GMP indexation fact sheet published
The DWP has published a factsheet called GMP and the effect of the new State Pension. Although no explanation has been given for its publication, it seems to deliver on the DWP’s promise to Parliament’s Work and Pensions Committee in May to produce a fact sheet to acknowledge that those who reach State Pension Age after 5 April 2016, and had built up large GMPs in contracted-out schemes, may be negatively affected by the changes to the state pension system.
This is because the Government no longer tops up the increase in GMPs from the limited indexation provided by formerly contracted-out private sector schemes to full indexation for those in receipt of the new State Pension.
The factsheet explains this issue in outline terms, saying that the loss may be small initially but can build up over time. It then goes on to explain that those impacted might also find that they have built up a greater State Pension under the post 2016 regime than had the old regime continued, and will also benefit from the triple lock. It concludes by inviting affected individuals to contact the DWP if they would like advice about what difference these factors have made to their state pension.
This new factsheet comes as an accessible version for the general public of the lengthier new State Pension transition and contracting-out guidance, first published in July 2015.
Comment
This issue has been known for many years as it is inherent in the design of the new State Pension, but it has taken an adverse finding of the Parliamentary and Health Service Ombudsman (see Pensions Bulletin 2019/44) and some chasing up, for it to be acknowledged in a new DWP leaflet. The DWP will now have the task of ensuring that this information is widely publicised amongst those affected.
More news on HMRC’s Managing Pension Schemes service
HMRC has published its latest newsletter on the Managing Pension Schemes service. Articles include how to declare as pension scheme administrator for a retirement annuity contract and deferred annuity contract, and the need to contact HMRC via email if registered on this service and intending to submit an Event Report.
There is also some news on migration from the old Pension Schemes Online service including that, from 19 October 2021, scheme administrators will be able to view a list of pension schemes they need to migrate.
