LIFETRACK
What you need to know about GMP
30-second summary
We have carried out a Guaranteed Minimum Pension (GMP) equalisation review.
You can only be affected if you have GMP benefits built up between 17 May 1990 and 5 April 1997.
GMP equalisation involves reassessing members’ benefits built up within this period and adjusting these benefits where necessary so that both men and women are treated the same.
You do not need to do anything and your pension will not decrease as a result of the GMP equalisation exercise.
We have sent letters to affected members with more information.
What is GMP?
In the past, people who belonged to a workplace pension scheme could be ‘contracted out’ of the additional state pension. ‘Contracting out’ meant paying lower National Insurance contributions, but it also meant building up less additional state pension. Instead, their workplace pension scheme had to meet certain requirements. For employment before 6 April 1997, the requirement was that the workplace scheme would pay at least a certain level of pension income, known as a Guaranteed Minimum Pension (GMP). Like the State Pension at the time, it was calculated differently and payable from different ages for men and women.
What is GMP equalisation?
Following a High Court judgment, defined benefit pension schemes with GMP (like RWE Group) must ensure that there is no sex-based inequality arising from any GMPs earned between 17 May 1990 and 5 April 1997. Where any such inequality is identified, schemes are legally required to take steps to address this. The process, which schemes like ours now need to follow to address this inequality, is known as GMP equalisation.
What we are going to do
We have looked at our records to see which of our members and former members built up any GMP in the RWE Group between 1990 and 1997. For members who did, we have worked out how their benefits would have been calculated if they were the opposite sex for this period. If the calculations show that they would have built up a different amount of benefits, we may need to make some changes to their pension to address this. We will continue to do this each year to ensure they don’t experience any future inequality relating to GMP built up from 17 May 1990.
Could I be affected?
You can only be affected if you have GMP benefits built up between 17 May 1990 and 5 April 1997. If you are affected, you will be sent a statement explaining any changes and how they affect your benefits.
Many members may see no change to their pension benefits due to GMP equalisation. For most people who do see a change, the impact is likely to be small in proportion to their total pension and no member’s pension will decrease as a result of the GMP equalisation review.
Where to find more information
You can find answers to Frequently Asked Questions by viewing the document below.