Pensioners over GMP age

If you are over GMP age (65 for men and 60 for women) and you, or your spouse, was a contributing member of the Scheme after April 1978, then your pension is likely to include a GMP element.  The following example explains how your pension elements would increase if RPI was disclosed as 3.5% (as it was in 2017).  If your pension does not include a GMP element, please see the example calculation for someone under GMP age as this will be more relevant for you.

Part of your Guaranteed pension is known as the Guaranteed Minimum Pension (GMP) which is the equivalent of the pension a member would have earned had they been in the State Earnings Related Pension Scheme (SERPS). Members of the MPS were ‘contracted out’ of SERPS and paid lower NI contributions as a consequence. Part of the arrangements for contracting out means that the MPS cannot pay a pension lower than that a member would have earned in SERPS had they not been contracted out. This ‘Guaranteed Minimum Pension’ forms part of their overall MPS guaranteed pension and has different pension increase arrangements to the rest of the MPS pension once a member reaches age 65.

This is further complicated by the GMP being in 2 parts which have different increase arrangements too. The GMP earned before 6 April 1988 does not receive any increases from the Scheme once a member reaches age 65, any increase on this element would come with the State pension. The GMP earned after 6 April 1988 is increased by the Scheme each year by CPI up to a maximum of 3% a year, these are the increases that by law MPS has to apply in April each year to that element of pension.

So once a member reaches age 65 the non GMP part of the Guaranteed pension gets increased each autumn by the increase in the Retail Price Index.  

For example - the increase for 2017 was 3.5% and was applied from 3 October 2017 and the following is a typical example of how that increase would have been applied:

Pension element

Pre increase weekly rate

Rate of Increase (3.5%)

New pension rate from 3 October 2017

Guaranteed pension (excluding GMP)

£55.00

 £55.00 x 3.5% = £1.93

£56.93

Pre 1988 GMP

£40.00

-

£40.00

Post 1988 GMP

£9.00

Any increase would be applied in April separately

£9.00

Reducing bonus

£16.50

£16.50 - £1.93 = £14.57

£14.57

Flat rate bonus from 2012

£4.30

-

£4.30

Flat rate bonus from 2014

£4.00

-

£4.00

Replacement bonuses from 2015, 2016 and 2017.

£3.00

£3.00 + £1.93 = £4.93

£4.93

Total pension

£131.80

 

£133.73

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