What is a guaranteed minimum pension (GMP)?

A guaranteed minimum pension (GMP) is the part of an older final salary pension that schemes had to provide for service between 1978 and 1997.

If "GMP" has turned up on a pension statement, you are looking at a legacy of the years when employers' final salary schemes could take over part of the State's job of providing retirement income. Your scheme administrator can confirm what yours is. An FCA-authorised adviser can weigh it alongside everything else you hold; ask through this page's form at no cost.

Where the guarantee came from: contracting out, 1978 to 1997

Between 6 April 1978 and 5 April 1997 the State ran an earnings-related top-up to the basic pension, known as SERPS (the State Earnings-Related Pension Scheme). Summarising the background in the 2018 Lloyds case, the High Court explained that an employer could contract out of SERPS through alternative arrangements that provided guaranteed minimum pensions, and that doing so reduced the liability to pay National Insurance contributions (Lloyds Banking Group Pensions Trustees Ltd v Lloyds Bank Plc [2018] EWHC 2839 (Ch)). In return, the scheme had to promise a minimum pension for that service.

HMRC's guidance for administrators puts the period precisely. Schemes that were contracted-out salary related schemes before contracting out ended on 6 April 2016 "need to provide a Guaranteed Minimum Pension (GMP) to members for contracted-out service between 6 April 1978 and 5 April 1997" (GOV.UK, How to calculate your scheme member’s Guaranteed Minimum Pension). The rules that created new GMPs were abolished from 6 April 1997, but earlier accruals stayed in place: a scheme that was contracted out "must still provide a pension at least as good as the GMP" for that service (GOV.UK, GMP conversion and equalisation).

The law is in the Pension Schemes Act 1993, in Part III. Section 8 defines a GMP as "any pension which is provided, by a scheme that was a salary related contracted-out scheme, in accordance with the requirements of sections 13 and 17" (legislation.gov.uk, section 8). All contracting out stopped on 5 April 2016, as GOV.UK's guide to contracting out records; the State Pension page explains how a contracted-out past can reduce the State Pension itself.

What a GMP actually is, and what it is not

It is a floor, not the whole pension. Your scheme pension is built under its own rules and is usually larger; the GMP is the minimum it must not fall below for the 1978 to 1997 part of your service. The overall idea of a salary-linked promise is in final salary pensions, and the pension you will actually receive follows the scheme's design.

The amount was not worked out from your final pay. HMRC's calculation guidance builds it from the earnings on which contracted-out National Insurance contributions were paid between the lower and upper earnings limits, at an accrual rate of 25% for GMP earned before 6 April 1988 and 20% for GMP earned after that date. Two terms follow, and you will see them on statements:

• Pre-1988 GMP, built up before 6 April 1988.
• Post-1988 GMP, built up from 6 April 1988 to 5 April 1997.

The split matters because the two parts are increased differently, as explained below.

When a GMP is payable: 60 for women, 65 for men

The GMP has fixed ages. The scheme "must make the GMP available to its members at age: 60 for a woman 65 for a man", and this has not moved even as State Pension ages have risen (GOV.UK, Provide a pension for your scheme member). Your State Pension age may be well above 65, but the GMP age stays where it was set.

That does not fix when your scheme pension starts. The same guidance says a scheme can pay a member's pension at any time its rules allow, so your own rules decide when income can begin; how an early start is reduced is on early retirement reductions. If you carry on working past GMP age and put off taking it, the scheme must add an increment: for a deferment of seven weeks or more, it "must increase the GMP by one seventh of a per cent for each complete week in the period of deferment".

GMPs can also pass to a survivor. For a married man who dies, his widow is entitled to half the GMP accrued by him, or in payment, at death, if she qualifies for one of the listed State benefits; the guidance gives different rules for a widower or surviving civil partner. What your own scheme pays on death is a question for death benefits from a final salary pension. Cash is limited too: GMP rights can, in certain circumstances, be paid as a trivial commutation, serious ill-health or winding-up lump sum.

How a GMP is increased before and after payment

The two halves of a GMP are treated differently. A 2016 Treasury consultation on public service schemes sets out the general rule under the Pension Schemes Act 1993: for the pre-1988 part "there is no requirement under the PSA 1993 on the occupational pension scheme to provide price protection", while for the post-1988 part schemes "are required to provide price protection up to 3% per annum". Section 109 of the Act sets the yearly percentage as the rise in prices or "3 per cent., whichever is less" (legislation.gov.uk, section 109).

Before GMP age, an early leaver's GMP is revalued. HMRC's guidance sets out three methods: full revaluation by yearly order, a fixed rate, or limited rate revaluation where service ended before 6 April 1997. The Government Actuary's Department announced in March 2022 that the fixed rate is 3.25% a year for those contracted out before 6 April 2016 who leave service between 6 April 2022 and 5 April 2027, and that DWP reviews it every five years.

