Statement on Equalisation for GMPs AND the application of a ...

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B.7.4 Typically male deferred pensioners benefit from both Modified Method (2)and the Statutory Minimum:1. Modified Method (2) typically produces a larger revalued deferred pension at theRelevant Time due to the larger equivalent female GMP calculated using ModifiedMethod (2) typically receiving greater increases in deferment than excess pension;and2. The Statutory Minimum underpin often requires pension in a tranche with a NPA of65 to be moved into a tranche of pension with a NPA of 60 to meet the femaleStatutory Minimum underpin at age 60.B.7.5 Typically female deferred pensioners benefit from the Statutory MinimumThe Statutory Minimum underpin often requires pension in a tranche with a NPA of 65being moved into a tranche of pension with a NPA of 60 to meet the female StatutoryMinimum underpin at age 60.B.7.6 Circumstances where adjustments are most pronouncedSchemes where the adjustments to pension at the Relevant Time are most pronouncedare those where the scheme has a single NPA of 65 or there is only a very short Barberwindow with NPA 60.Members who tend to be most affected by the change are those in schemes that givefixed revaluation on the GMP and who have a long period between the date of leaving thescheme and the Relevant Time. This is due to fixed rate revaluation on the GMP typicallybeing much higher than the revaluation on excess pension for members who left thescheme prior to 6 April 2002.This is illustrated in the table below which shows the rate of fixed rate revaluation that isapplicable to members leaving contracted-out service at different dates.Date of leaving contracted - out service Rate of fixed rate revaluation% per annum6/4/1988 – 5/4/1993 7.56/4/1993 – 5/4/1997 7.06/4/1997 – 5/4/2002 6.256/4/2002 – 5/4/2007 4.56/4/2007 onwards 4.0The differences between GMP and excess rates of revaluation for schemes that giverevaluation on the GMP in line with s148 orders and statutory revaluation on the excesspension are much less pronounced. This is mainly due to:the recent relatively low levels of inflation (which means that the overall cap onstatutory revaluation has had little effect); andnew s148 and statutory revaluation rates being published each year (whereasthe applicable rate of fixed rate revaluation is set at the date the memberleaves contracted out service and then applies for the whole period of themember's deferment).For similar reasons, the differences between limited revaluation on GMP and statutoryrevaluation on excess pension are not so pronounced.23
B.8 Pensioners – explanation of calculations at the Relevant TimeB.8.1 Possible pensioner timelineDate ofleavingDate retiredfrom SchemeAge60SchemeNPAsAge65RelevantTimeThe calculations required to adjust PPF compensation for pensioners are much morecomplex as they depend on where the Relevant Time falls relative to the date the memberretired and several other key dates on the individual pensioner’s timeline. Typically thepensioner may also have had benefits from the scheme with different normal pension agesalthough they will usually have retired from the scheme at a single date. The timelineabove illustrates one particular scenario. Our adjustment to PPF compensation andscheme benefits assumes in all cases that the member would have made the samedecision on the date of retirement from the scheme in relation to all benefits (see B.3.4for further details).Any pensioner whose PPF compensation is affected by equalisation for GMPs will have apension in payment at the Relevant Time that includes some GMP accrued in the period17/5/1990 – 5/4/1997. As GMPs stop accruing at the 5 April preceding GMP Age and GMPaccrual rates are the same for male and female pensioners born before 6 April 1934,cases can arise where the male GMP is the same or larger than the equivalent femaleGMP. For pensioners we cannot therefore automatically assume that male pensionerswould be better off being treated as a female, or vice-versa.B.8.2 Equalisation for GMPs and statutory requirementsFor pensioners equalisation for GMPs involves recalculating the split of the pension at dateof leaving the scheme between GMP and excess pension. This needs to be done for eachtranche of pension with different Normal Pension Ages in the period 17/5/1990-5/4/1997.The scheme's method of:revaluing the pension in deferment;calculating the revised pension on early / late retirement, if applicable; andreducing the pension on retirement to allow for any pension commuted, ifapplicable,should then be followed in order to calculate the opposite sex pension the member couldhave been receiving at the date the member retired from the scheme.It is also necessary to consider the different statutory requirements that the schemewould have applied to a member of the opposite sex at the appropriate times and toamend the pension as necessary to ensure that these requirements are met.From the date of retirement to the Relevant Time the pension that the member hasreceived should be compared with that which would have paid to a member of theopposite sex. This calculation needs to consider the pension increases that the schemewould have awarded to a member of the opposite sex.24
