State Earnings-Related Pension Scheme

Guaranteed Minimum Pension (GMP) increases

Retrieved on: 
Sunday, February 3, 2019
Pensions in the United Kingdom, Finance, Money, Economy, Guaranteed Minimum Pension, State Pension, Pension, Frozen Occupational Pension, State Earnings-Related Pension Scheme

Sunday, February 3, 2019Between 1978 and 1997, contracted-out defined benefit pension schemes were required to provide a Guaranteed Minimum Pension (GMP). This note looks at the arrangements for index-linking GMP rights for people reaching State Pension age before and after 6 April 2016 and for members of public service pension schemes

Key Points: 


House of Commons Library

Guaranteed Minimum Pension (GMP) increases

  • The State Pension for people who reached State Pension age before 6 April 2016 had two tiers:
    • The basic State Pension – to which people built entitlement on the basis of their National Insurance record; and
    • The additional State Pension – which was partly earnings-related.
  • The increase required by schemes each year is provided for in a Statutory Instrument - the Guaranteed Minimum Pension Increase Order.
  • Occupational pension scheme providers will continue to revalue any Guaranteed Minimum Pensions that people have built up (paragraphs 2.6 to 2.11).10 For people retiring after 6 April 2016, the government will no longer take account of inflation increases to Guaranteed Minimum Pensions when uprating peoples new state pension.
  • Occupational pension scheme providers will continue to revalue any Guaranteed Minimum Pensions that people have built up (paragraphs 2.6 to 2.11).
  • Some people are likely to lose out and they have not been able to find the information they need.18 We are concerned that the Department has limited information about who is affected by the impact of pension reforms on Guaranteed Minimum Pensions.
  • 17 The uprating of Guaranteed Minimum Pensions is a complicated area.
  • Because the mechanism in the old State Pension for providing full indexation of GMPs, is not part of the new State Pension, the Government had to consider how to deliver on commitments by previous governments that public service pensions would be fully indexed.
  • In March 2016, it announced that those reaching State Pension age between 6 April 2016 and 6 December 2018 would receive a fully-indexed public service pension for life.

GMP equalisation

Retrieved on: 
Tuesday, December 4, 2018
Pensions in the United Kingdom, Finance, Money, Economy, State Earnings-Related Pension Scheme, SERPS, Pension, Defined benefit pension plan, Guaranteed Minimum Pension, Limited Price Indexation

Tuesday, December 4, 2018Looks at the debate around the equalisation of GMPs and the recent High Court judgment in relation to the Lloyds Bank pension scheme

Key Points: 
  • House of Commons Library

    Looks at the debate around the equalisation of GMPs and the recent High Court judgment in relation to the Lloyds Bank pension scheme

    When the State Earnings Related Pension Scheme (SERPS)was introduced in April 1978, it was possible to contract-out of it into an occupational pension scheme.

  • A condition of it being used to contract-out was that the scheme provided a defined benefit (known as a GMP).
  • The requirement to provide a GMP was removed from April 1997 but schemes still have to provide them for rights built up before that date.
  • In 2016, it launched a further consultation on an alternative methodology, which was generally considered to be a distinct improvement.