Guaranteed Minimum Pension (GMP)

Your Fund pension is made up of different parts, based on when you built up your pension.

If you were building up benefits in the Fund between 6 April 1978 and 5 April 1997, some of your Fund pension may be Guaranteed Minimum Pension (GMP). GMP is linked to when there were two parts to the State Pension – the Basic State Pension and the State Earnings-Related Pension Scheme (SERPS, which later became the State Second Pension).

Workplace pension schemes had the option to ‘contract out’ of SERPS. This resulted in National Insurance savings for the employer and the scheme’s active members, and many schemes like ours took advantage of this option. In exchange, the scheme had to promise to pay members at least as much pension as they would have received from SERPS. This is the part of your Fund pension that is known as GMP.

You can find out more about the State Pension at www.gov.uk/state-pension

GMP equalisation

GMPs are different for most men and women because the State Pension Age used to be different for men and women. As a result, men and women built up GMPs at different rates and GMPs are payable at different dates, age 65 for men and age 60 for women. The extent to which GMP must be increased each year when in payment is set by legislation.

Following a High Court ruling in 2018, all UK pension plans like ours need to review their benefits to address the historic inequality that exists between some male and female members in relation to GMP. This is called ‘GMP equalisation’.

The Trustee of the Fund and the Company have worked together in recent years to adjust Fund benefits for the effect of unequal GMPs. In addition, to meet the GMP equalisation requirement in future, and to simplify future administration of the Fund, the Trustee and the Company have agreed to convert all GMP into a different form of pension using a one-off calculation for each member when they retire. This is known as ‘GMP conversion’.

The impact of GMP equalisation and GMP conversion will be reflected in the retirement pack that you will receive from the Plan administrator, WTW, when you approach retirement. Therefore, no action from you is required.

Please note that if you elect to transfer your benefits out of the Fund, your transfer value will reflect the impact of GMP equalisation.