Questions & Answers

GMP is a minimum pension that a workplace pension scheme provides. 

It only applies to people who were contracted out of the Additional State Pension (or State Earnings Related Pension) between 6 April 1978 and 5 April 1997. 

Schemes could 'contract out' so that members and the employer could save on National Insurance. In return, the scheme had to guarantee that the member would get a certain minimum level of pension when they retire.

This minimum level of pension was designed to be at least as much as the Additional State Pension a member would get if they had not been contracted out.

There was a High Court legal judgment about GMP in 2018. The judgment said that schemes must equalise benefits for the effect of unequal GMPs. All schemes like ours have to follow the judgment, but there is no deadline for doing so. 

Like most pension schemes affected by the changes to GMP, we’ve been thinking carefully about how best to review pensions since 2018. We’ve also taken a lot of expert advice. The process to review and potentially change members’ benefits is complex. We wanted to be certain that our plan to proceed was the right one. 

Now that we’ve agreed our approach and have what we need, we’re able to submit our proposal to members for consultation.

We’re only writing to members who have GMP. 

We have not written to members who:

• left the Scheme before 6 April 1978 (when GMP began)

• joined the Scheme after 5 April 1997 (when GMP ended), or

• joined another scheme after 5 April 1997 that later merged into this Scheme

In the next newsletter, we’ll update all members about what’s going on. But if you know a member who you think should have heard from us, please ask them to contact us. For example, someone might have recently moved house or been away from their main address.

If you ask for a retirement quotation before taking your benefits, this will not reflect the impact of any changes for GMP. This is because we will not have checked your pension and GMP yet.

If our calculations mean that your pension is due to increase, we’ll include information about how it’s changed when we write to you in the run up to taking your benefits.

We are not planning to make any more checks or changes of this nature in the future, but we might need to do so if pension legislation requires it. 

If we do need to make any further changes, we’ll contact you about them.

If you receive a small increase to your pension, your death benefits will increase too. 

And if your pension stays the same, your death benefits will also stay the same.

Converting GMP is one of the methods that the law allows us to use to equalise pensions for the effect of unequal GMPs. We have decided it is the most appropriate method for this scheme. It is not a legal requirement to convert GMP to normal (non-GMP) pension. But if we do not do this, it will more than double the calculations that are currently needed for every member request. This would make the administration of the Scheme much more complicated, which would be more expensive in the long run and create greater risk of error.

Yes, pensions law does allow the Trustee to change the Scheme’s benefits in this way. However, certain steps need to be taken first to protect members’ pensions, given that the change we are proposing affects benefits that have already been built up.

The Trustee has taken legal and actuarial advice and is following guidance from the Department of Work and Pensions. The Trustee is consulting with all affected members of the Scheme.

If you would like advice about your pension you should speak with an authorised independent financial adviser (IFA). Neither the Trustee nor anyone involved with the Scheme is allowed to provide financial advice.

If you do not have an IFA, you can find one by searching online. MoneyHelper has an online directory of IFAs. Go to moneyhelper.org.uk and search for ‘adviser’.

If you are due an increase or a back payment, we will aim to pay these to your estate or any dependents.