By law we need to recalculate some members’ pensions so that men and women are treated the same overall. This is because some members have something called a Guaranteed Minimum Pension (GMP), which is included in their UKRF pension and has historically been different for male and female members. This process is called ‘GMP equalisation’.
GMP equalisation is no small task. It involves lots of complex calculations using data from thousands of members and we need to check our results thoroughly. This means the process is taking us time, years in fact, to finalise. But, in the meantime, we know that some of you may have questions and want to know more.
A new online resource
That’s why we’ve developed our GMP equalisation pages. We want to make sure there is a dedicated place where you can find videos, articles, and FAQs, about the process, including what’s happening when (and why), who might be affected, and tax information.
We’ll soon start writing to all affected pensioner members
Here are the steps we’ve completed so far, and what we’re doing next:
Step 1 – We know ‘who’
We’ve identified all our pensioners with a GMP earned between 17 May 1990 and 5 April 1997 and reviewed whether the affected part of their pension would have been higher if they were the opposite sex.
Step 2 – We’re working out ‘how much’
We are working out how much each affected pensioner should receive to make their GMP equal. Members may receive a pension increase, a one-off extra payment, or both. Note that any payment is likely to be small. No one’s pension payments will be reduced as a result of GMP equalisation.
Step 3 – We’ll contact affected members
We will write to pensioners who are due an extra payment and/or a pension increase. We have thousands of members’ pensions to recalculate so we’ll be contacting affected members in stages, with the aim of contacting the majority during 2022. You won’t get a letter if your pension is not affected by GMP equalisation.
Step 4 – We’re making the changes
We’ll arrange for one-off payments to be made and/or pensions to be increased. You don’t need to do anything to receive this, but it is worth keeping in mind that a higher pension payment could put you into a higher income tax bracket. A one-off payment could also put you temporarily into a higher income tax bracket, but you may be able to reclaim the tax. You’ll find more information about the tax implications under Tax explained.
Step 5 – We’ll continue to review
GMP equalisation is an ongoing process. If you haven’t yet retired from the UKRF, we’ll review your pension when you take it. We’re also working through the implications of the High Court judgment in November 2020 on how to treat benefits that have been transferred out from the UKRF to another pension arrangement. Once we have worked through the implications, we will review the impact on individual members where appropriate.
Your next step?
Visit the GMP equalisation pages – we hope you find it useful.