If you started paying into the Local Government Pension Scheme (LGPS) after 1997, you will not have a GMP amount, unless you transferred some pension rights in from another contracted-out scheme that you paid into before 1997 you may have a GMP.
If you paid into the LGPS before 1997, and you have reached State Pension Age you will probably have a GMP.
What is a Guaranteed Minimum Pension (GMP)?
From 6 April 1978 to 31 March 2016 the State Pension was made up of 2 parts:
- basic pension
- additional pension, known as the State Second Pension (S2P) and previously known as the State Earning Related Pension (SERPS).
Occupational pension schemes could 'contract-out' of the S2P and in return members paid a lower rate of National Insurance contributions. The LGPS, along with all public service pension schemes, was contracted-out of the S2P.
The LGPS must ensure that the pension paid to a member is as much as they would have been paid under S2P. This is known as the Guaranteed Minimum Pension (GMP). It isn't a separate pension; it's simply the minimum amount your LGPS pension must reach. Usually, your LGPS pension is more than your GMP.
With effect from 6 April 1997 Guaranteed Minimum Pensions no longer accrued.
With effect from 1 April 2016 the LGPS is no longer a contracted out scheme.
Who calculates the GMP amount?
Your GMP is calculated by the Department for Work and Pensions (DWP) and will be notified to you with your State Pension entitlement. The DWP will inform us of the amount and provide an annual update. Your GMP is paid as part of your Local Government pension, and not in addition to it. In correspondence from the DWP they may refer to the GMP as Contracted out deduction (COD). Who pays pension increase on the GMP?
Who pays pensions increase on the GMP?
If you have a GMP and you reach State Pension Age after 31/03/2016 the full increase will be paid with your LGPS pension.
If you have a GMP and you reach state Pension age before 01/04/2016 the full increase is still paid but, instead of it all being paid with your LGPS pension, it is paid partly with your LGPS pension and partly with your State Pension. Government legislation changed in 1988 so the GMP is made up of 2 elements:
- pre 1988
and
- post 1988 amounts.
The table shows what pension increase is paid on the different parts of your pension and who is responsible for paying it.
| Part of the pension |
How much pension increase is paid |
Where is the increase paid |
Who is responsible for paying it |
| LGPS pension, less pre and post 1988 GMP amount |
Full pensions increase |
With your LGPS pension |
South Yorkshire Pension Fund |
| Pre 1988 GMP amount |
Full pensions increase |
With your State Pension |
DWP |
| Post 1988 GMP amount |
3% or full pensions increase if lower than 3%
Any pensions increase over 3% |
With your LGPS pension
With your state pension |
South Yorkshire Pension Fund
DWP |
Overall, you don’t lose out you will receive the full increase.