2 / 58
IVAN WALKER, SOLICITOR
AUTHORISED AND REGULATED BY THE SOLICITORS REGULATION AUTHORITY. REGISTRATION NUMBER 462700
Ref: IFW/GFTU/17/01
Trustees of the GFTU Pension Scheme
26 April 2017
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.