How an example member could be affected
We’ve been in touch with most affected members about a change to their pension. If you’re not taking your pension yet but you are affected by GMP equalisation, we’ll be in touch about this change before you retire. In the meantime, here is an example to show how pensions are being updated.
In this example, we’ve chosen a member called Diane.
Diane:
worked for the Company from 1984 to 1997
retired in 2009
gets £6,100 a year from their pension
Checking Diane’s pension
We check Diane’s pension. We calculate that, if she were the opposite sex, she would have built up more GMP. We need to correct this.
We send Diane a letter explaining that she will receive a small increase to her pension.
Diane will get:
£3 more pension each year
£45 as a one-off back payment excluding interest, to make up for the 15 years she received her pension without getting this extra money
We make these changes automatically. Diane does not have to do anything.
Converting Diane’s GMP
Next, we convert Diane’s GMP to normal pension.
When we do this conversion, we need to make sure that the overall expected value of Diane’s pension does not go down.
To do this, we:
estimate how much Diane’s benefits are worth now
estimate how much Diane’s benefits are worth after conversion
compare the two numbers
We take into account lots of factors like life expectancy, dependants’ pensions, what interest rates might do in the future, and how pensions increase from year to year. We call this estimated amount ‘the overall expected value’ of Diane’s benefits.
If the value of Diane’s benefits after conversion is:
more, we’ll use the higher number
the same, then nothing will change
less, then we’ll increase the number until it’s the same as before conversion
By doing this, we make sure that no one’s pension will go down.
What will I get?
The best way to see how your pension could change is to wait for us to tell you.
Read about when we’ll do this under What these checks mean for you.