Page 5 and 6: If you have any questions regarding
Page 8 and 9: A.4 Section 143 valuation requireme
Page 10 and 11: Combining information from several
Page 12 and 13: A.6 Schemes not included in the pil
Page 14 and 15: B.1 BackgroundB.1.1 Content of Part
Page 16 and 17: B.3 Statutory requirements for cont
Page 18 and 19: B.5 Interaction of the statutory re
Page 20 and 21: greater, no further adjustment is r
Page 22 and 23: For actives, the application of the
Page 26 and 27: B.8.3 Back-paymentsWhere pensioner
Page 28 and 29: B.10 Back-paymentsB.10.1 Back payme
Page 30 and 31: (c) New Pensioners between the RT a
Page 32 and 33: C.1 Data requirementsFor members of
Page 34 and 35: C.3 AssumptionsThis section contain
Page 36 and 37: females joining the scheme after ag
Page 38 and 39: C.4 PPF Standard FormsThese forms c
Page 40 and 41: Form 1 - Active members at the Rele
Page 42 and 43: Generalised formula for male deferr
Page 44 and 45: Generalised formula for female defe
Page 46 and 47: 1 MGMP 65 = 0 if the member is aged
Page 48 and 49: Pensioner Form 3(b) - GMP only case
Page 50 and 51: GMP pensioners - use this section i
Page 52 and 53: Age at DOR = DOR - DOB (years and m
Page 54 and 55: PLUS applicable to pensioners who h
Page 56 and 57: Calculation of Accumulated Back-pay
Page 58 and 59: Calculation of uplift at Relevant T
Page 60 and 61: Uplift in Pension at Date of Retire
Page 62 and 63: C.5 Examples of theoretical calcula
Page 64 and 65: Active Example 1. Male active membe
Page 66 and 67: Form 1 - Active members at the Rele
Page 68 and 69: Statutory minimum test for NPA 60 t
Page 70 and 71: Deferred pensioner examplesThe exam
Page 72 and 73: Modified Method (2): Opposite sex c
Page 74 and 75:
Adjustment to Pension revalued to t
Page 76 and 77:
Generalised formula for male deferr
Page 78 and 79:
Modified Method (2): Opposite sex c
Page 80 and 81:
The revised NPA 65 tranche = total
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Adjustment to Pension revalued to t
Page 88 and 89:
Generalised formula for female defe
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Page 92 and 93:
Factors used in the form 2(a) for E
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eing a late retirement pensioner fo
Page 98 and 99:
Pensioner NPA 60 trancheThe member
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Factors used in the Pensioner Form
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1 MGMP 65 = 0 if the member is aged
Page 104 and 105:
Factors used in the Male Deferred P
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Example 5 - Member with tranches of
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Pre 97 Pension at Date retired from
Page 112 and 113:
Back-paymentsThe member is entitled
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Pensioner Form 3(a) - not GMP only
Page 116 and 117:
PLUS applicable to pensioners who h
Page 118 and 119:
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Page 128 and 129:
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Page 136 and 137:
Pre 97 PPF compensation at Relevant
Page 138 and 139:
Page 140 and 141:
Page 142 and 143:
Age at DOR = DOR - DOB (years and m
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Page 146 and 147:
Calculation of Accumulated Back-pay
Page 148 and 149:
Pre 97 Pension at Date of LeavingPr
Page 150 and 151:
2.8% and 3% are UK Guaranteed Minim
Page 152 and 153:
Factors used in the Form 3(a) for E
Page 154 and 155:
Page 156 and 157:
Factors used in the Form 3(a) for E
Page 158 and 159:
Page 160 and 161:
Pensioner Example 6. Male pensioner
Page 162 and 163:
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Factors used in the Form 3(b) for E
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May use instead of standard calcula
Page 168 and 169:
Back-payments Form 4(b) - GMP only
Page 170 and 171:
Uplift at Relevant Time (before app
Page 172 and 173:
Calculation of Accumulated Back-pay
Page 174 and 175:
D.1 Factors for calculating opposit
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D.2 Questionnaire to gather scheme
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Early retirement information15. Did
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Late retirement from either active
Page 182 and 183:
NPAFGMP DOLFemale Deferred Pensione
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e.g. 65 MGMP DOL = male GMP at date
Page 186:
65 to RTEnter 1 if pension does not
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