A few facts about GMP
- Back in 1978, employers were offered the choice to ‘contract out’ their pension schemes.
- This meant that members and employers paid lower National Insurance contributions, and members built up less State Pension.
- In return, the employer’s scheme had to pay at least a certain level of pension, known as GMP.
- GMPs are part of the Plan benefits but are often increased at a different rate and paid at a different date than non-GMP benefits. There are also restrictions around how the benefits can be taken and rules for any benefits payable to dependants.
- Contracting out stopped in April 2016.
- If your pension scheme was contracted out, as the DB Section of the D&B UK Pension Plan was, then you may have built up a GMP.
Where are we now?
Following a court judgment in October 2018, GMPs now need to be treated equally for men and women. This applies to benefits built up between May 1990 and April 1997, including GMPs transferred from one scheme into another. The process of correcting these differences is known as GMP equalisation, and it also applies to pensions paid to dependants of members who have died.
GMP equalisation is something that all workplace pension schemes with GMP earned during this period are required to address. It’s a complex process that involves detailed calculations and input from scheme advisers.
The Trustee is currently reviewing all pension benefits - both in payment and those yet to be paid - in relation to equalising notional GMPs under the Plan. They are working closely with their advisers to ensure any necessary corrections are identified and applied.
Members of the OMPS section of the Plan have already been contacted with details of the intended approach.
If you have Final Salary or CARE benefits, please note that a separate communication will be provided explaining how GMP equalisation will apply to those benefits.
Once the review is complete, the Trustee will write to affected members with further information.