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Public sector pension scheme members to get full inflation protection

Public sector pension scheme members to get full inflation protection

Tens of thousands of public sector workers will benefit from the news that their full pension will be inflation protected throughout retirement.



Stack of pension coins declining in size

The government today published its response to a consultation on how an element of public sector pensions built up in the eighties and nineties, known as the Guaranteed Minimum Pension or GMP, should be increased in retirement.

Under previous rules, increases to the part of the pension known as the GMP were paid by the DWP along with the state pension once scheme members reached State Pension Age. For people reaching State Pension Age after April 2016 this has no longer been the case.

Treasury previously announced that public sector pension schemes would pay the increases on GMPs for scheme members reaching State Pension Age from April 2016 to 5 December 2018.

Today’s announcement extends that provision to people who reach State Pension Age on or after 6 December 2018 and before 6 April 2021.

Treasury will continue to investigate how to protect GMP increases for scheme members reaching State Pension Age after April 2021.       

Prospect pension officer Neil Walsh said: “This is welcome news for public sector pension scheme members.

“The proposed removal of inflation increases for GMPs would have had an insidious effect on their incomes in retirement. 

“The members covered by the extension of current policy should benefit to the tune of thousands of pounds over the course of their retirement.

“Prospect will continue to push for the protection of these payments for all members.”

 

Read the government’s response to the consultation:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/675360/Indexation_and_equalisation_of_GMP_in_public_service_pension_schemes_government_response_web.pdf