Pensions and Annuities Ltd

If you’re reading this, it’s quite possible you’ve come across something called GMP — or Guaranteed Minimum Pension — in your pension paperwork. And if your first thought was “what on earth is that?”, you’re not alone.

We regularly speak to clients who find themselves in the same position, especially when they’ve tried to transfer their pension and have been told they can’t because of GMP. While GMP can be a valuable benefit, it isn’t always the right fit for everyone. In fact, many people find it quite restrictive, which is why understanding what it really means is so important.

So, what exactly is GMP?
GMP relates to pensions built up between 1978 and 1997, when many employees were “contracted out” of SERPS (the State Earnings Related Pension Scheme). In return, their workplace or private pension had to guarantee at least a minimum level of retirement income. This is the “minimum” that the GMP promises to provide.

On top of that, GMP comes with its own set of specific rules about how benefits must be paid and increased over time. While this was designed to protect savers, these rules can sometimes limit flexibility when it comes to managing your pension today.

What pensions have GMP?

You will most commonly see pensions with GMP from Final Salary Pension Schemes, Contracted Out Money Purchase Pension Scheme/Hybrid Schemes and Section 32 Plans. 

For extensive information on pensions with GMP, visit our other website: gmppensions.co.uk