Pension increases & bonus payments

Annual pension increases

MPS Guaranteed Pensions are reviewed each year. The increase is based on the change in the Retail Prices Index (RPI) in the 12 months to the previous June, and is applied in the autumn to pensions in payment.

Click on the tabs below for more information about the increases to other elements of your pension:
Pensioners under GMP age (age 65 for men and age 60 for women)

 

Your Scheme pension is made up of different elements, which increase in different ways. Details of how your pension is made up can be found on your payslip. The different elements of your pension are:

Guaranteed Pensions, which means the pension earned for service in the industry before the date of privatisation in 1994, plus cost of living increases awarded since then. These benefits are covered by the Government Guarantee and are reviewed each year based on the change in the Retail Prices Index (RPI) in the 12 months to the previous June. If you receive a GMP element it will be included in the guaranteed figure on your payslip.

Bonus elements, which were awarded from previous valuation surpluses. No increases are added to these bonus elements. You may see the following bonus elements on your payslip:

Reducing Bonuses - these are the bonuses granted to members before 2012 which will continue to reduce until they are overtaken by increases on the guaranteed pension.

Protected Bonus - this bonus is applicable to some members who are entitled to the Value for Money Guarantee. This bonus is protected and cannot reduce.

Bonus 2012 - the bonus awarded in autumn 2012.

Bonus 2014 - the bonus awarded in April 2014.

Bonus 2015 - the total bonus awarded in 2015 and 2016 to offset the decrease in the Reducing Bonus in those years.

Guaranteed Minimum Pension (GMP) - if your membership (or your late husband or wife’s membership) ended after 5 April 1978 this element will be included in the guaranteed figure on your payslip. Members who receive a guaranteed pension that consists of GMP-only elements do not receive bonuses. 

 

Pensioners over GMP age (age 65 for men and age 60 for women)

 

Your Scheme pension is made up of different elements, which increase in different ways:

Your Guaranteed Pension element increases on 1 January each year based on the change in the RPI in the 12 months to the previous November.

Level bonus - this does not increase (these are the 2% bonuses awarded in 2014, 2015 and 2016).

Reducing bonus - these are the bonuses from previous valuation surpluses which will continue but reduce over time.

Guaranteed Minimum Pension (GMP) - at age 60 for women and 65 for men your pension must be at least equal to your GMP element in respect of membership after 5 April 1978. For most members, the total Scheme pension is higher than the GMP but if it is not, the MPS would increase the pension so that it is equal to the GMP.

From age 60 for women and 65 for men, the following arrangements apply for increases to any GMP element:

If you reached State Pension Age before April 2016:

  • The State is responsible for any increase on GMP arising from contributing service between April 1978 and April 1988. Any increase payable is added to your State Pension by the Benefits Agency when your State Pension increases. These increases are effective from 6 April each year.
  • For GMP arising from contributing service after April 1988 the MPS will pay the increase in the Consumer Price Index (CPI), up to a maximum of 3%. These increases are effective from 6 April each year. In any year that CPI has increased by more than 3% the State will make up the increase to the CPI level.

 

If you reached State Pension Age after April 2016:

  • The GMP arising from contributing service between April 1978 and April 1988 will not be increased by the MPS or the State.
  • For GMP arising from contributing service after April 1988 the MPS will pay the increase in the Consumer Price Index (CPI), up to a maximum of 3%, effective from 6 April each year.
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