thanks for getting back I am 50 years old. I have not tried for DWP funeral payment I was hoping this money she was offered in May 2018 would come to me as a lump sum and pay for the funeral so your saying there is a chance I may get offered a lump some in a few months once the GMP equalisation process has been granted because JLT has stated that this could be investigated in the future. once the equalisation process has been granted. Many Thanks.
    Originally posted by Gazza555

    It's not a funeral payment - that no longer exists - but, if you qualify, it's a non-means tested £3.5K bereavement grant plus a monthly payment for 12 months. I don't think the funeral director will wait for the GMP problem to be resolved - it could take many months, not just a few months.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

211Posts Today

2,988Users online

Martin's Twitter
  • This probably (who knows) makes it both more likely we'll remain in the EU via a 2nd referendum and more likely we'? https://t.co/GrNV48E1jS

  • Instant aftermath poll: After a defeat by over 230 votes on a flagship issue (Brexit) should Theresa May resign?

  • Wow losing by over 200. That's not defeat it's obliteration. Has there ever been a time before when a PM could lo? https://t.co/i0sVwL9P9P

  • Follow Martin