Guaranteed Minimum Pensions (GMPs)
The Plan Trustee is currently going through a process called GMP reconciliation and rectification, which may have an impact on benefits for some DB members. This page answers some Frequently Asked Questions about the situation. You might like to start by watching this short animation, which explains what we're doing.
What are Guaranteed Minimum Pensions?
Between 6 April 1978 and 5 April 2016, in addition to the basic State Pension, there was an additional earnings-related State Pension.
Workplace pension plans could choose to “contract out” of the additional State Pension, meaning they would commit to providing certain benefits in return for paying reduced National Insurance contributions.
Those equivalent benefits built up between 6 April 1978 and 5 April 1997 are called Guaranteed Minimum Pensions, or GMPs.
GMPs are often a relatively small part of the pension provided by a workplace pension plan. They are broadly similar to the additional State Pension they were intended to replace.
What is “GMP reconciliation and rectification”?
GMP reconciliation is the process by which a pension plan ensures its GMP records match those held by HM Revenue and Customs.
If adjustments are needed, this process is known as GMP rectification.
Will I be affected?
You may be affected if you were a member of the Plan between 6 April 1978 and 5 April 1997, or if you transferred benefits into the Plan from another pension arrangement.
If this is not the case, you will not be affected.
When will I hear more?
The GMP rectification process is complex and time-consuming, so please bear with us while we complete this important work.
If you are already receiving your pension and the GMP review results in a change to your benefits or an arrears payment, we will write to you to let you know. If you are not yet receiving your pension, we will make the necessary adjustments to your records now so that your payments are correct when they begin.
Will my pension increase or decrease?
The GMP rectification process is ongoing, but we can confirm that no members will experience a decrease in their pension benefits.
If you are already receiving your pension, there may be an increase in your regular payments. However, most members of the Plan will see no change to their benefits.
Will I get a lump sum payment?
If your Plan pension is already in payment and GMP rectification reveals that we have underpaid you in the past, you may receive a one-off arrears payment. Depending on your circumstances, there may be tax implications if you receive a large arrears payment. You should speak to the Plan administrator or an Independent Financial Adviser if you are concerned about this.
Will I be asked to pay back any money?
The Plan Trustee has confirmed that, if the GMP rectification process finds that you have been paid too much pension in the past, you will not be required to pay back any money.