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Guaranteed Minimum Pension

If you only paid into the Police Pension Scheme after 1997 then you will not have a GMP amount. However, if you transferred some pension rights in from another contracted-out scheme that you paid into before 1997 you may have a GMP.

If you paid into the Police Pension Scheme before 1997, and you have reached State Pension age (SPa), you will probably have a GMP.

Definition of a GMP

From 6 April 1978 the State Pension was made up of 2 parts:

  1. basic pension
  2. additional pension, known as the State Second Pension (S2P) and previously known as the State Earnings Related Pension Scheme (SERPS).

Occupational pension schemes could 'contract-out' of the S2P and in return members pay a lower rate of National Insurance contributions. The Police Pension Schemes, along with all public service pension schemes, is contracted-out of the S2P.

We must ensure that the pension paid to a member is as much as they would have been paid under S2P. This is known as the Guaranteed Minimum Pension (GMP). It isn't a separate pension; it's simply the minimum amount your pension from the Police Pension Scheme must reach. Usually your pension from the Police Pension Scheme is more than your GMP.

With effect from 6 April 1997 Guaranteed Minimum Pensions  was no longer built up.

GMP amount

Your GMP is calculated by the Department for Work and Pensions (DWP) and will be notified to you with your State Pension entitlement. The DWP will inform us of the amount and provide an annual update. Your GMP is paid as part of your pension from the Police Pension Scheme, and not in addition to it. In correspondence from the DWP they may refer to the GMP as Contracted out deduction (COD).

GMP and pension increase

If you have a GMP amount all the pension increase is still paid but, instead of it all being paid with your Police pension, it is paid partly with your Police pension and partly with your State Pension.

Government legislation changed in 1988 so the GMP is made up of 2 elements:

  1. pre 1988 and
  2. post 1988 amounts.

The table below shows what pension increase is paid on the different parts of your pension and who is responsible for paying it.

Part of the pensionHow much pension increase is paid?Where is it paid?Who is responsible for paying it?
Basic Police pension, less pre and post 1988 GMP amountTotal % increaseWith Police pensionKent Pension Fund
Pre 1988 GMP amountTotal % increaseWith State PensionDWP
Post 1988 GMP amount

3% or total % increase if lower than 3%

-------------------------------

Any remaining % over 3%

With Police pension

---------------

With State Pension

Kent Pension Fund

-----------------------

DWP

Here's an example of how pension increase would be calculated and paid if you paid into the Police pension before 1997 and had a GMP amount:

Tim retired last April at age 65 and was awarded a Police pension of £3,000 a year.

The DWP notified Tim that he had a GMP amount of £1,000, made up of £400 for pre 1988 and £600 for post 1988. This is the minimum amount of pension the Police pension must pay him. His Police pension is much more. The GMP amount is included as part of the Police pension.

Tim's total pension of £3,000 is made up of these parts:
Basic pension     £2,000
Pre 88 GMP       £   400
Post 88 GMP     £   600  
£3,000

The pension increase awarded was 3.5%. The increase was calculated and paid like this:

Part of the pensionHow much pension increase is paid?Where is it paid?Who is responsible for paying it?
Basic Police pension less pre 1988 and post 1988 GMP amount (£3,000 - £400 - £600)3.5% of £2,000 = £70With Police pensionKent Pension Fund
Pre 1988 GMP amount (£400)3.5% of £400 = £14With State PensionDWP
Post 1988 GMP amount (£600)

3% of £600 = £18

----------------------

0.5% of £600 = £3

With Police pension

------------

With State Pension

Kent Pension Fund

--------------------

DWP

Therefore all the pension increase totalling £105 was paid to Tim but £88 was paid with his Police pension and £17 was paid with his State Pension.