Incorrect wording in Private Sector Pension scheme booklets regarding who is responsible for paying GMP increases if they reach stater pension age on and after 6 April 2016.

Pensions Ombudsman did not have the information requested.

Dear Pensions Ombudsman,

I have seen on the internet that Allen & Overy have produce information under the following publication GMP ROUND-UP: WHERE ARE WE NOW? dated July 2017.

Under section 5 it mentions .
The following paragraph is taken from the section 5 below.

Can you please tell me how many people have contacted your office about the wording in their occupational pension scheme booklets not being correct about who is responsible about who pays increases on pre 1988 GMPand on post 1988 GMP increases in excess of 3% and any potential loss as mentioned by Allen & Overy in their article.

Can you also tell me when you received your first complaint.

We are already aware that members of various private
sector schemes have identified this missing element as a
potential loss and have raised it – including by way of a
formal complaint via internal dispute resolution
procedures or to the Pensions Ombudsman.

One potential problem is that the distinction between the
scheme’s responsibility and the state’s responsibility for
increases may not always have been made clear to
members –

5. INCREASES TO PRE-88 GMPs
Another feature of the transition to the new state pension
system is that elements of the state pension which were
previously recalculated annually as part of the state
pension arrangements will be ‘locked in’ at their 6 April
2016 values.
Under the old state pension system, when an individual
reaches state pension age, their GMP amount for all or
part of the period 1978/79 to 1996/97 is subtracted from
the total amount of additional state pension the member
would otherwise have earned over that whole period.
The state pays any difference between the two amounts.
This calculation is carried out annually, and the
contracted-out deduction is subtracted from the
(index-linked) additional state pension (i.e. the
additional state pension is increased each year before the
deduction is made).
The key issue here relates to increases to GMPs which
accrued before 6 April 1988, which is the date from
which occupational schemes were required by law to
uprate GMP rights, subject to a 3% cap. There has never
been a statutory requirement for schemes to pay
increases on pre-88 GMPs or to provide increases on
post-88 GMPs above the 3% cap – but as a result of the
annual calculation described above, increases to GMP
rights which accrued between April 1978 and April
1988, and any increases in excess of 3% on rights
accrued between 1988 and 1997, were effectively
provided via the additional state pension.
However, this element of the state pension, which
reflects these GMP increases, is lost under the new
system, in which the starting amount (which will always
be based on the difference between the GMP and
hypothetical state scheme rights as at 6 April 2016) is

revalued annually. No allowance will be given for any
amount by which the value of state scheme rights might
outpace the value of GMP rights over time. The
government is aware of the issue, and has already put in
place transitional measures to rectify it for members of
public sector schemes, in its capacity as a large employer
and because of ‘historical commitments made by
previous governments’ in relation to official pensions.
The transitional measures will last until December 2018
and the outcome of a consultation into further protection
after that date is still awaited. However, these
transitional measures will not benefit members of private
sector schemes.
We are already aware that members of various private
sector schemes have identified this missing element as a
potential loss and have raised it – including by way of a
formal complaint via internal dispute resolution
procedures or to the Pensions Ombudsman. Who, if
anyone, has responsibility for any shortfall? One
potential problem is that the distinction between the
scheme’s responsibility and the state’s responsibility for
increases may not always have been made clear to
members – for example, if the scheme booklet makes a
simplified statement such as ‘your GMP will be fully
price-protected by the scheme’. Even in these
circumstances, the booklet is likely to say that the
scheme rules are overriding, and most standard
contracting-out rules will provide for statutory
revaluation only. It’s important to check that current
statements – by schemes and by employers – are
accurate regarding the increases that will be provided by
the scheme; if you have any concerns about historic
member communications, please get in touch with your
usual Allen & Overy adviser.

Yours faithfully,

C. Thompson

Adam Pokun, Pensions Ombudsman

Dear C Thompson

 

Freedom of Information Act – your request for information

 

I refer to your email of 9 July 2017 asking for details about how many
people have contacted our office about the wording in their occupational
pension scheme booklets not being correct about who is responsible about
who pays increases on pre 1988 GMP and on post 1988 GMP increases in
excess of 3% and any potential loss as mentioned by Allen & Overy in their
article.

 

As you may know, the Freedom of Information Act 2000 (the Act) gives the
public a general right of access to information held by a public
authority. I am dealing with your request under the terms of that Act.

 

Unfortunately we do not have data that captures who or how many people
have raised this issue with us as it is not a topic that we record on our
case management system.

 

If you are unhappy with the way we have handled your request for
information, you may ask for an internal review by writing to me with your
reasons for requesting it. If you are not satisfied with the outcome of
the internal review, you have the right to apply directly to the
Information Commissioner for a decision. Generally the Information
Commissioner cannot make a decision unless you have exhausted our internal
procedure.

 

The Information Commissioner can be contacted at: Information Commissioner
House, Wycliffe House, Water Lane, Wilmslow, SK9 5AF or [1]www.ico.org.uk.

Yours sincerely

 

 

Adam Pokun

 

Adam Pokun I Business Manager I 020 7630 2231

The Pensions Ombudsman

 

The Pensions Ombudsman and Pension Protection Fund Ombudsman

www.pensions-ombudsman.org.uk

 

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show quoted sections

Dear Pensions Ombudsman,

Please pass this on to the person who conducts Freedom of Information reviews.

I am writing to request an internal review of Pensions Ombudsman's handling of my FOI request 'Incorrect wording in Private Sector Pension scheme booklets regarding who is responsible for paying GMP increases if they reach stater pension age on and after 6 April 2016.'.

I can't believe that you don't know how many people have contacted you regarding the wording in their pension scheme booklets Incorrect wording in Private Sector Pension scheme booklets regarding who is responsible for paying GMP increases if they reach stater pension age on and after 6 April 2016.

When someone writes in about a problem you must have a system in place to see if yo have ad a similar case before to see what was your previous judgement.

[ GIVE DETAILS ABOUT YOUR COMPLAINT HERE ]

A full history of my FOI request and all correspondence is available on the Internet at this address: https://www.whatdotheyknow.com/request/i...

Yours faithfully,

C. Thompson

Jane Carey, Pensions Ombudsman

Dear C Thompson

 

Thank you for your email of 1 August 2017 asking for an internal review in
relation to the above Freedom of Information request.

 

I have conducted an internal review, and can confirm that while our case
management system does capture certain data, it does not capture
information about incorrect wording in Private Sector Pension scheme
booklets regarding who is responsible for paying GMP increases if they
reach state pension age on and after 6 April 2016.

 

If you believe that the we have not dealt with your complaint properly you
have the right to complain directly to the Information Commissioner.

 

The Information Commissioner can be contacted at: Information Commissioner
House, Wycliffe House, Water Lane, Wilmslow, SK9 5AF or [1]www.ico.org.uk.

 

Yours sincerely

 

 

Jane Carey

 

 

Jane Carey I Business Director I 020 7630 2211

The Pensions Ombudsman

 

The Pensions Ombudsman and Pension Protection Fund Ombudsman

[2]www.pensions-ombudsman.org.uk

 

Follow us on: [3]Twitter | [4]Facebook.com | [5]LinkedIn

 

The information contained in this e-mail is confidential and may be
privileged or contain restricted information. It is intended for the
addressee only. If you are not the intended recipient, please delete this
e-mail immediately and notify the sender. The contents of this e-mail must
not be disclosed or copied without the sender's consent. We cannot accept
any responsibility for viruses, so please scan all attachments.