GMP
Guaranteed Minimum Pension

(This includes teachers, nurses, doctors, policemen, armed services, council employees and lots more)

If you earned a pension in a public sector scheme between 1978 and 1997 you will have a portion of your pension described as a Guaranteed Minimum Pension. Because the scheme was "contracted out" from the State Earnings Related Pensions Scheme, the Guaranteed Minimum Pension is treated differently from the rest of your public service pension. The following is based on the 2008 News Letter of one of the Public Service Pension Schemes.

The Guaranteed Minimum Pension, GMP, consists of two elements:

* (Pre 1988) For service between 1978 and 1988 the National Insurance Fund will pay all annual indexation on your GMP with your State pension. This part does not attract increases from your public service scheme pension.
* (Post 1988) For service between 1988 and 1997, annual indexation up to 3% is paid by the scheme. In this case your public service scheme will pay the increase up to 3%; any balance above 3% will be paid out of the National Insurance Fund with your State pension.

If you worked in the public sector in both periods then your GMP will be a blend of these, making it more difficult to disentangle.

When a pensioner retires to a "frozen" country the National Insurance Fund no longer pays the annual indexation, and since the scheme pays either no indexation, or limited, indexation, the GMP is not properly indexed like the rest of your occupational pension.

Under a Treasury directive, the Department for Work and Pensions, DWP, is supposed to advise the scheme administrators and instruct them to take over indexation of the GMP. Unfortunately the DWP is not diligent in doing this, and most public sector pensioners do not know that they are not getting their rights.

Here is how you tell.

You should receive an annual advice from the scheme, setting out in detail how your pension has been indexed.

It may show you your Current Annual Pension, with your GMP deducted from it, and show a percentage increase on the reduced figure.The increase, if you are a frozen pensioner, should be calculated on the whole pension, before deducting the GMP.

If the GMP amount is zero. Then the scheme is indexing your full pension. All's well.

Otherwise do your sums. It may look as if you are getting an increase in your pension, but it may not be by the correct amount.

For example, if your last year's pension was £1000 with a GMP of £200 included, then indexation will have been calculated on the £800 residue only. The indexation should be calculated on the full £1000

What to do:

1. Write to the managers of your pension scheme. You may be able to find an address in their newsletter or on the annual pension advice you received. Use email if available.

2. Ask them whether they ever received notification that you are living in a "frozen" country? If they ever received form IPC SU 1131 from the International Pension Centre of DWP? And if not, will they now ask International Pension Centre to issue the requisite form?