To find out when you will reach your state pension age please view the department for work and pensions website for details, or visit the Gov.uk website for information about qualifying for state pensions and how to obtain an estimate.
How is my pension with the CPF affected when I reach state pension age?
When you reach state pension age there are a couple of things which can affect your monthly pension with the Cornwall Pension Fund:
- Guaranteed minimum pension (GMP)
- National insurance modification
Guaranteed Minimum Pension (GMP) is:
- the minimum amount of pension which the Fund must pay you, as one of the conditions of contracting out for service before 1997. Contracting out was abolished on 6 April 2016.
Before the 6 April 2016, the Fund was contracted out of the state second pension (S2P), previously known as state earnings related pension scheme (SERPS). So, during your membership you paid reduced national insurance contributions. If you had service between 6 April 1978 and 5 April 1997, you may have earned a GMP.
Is GMP a separate benefit?
The GMP is not a separate benefit paid in addition to your Cornwall Pension Fund pension. But, is the pension we pay you must equal or exceed your GMP. HM Revenue and Customs (HMRC) work out the level of your GMP.
If you reached state pension age on or before 5 April 2016, the value of your GMP can affect the yearly increases on your pension in payment.
In some cases if your pension is in payment, once you reach state pension age (providing you reached state pension age on or before 5 April 2016):
- part of your increase will be paid by the Fund and part will be paid by the state.
This occurs:
- If you earned a GMP before 6 April 1988, the GMP element of your pension will be increased every April by the state and the increase will be paid through your state basic pension.
- If you earned a GMP after 6 April 1988, the GMP element of your pension will be increased up to 3% by the Fund, after which any remaining increase will be paid by the state and paid with your state basic pension.
If you reached state pension age on or after 6th April 2016, then you will not have a GMP and all of your pension will be increased by the Fund.
I have reached state pension age - does this mean that my pension with Cornwall Council will reduce?
If you have pensionable service between 6 April 1948 and 31 March 1980:
-
your pension with the Fund will reduce slightly when you reach state pension age. The reduction is due to national insurance (NI) modification.
When the government introduced the NI scheme, on 6 April 1948, the Fund was modified, which resulted in:
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you paying less contributions into the fund. This was to ensure that two pensions were not paid for the same period of service.
On 31 March 1980, modification was removed. You started to pay a higher amount of pension contributions into your fund.
How much will my pension reduce by?
As you paid into the modified scheme and therefore paid a lower percentage of pension contributions:
- at state pension age your pension will be reduced annually by £1.70 for each year that you paid into the modified scheme.
The maximum reduction is therefore £54 per annum. If you have an incomplete year of service in the modified scheme the reduction will be in proportion to this.
I retired before my state pension age
If you retire before you reach state pension age:
- the actual reduction in your pension with the Fund will be more than the amount originally specified on your notification of pension benefits.
This is because annual pension increases are taken into account. A reduction for NI modification is taken from the original amount of pension you received at retirement and pension increases are then reapplied. Therefore the reduction will be the amount of pension originally notified multiplied by the percentage increases which have been applied to your pension on a yearly basis.