The same consultation describes what the State used to add. Under the old State Pension, the State paid price-linked increases on the additional pension a member built up while contracted out, took off a deduction broadly equivalent to the GMP, and paid any surplus as part of the State Pension. "It is this payment that is no longer made under the new State Pension", and many consider it, in effect, indexation of the GMP. That account comes from a consultation about public service schemes; what your own scheme pays above its legal minimum depends on its rules, and the yearly rise is covered on whether a GMP increases and pension increases in payment. How contracting out interacts with the State Pension is in final salary pensions and the State Pension.

Why GMPs became an equalisation issue

Because GMP ages and accrual rates differed for men and women, HMRC's guidance on conversion and equalisation says the rules can produce a difference in treatment that schemes are required to address under their equal treatment obligations.

The High Court settled the main principle on 26 October 2018. In the first Lloyds judgment it held that the trustee "is under a duty to amend the Schemes in order to equalise benefits for men and women" in relation to GMPs, and that it was not obliged to adopt the one method argued to be the only option. The Government Actuary's Department, which traces the issue to the Barber judgment of May 1990 and to GMP built up between 17 May 1990 and 5 April 1997, says the judgment means "no member can be worse off compared to someone of the opposite sex", and that some members' benefits will need to be uplifted.

A second judgment, on 20 November 2020, dealt with transfers out. For transfers made under the cash equivalent legislation, it held that the trustee owed a transferring member a payment that was correctly calculated and "reflected the member’s right to equalised benefits", and that a claim for an order that the trustee belatedly perform that duty was not time barred ([2020] EWHC 3135 (Ch)). For individual transfers made under the scheme's own rules, the court said whether the trustee had breached a duty would need an investigation that the trial did not carry out.

Each scheme chooses its own route. HMRC's guidance leaves the method to schemes, recommends they take legal advice, and describes GMP conversion, in which GMPs are turned into other scheme benefits. If you have received a letter or a revised figure, the detail is on GMP equalisation explained; GAD noted in January 2024 that many schemes were still working towards equalisation.

Finding out whether you have one

Start with whether you were contracted out. GOV.UK says most people employed before April 2016 were at some point, and payslips from before 6 April 2016 showing category letters D, E, L, N or O mean you were. Your employer or pension provider can also tell you. A GMP only arises in a salary related scheme, so a DC pot is a different case; the question of which type you have is on do I have a final salary pension.

The people who calculate and confirm a GMP are the scheme's administrators. HMRC's GMP checker is a tool for them, letting them check a member's record against what HMRC holds, and schemes were asked to reconcile their records with HMRC's after contracting out ended. The scheme administrator is the place to ask about yours, and how to find your GMP covers the steps. A pension from a former employer you have lost touch with is covered by finding a lost pension and finding a lost SERPS pension, and deferred final salary pensions explains what a statement shows. If you wonder about cashing in a SERPS-related amount, that guide separates the types.

A GMP and the question of transferring

A GMP is part of the guaranteed income inside a defined benefit scheme, so a transfer gives it up along with the rest of the scheme pension, in exchange for a transfer value. The regulators' starting point is plain: the FCA and The Pensions Regulator consider keeping a DB pension to be in most people's interests, and a transfer, once made, is permanent (FCA, Pension transfers from a defined benefit scheme). Where the transfer value of safeguarded benefits is above £30,000, appropriate independent advice is required first (legislation.gov.uk, SI 2015/742, as read in October 2026). How the value is calculated is on pension transfer values, and the wider risks are in should I transfer my final salary pension? Anyone contacting you out of the blue about moving your pension is worth checking against the FCA's guidance on pension scams before you reply.

Weighing a transfer offer against leaving the scheme pension where it is? Request a call through this page's form and an FCA-authorised adviser will talk through both with you, free of charge.

Questions about guaranteed minimum pensions

What does GMP mean?

It stands for guaranteed minimum pension: the minimum a contracted-out final salary scheme had to provide for service between 6 April 1978 and 5 April 1997.

At what age can I take my GMP?

The scheme must make it available at 60 for a woman and 65 for a man. Your scheme's own rules decide when your pension can start.

Do I have a GMP?

Only if you were in a contracted-out salary related scheme between those dates. Payslip letters D, E, L, N or O from before April 2016 show contracting out; the scheme administrator confirms the GMP.

Does a GMP go up each year?

The post-1988 part must be increased by the lower of price rises and 3%; the pre-1988 part has no such scheme requirement. Your scheme may do more. See whether a GMP increases.

Is the guaranteed minimum State Pension the same thing?

No. A GMP is paid by a scheme, not the State. The State Pension is covered on its own page.

Your next step

Check whether you were contracted out, then ask the scheme administrator for your GMP and how your scheme treats it. Prefer to talk it through once you have the figures? Leave a number via this page's form; an adviser at an FCA-authorised firm will ring, and there is nothing to pay.