Guaranteed Minimum Pensions

Whilst you were a contributing member of the MNOPF Defined Benefit Section, you may have been contracted-out of the State Earnings Related Pension Scheme (“SERPS”) for some, or all, of your contributory service. If this was the case, you will have paid National Insurance (“NI”) contributions at a lower rate than for somebody who was not contracted-out. In return for this, the MNOPF must provide a pension at least equal in value to a prescribed minimum amount called the Guaranteed Minimum Pension (“GMP”). In practice, MNOPF pensions are more generous than these minimum amounts, so your GMP forms part of your overall MNOPF pension.

In 2016 SERPS ceased to exist and no GMPs have accrued since this time. The calculation of GMPs is very complex and relies on National Insurance contribution data submitted historically to HMRC and to the MNOPF. Your MNOPF record includes month by month data showing the contribution paid by you and the corresponding NI contribution; this information was provided every month by your employer while you were an active member of the MNOPF. Independently of this your employer should have also remitted your NI contribution information to HMRC.

In 2016, HMRC and the pensions industry started working to ensure that the GMP values recorded and calculated by pension schemes and at HMRC were the same. This substantial exercise was known as GMP reconciliation and the project was completed in 2023, with affected members contacted.

GMP Equalisation

In a 2018 court case involving Lloyds Bank and its pension scheme, a judgement was reached that GMPs must be equalised in respect of males and females. This followed legislation passed some time ago requiring pension schemes to equalise their main scheme benefits from 17 May 1990, which had been in place for MNOPF members since the requirement became law. However, in common with most other defined benefit pension schemes, the MNOPF had not equalised GMPs due to a lack of guiding legislation and the extreme complexity of any calculations required.

A significant project to equalise GMPs for affected members commenced in 2022 with the final phase of the project expected to be completed during 2026/2027. If this exercise affects your pension, you will have been, or will be, contacted individually.