Pensions Increase and GMP


When will my pension increase?

Pensions are increased yearly in line with inflation - this is called Pensions Increase. Pensions Increase is due in April each year. 

  • If your pension has been in payment for less than a year, you will not receive full pensions increase. 
  • Your pension will not be increased if you are below age 55 (unless you retired due to ill health or are in receipt of a dependant's benefit). 

The increase occurs on the first Monday after the start of the tax year on 6 April. 

If you are eligible for Pensions Increase:

  • Your pension for April will include Pensions Increase to cover the increase for the latter part of April.
  • Payments for May onwards will include Pensions Increase for the full month. 
  • There will not be any Pensions Increase in years when the Consumer Price Index is zero. 

Note: As the increase occurs part way through April, the first month with a full increase will be May. 

What is GMP?

Guaranteed Minimum Pension (GMP) is a type of protection that you may have included in your FPS pension if:

  • you paid into the FPS between 6 April 1978 and 5 April 1997 and/or
  • you transferred in pension rights which included a GMP, from another pension scheme. 

GMP is not a separate pension. It is the minimum amount that a member's FPS pension must reach. Usually, your FPS pension is more than your GMP and the GMP is included in the FPS pension. 

Why is GMP important?

The GMP is the minimum amount of pension that you must be paid in retirement for pension built up between 6 April 1978 and 5 April 1997.

If you have a GMP, it is possible that some of your pension increase will be paid with your State Pension. You will still receive the full increase. See the section below: "How does GMP affect Pensions Increase?".

Why was GMP introduced?

Before 1 April 2016, the State Pension had two tiers:

  • the basic State Pension and 
  • the State Second Pension (S2P) previously known as State Earnings Related Pension (SERPS).

Occupational pension schemes could 'contract-out' of S2P. All public service pension schemes including the FPS, contracted out of S2P. This meant that:

  • FPS members did not contribute to S2P and therefore paid a lower rate of National Insurance contributions.
  • The FPS had to ensure that the pension paid to a member was at least as much as they would have received under S2P. This minimum level for pension was known as the GMP. 
How does GMP affect pension increase?

Every April, a pension increase is applied to your pension. Currently this increase is related to the annual increase in the Consumer Price Index to the previous September. 

If your pension started before State Pension age:

If you started receiving your pension after GMP age but before State Pension age, then all of the pension increase will be included in your FPS pension payments.

If your pension started on/after State Pension age:

Once you reach State Pension age the responsibility for paying increases on the GMP elements of your pension may be shared between the FPS and the Department of Work and Pensions (DWP) through your State Pension.