BGCM EC May 2017

Ref: IFW/GFTU/17/01

26 April 2017

Trustees of the GFTU Pension Scheme

Pension increases

Introduction

As you will be aware, pensions in payment to pensioner members of the Scheme are increased annually. Different statutory minimum increases must be applied to different tranches of pension. In short: 1. Any guaranteed minimum pension (GMP) which is in payment which reflects pensionable service before 6 April 1988 need not be increased at all. GMPs accrued by reference to pensionable service between 6 April 1988 and 5 April 1997 must be increased in line with the consumer prices index with a cap of 3%. GMPs stopped accruing with effect from 6 April 1997 and increases to GMPs accrued after that date therefore has no meaning. 2. The rest of any pension (“excess over GMP”) accrued before 6 April 1997 need not be increased. Excess over GMP accrued on and after 6 April 1997 must be increased in line with the consumer prices index, with a cap which in times past was 5% and is now 2.5%. These are minimum increases, and the GFTU Scheme has always paid more than the statutory minimum. When discussing the Scheme’s benefits with John Livesey before the valuation was completed, however, it became apparent that the rules relating to GMP increases may need to be re-examined.

GMP increases

A member’s GMP is, broadly speaking, the part which reflects the State earnings-related pension that the member forgoes as a result of the pension scheme being contracted-out before 6 April 1997. In practice the GMPs payable to GFTU Scheme members are a small part of their overall entitlement.

IVAN WALKER, SOLICITOR AUTHORISED AND REGULATED BY THE SOLICITORS REGULATION AUTHORITY. REGISTRATION NUMBER 462700