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 have been 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
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 schemes 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 benefits for pensioners of the Fund 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 agreed to convert all GMP into a different form of pension using a one-off calculation. This is known as ‘GMP conversion’.
For pensioners in the Fund who had GMP, the impact of GMP equalisation and GMP conversion will have been determined in one of two ways:
- For most pensioners, the impact was calculated in one of three calculation phases over the period from 2022 to 2024. If your benefits were adjusted in this way, the Trustee and the Company would have written to you, explaining the impact on your Fund benefits.
- For other pensioners, the impact of GMP equalisation and GMP conversion will have been calculated at the point of retirement.
In any case, your current pension in payment will reflect the impact of both GMP equalisation and GMP conversion, and therefore no action is required.