PinkDalek wrote:In so far as I am concerned, I don't think my (not yet due) State Pension will be impacted but I'm certainly not sure.
What will be is my occupational pension that I'm already drawing (early). Up to now I'm receiving increases on the entirety based on RPI but subject to a maximum of 3% per annum.
When the State Pension Age arrives, part of that pension will be deemed to consist of GMP (if I've understood correctly).
My recently received Pension Scheme annual statement says:
Your GMP accrued before 6 April 1988 is not increased by the Scheme; it is increased by the State, in line with the rise in the Retail Prices Index.
So overall in times of generally low inflation (however one calculates it), I don't think my existing pension will suffer to any great extent in that there will be some increase one way or the other (if no deflation).
Not quite, and if that's a recent statement from your scheme, and that's all it says, it's misleading/wrong. The effect of the New State Pension on GMP increases is complex and something that's not been well publicised.
The way GMP works/worked was that the pension scheme would pay inflation increases on post 88 GMP up to 3% and the state would pay all of the pre 88 inflation increases and the greater-than-3% (if any) post 88 increases.
The way this was implemented in payment was via the Additional State Pension. DWP would calculate your "gross" ASP, as if you'd never been contracted out, and apply inflation increases to that, and then subtract the GMP that your scheme was paying you to arrive at your "net" ASP, which would be added to your old state pension. (The GMP amount subtracted is called the Contracted Out Deduction. In £ terms COD = GMP.)
So, you can see, if, e.g., you'd been contracted out all your life (including pre-88), and your scheme used the pre-GMP-age GMP revaluation method that matched ASP increases (not all do but let's keep this simple!), then
at state pension age your gross ASP and GMP (and hence COD) would be the same, so what you'd get from the state for net ASP would,
that year, be zero. Which is, of course, the point of contracting out: the GMP you receive from the scheme replaces the ASP you would have got from the state.
Come the next year the whole of gross ASP goes up by inflation but only the post-88 GMP goes up (and then only by max 3%), so your overall GMP (and hence COD) goes up by less than the gross ASP does, so gross ASP minus COD is more than zero and you get a little net ASP to make up the difference. The year after that the difference between gross ASP and GMP gets a little bigger, and so on (assuming no deflation), so as the years go on gross ASP minus COD increases and you get an increasingly larger net ASP to make up the "shortfall" from the GMP.
But that's under the old state pension system. Under the new state pension there is no ASP and the gross ASP minus COD figure is fixed and forever immortalised in your April 2016 "starting amount" that goes into your new state pension calculation. If it's zero that's it, it will never increase, the zero is baked into your starting amount.
Sounds bad? Well it is for anyone that reached state pension age soon after April 2016 and has been fully contracted out all their lives; they'd get no ASP at all, ever, just a new state pension starting at their old state pension amount, and no pre-88 GMP or post-88>3% GMP increases, ever.
However, it's not so simple or so bad for everyone, as people with some years to go (who can accrue additional years) and/or with larger starting amounts get the benefit of the whole of the new state pension being increased by the "triple lock" and not just the CPI amounts the ASP was increased by. It's complex.
There's a House of Commons Library Research Briefing on the matter at
https://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN04956. That page is a summary, the full report it references is a 19 page PDF, and also of interest, in particular for looking at case studies of winners & loses from it, is the National Audit Office (NAO) 41 page report it summarises and references. Warning: it's multiple mugs of tea/coffee reading!