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Pensioner - All about my pension
What’s GMP and how does it affect me?

If you worked for your LGPS employer after April 1978 you built up something called a guaranteed minimum pension, or GMP. It’s also known as a contracted-out deduction, or COD.

It only affects the way we calculate increases to your pension, and only from the time you reach state pension age.

How does it affect me if I have a GMP?

From state pension age the government starts paying the increase on your GMP (it’s paid along with your state pension).

So when we pay the increase on your pension we pay it less the increase on your GMP. (Remember, the government pays this.)

What if I have membership after 6 April 1988?

It’s a bit more complicated if you have membership after 6 April 1988. If you do, we pay the increase on the part of your GMP that’s for your membership after this date. Except that if the increase is more than 3%, we only pay the increase on 3% and the government pays it on the rest.

The 2014 increase is under 3% though, so you’ll get the whole of the increase on your firefighters’ pension this year.

I paid married woman’s reduced rate Contributions – do I have a GMP?

There is no GMP for the time you paid the reduced rate.

What happens if I live abroad?

If you live in a country that has a social security agreement with the United Kingdom, we work out your increase in the same way as in the example.

Otherwise we pay the increase on all of your pension, including your GMP.

How does GMP affect how pensions increase is paid and calculated?

Service Pre 5th April 1988:

Mr Jones retired in April 1987 with a pension of £150.00 per month. By the time he reached State Pensionable Age his pension was being paid at a rate of £205.82 per month made up as follows:

Original pension: £150.00
Pensions Increase: £ 55.82
Total: £205.82

At State Retirement Age, Mr Jones’ GMP was £50.00 per month, so the increase due in April 2001 of 3.3% was calculated as:

Total pension: £205.82
Less GMP: £ 50.00
Pension to be increased: £155.82
£155.82 x 3.3% = £5.14, so his pension was increased by £5.14 to £210.96 per month made up as follows:
Original pension: £150.00
Pensions Increase: £60.96 (£55.82 + £5.14)
Total: £210.96

HMRC started to pay PI of £1.65, i.e. £50.00 x 3.3%, on Mr Jones’ GMP from April 2001 so that his total pension in respect of his service was increased by 3.3%. This can be checked as follows:
Total increase due: £205.82 x 3.3% = £6.79
Increase paid by us: £5.14
Increase paid by the DWP: £1.65 (£50.00 x 3.3%)
Total increase paid: £6.79

Service Post 5th April 1988:

Mr Smith retired in 2000 at the age of 65. His pension was £200.00 per month. This included a GMP of £90.00 per month, of which £25.00 was earned after 5th April 1988.

The increase due in April 2001 was calculated as:
Original pension: £200.00
Less GMP earned after 5th April 1988: £ 25.00
Less GMP earned before 6th April 1988: £ 65.00
Pension to be increased: £110.00 (£110.00 x 3.3%) + (£25.00 post-88 GMP x 3%) £3.63 + £0.75 = £4.38

Therefore Mr Smith’s pension went up by £4.38 to £204.38 per month made up as follows:
Original pension: £200.00
Pensions Increase: £4.38
Total: £204.38

The balance of the 3.3% PI award on his GMP earned after 5th April 1988 was paid by the HMRC, along with the full PI award on his GMP earned before 6th April 1988. So Mr Smith’s total pension in respect of his service was increased by 3.3%. This can be checked as follows:
Total increase due: £200.00 x 3.3% = £6.60
Increase paid by us: £4.38
Increase paid by the HMRC: £2.22
(£65 x 3.3%) + (25 x 0.3%, the extra amount over 3% on service post 5th April 1988)
Total increase paid: £6.60