Union calls on govt to stop pensions cuts following GMP calculation errors

Public and Commercial Services (PCS) Union has called on the government to freeze pension payments that are set to be cut, after a calculation error was exposed in relation to guaranteed minimum pension (GMP) payments.

It follows the news that 36,000 civil service pensioners received letters about the rectification of GMPs, stating that 32,000 will now have their pensions reduced following the error, while 4,000 pensioners will see their payments increase.

Previous over payments have been written off by the government, to a total of £22m.

The error was found after the government carried out a reconciliation exercise last year, in which the amount of annual increase applied to the civil service pension was affected by the amount of GMP that was applied, which in this case was wrong.

PCS general secretary, Mark Serwotka, said: “This is worrying news for pensioners and it is only right that the government cushions the blow for those whose retirement income could be unexpectedly reduced.

“They should do more by freezing the pensions that would otherwise be cut until the anomalies are removed by uprating.”

PCS added that the ending of state-backed earning related schemes was itself a backward step.

“If they were still in place the UK wouldn’t be bottom of the league in the value of its state pension,” it said.

Commenting on the changes, Royal London director of policy, Steve Webb, commented: “it’s obviously a very complex system and it’s no fault of a pension scheme member that they were getting the wrong amount, the government can’t go on paying the wrong pension once the mistake has been discovered.

“I guess if there was a big reduction there might be some limited case for a phased reduction, but in principle it’s hard to justify going on paying the wrong amount.”

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