This is the lowest level of pension which must be paid to a pensioner, as a condition of contracting out of SERPS.
The portion of an Occupational Pension Scheme that must provide a minimum amount as a replacement for the State Earnings Related Pension Scheme (SERPS)/State Second Pension (S2P)
This is the minimum amount that a member of a contracted-out defined benefit arrangement will receive as pension under the arrangement in respect of contracted-out service between 6 April 1978 and 5 April 1997. Special rules apply to this type of pension.
If, before 6th April 1997, you belonged to an employer's scheme that was contracted-out of SERPS before 6th April 1997 (on the defined benefit test), then you will have a 'GMP' which replaces your SERPS pension in respect of the period you are contracted-out. This is roughly equivalent to what you would have received from SERPS in respect of that period.
The Guaranteed Minimum Pension (GMP) is broadly equivalent to the entitlement to pension from the State Earnings Related Pension Scheme (SERPS) that members would have earned during their years of contributing service had they not been contracted out of the State Scheme.
Pension schemes like classic, classic plus and premium must make sure that they give members a pension that is at least the same level as the pension they would have had if they had stayed in the State Earnings Related Pension (SERPS) for their service before 1997. This minimum level of pension is known as the Guaranteed Minimum Pension or GMP. [ Back to A to Z list
The minimum pension which a scheme must, by law, pay a member from State pension age. This is a condition of contracting out of the State earning related pension scheme. It applies to membership during the period from 6 April 1978 to 5 April 1997.
the level of pension an occupational final salary scheme had to provide until April 1997 in order to contract out of SERPS.
The minimum pension which an occupational pension scheme must provide as one of the conditions of contracting out for pre 6 April 1997 service (unless it was contracted out through the provision of protected rights).
The minimum amount of pension that a vocational pension scheme must provide for periods during which a member is contracted out of the state scheme.
A member of a contracted out occupational pension scheme will get at least this much pension unless: The member 's service is all after 5 April 1997. Their benefits would then come under limited price indexation (LPI) . Some of the member 's service is after 5 April 1997. They would have some of their benefits affected by GMP and some by LPI. The scheme is a contracted out money purchase scheme . The member's benefits are then affected by protected rights .
An employer can contract out of the SERPs element out of the state pension scheme (hence qualifying for a contracted-out rebate on NIC's ) by means of an occupational pension scheme. There are strict rules relating to occupational pension schemes generally and contracting-out. Benefits under a contracted-out scheme must be at least as good as SERPs benefits and such schemes must ensure a "guaranteed minimum pension". An occupational pension scheme need not be contracted out. Occupational pension schemes set up by smaller companies are often insured - whereby an insurance company takes over all responsibilities in return for a premium.