Frequently Asked Questions (GMPe)

GMP is short for Guaranteed Minimum Pension. This is a minimum level of pension some workplace pension schemes must provide to some of their members. The FAQs in this section include more information to help you understand GMP and the processes of GMP equalisation.

This is a pension scheme provided by an employer to its employees.

Because GMPs were intended to substitute part of the additional State pension, they reflected the fact that the State pension was, at that time, calculated differently and payable from different ages for males and females. Most benefits in workplace pension schemes were made equal for both sexes with effect from 17 May 1990, following a court judgment. It was unclear whether the judgment applied to GMPs, but a court case in October 2018 (known as ‘the Lloyds judgment’) ruled that it did.

It is the process of reviewing the benefits that people built up when they were ‘contracted out’ between 17 May 1990 and 6 April 1997 and adjusting these benefits, where necessary, so that both sexes are treated the same.

GMP equalisation involves a continual ongoing assessment of pensions each year to ensure that no further inequality arises as a result of GMP benefits and how they increase each year. Ongoing adjustments will be made to members’ pension benefits as required in the future.

There used to be two State pensions – the main one and an additional one. You might see references to the additional one as: 

• State Earnings-Related Pension Scheme, or ‘SERPS’ 
• State Second Pension, or ‘S2P’. 

State pensions are paid for by taxes and National Insurance contributions. 

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, one such requirement was that the workplace scheme would pay at least a certain level of pension income, known as a Guaranteed Minimum Pension (GMP).

Typically, it’s defined benefit (DB) pension schemes, like the Sainsbury’s Pension Scheme, that have GMP. In a DB pension scheme, the amount of pension a member might receive generally depends on how long they’ve been a member and their salary at the point they stopped earning benefits in the scheme.

No. GMP equalisation is all focused on complying with the recent High Court judgment to ensure that affected pensions are treated the same for male and female members. Both male and female members may have the value of their benefits adjusted as a result of GMP equalisation.

You’ll only be affected by GMP equalisation if you built up GMP benefits in the Sainsbury’s Pension Scheme – Sainsbury’s Section between 17 May 1990 and 5 April 1997. The equalisation process applies whether you’ve started to receive a pension income or not.

If you have GMP, it may have been shown as a separate amount in a document from the Scheme such as a deferred member statement or a pension increase letter.

You might be. We’ve reviewed the relevant part of your pension and let you know if you’re affected. If you haven’t received a letter from us and your pension hasn’t changed, you aren’t impacted. 

The Trustee is conscious of the costs associated with writing to members and has decided not to send letters if: 

• your pension is affected but the annual change in your pension is less than £1; and/or 
• the one-off lump sum back payment you’re due is less than £5.

Yes, if the initial pension includes GMP, you could be affected. We’ll review your pension as part of this equalisation exercise and let you know if you’re affected. If you don’t receive a letter from us and your pension doesn’t change, you aren’t impacted.

We’ll review your benefits and make any adjustments needed at the point you retire.

Any previous calculations of the value of your benefits will not have included adjustments for GMP equalisation and may need to be revised if your pension includes GMP. However, your pension won’t reduce as a result of this, and if there is a change it is likely to only be a small increase. Please contact WTW if you have any questions regarding this.

No, it won’t be a case of all women benefitting or all men benefitting. The outcomes will be influenced by when you earned your benefits, when you retired (if you have), your age, as well as if you are male or female.

A 2018 High Court ruling requires GMP benefits built up between 17 May 1990 and 5 April 1997 (inclusive) to be treated the same for male and female members. This is to bring it into line with other existing requirements for equality in workplace pension schemes.

From 17 May 1990, a European Court of Justice ruling made it compulsory for all workplace pension scheme benefits to be treated the same for male and female members. However, at the time, it wasn’t clear if that ruling applied to GMPs too. 

This was clarified in 2018 with another legal ruling; this time through the High Court, involving the Lloyds Banking Group pension schemes. Now schemes like ours must equalise for the effects of the GMP part of members’ benefits built up between 17 May 1990 and 5 April 1997 (when GMP ended).

Since that judgment in 2018, the Department for Work and Pensions, HMRC and an industry working group have been producing guidance on how GMP equalisation will work in practice. It’s possible that there may be further legal developments.

Any spouse/civil partner or dependant’s pension will be based on the equalised pension you would have received. We’ll also pay any back payments to your estate.

If you have a question about your Scheme benefits, please contact WTW by phone or email. Please make sure you have your National Insurance number to hand for security identification purposes. 

Tel: 0800 916 8087 or +44 1737 227 587 from outside the UK

Email: [email protected] 

Mail:
Sainsbury’s Pension Scheme
WTW
Sunderland
SR43 4JU 

For general pension support and advice
MoneyHelper provides free, general pension information and details on how to find a regulated financial adviser in your area by visiting www.moneyhelper.org.uk and searching for ‘retirement adviser’. Or you can call them on 0800 011 3797.

By the end of the project, all members in the Scheme will have their GMP equalised; however, most members will not see a change to their pension. 

If we haven’t written to you by the autumn of 2026, then this means that: 

• no change was needed to equalise your benefit; or 
• the annual change to your pension was less than £1; and/or 
• the value of the one-off lump sum back payment was less than £5.

No, you don’t need to do anything in relation to GMP equalisation to your Sainsbury’s pension unless you are impacted by the Lifetime Allowance (see ‘Could this affect my Lifetime Allowance?’). 

If your annual pension changes by more than £1 and/or the lump sum back payment you are due is more than £5, we will have written to you with details of the change to your pension. The Trustee is conscious of the costs associated with writing to members and therefore decided not to write to members if the change was smaller than this. However, you may have noticed a small change in your pension or that you’ve received a small lump sum.

By the end of the project, all members in the Scheme will have their GMP equalised; however, most members will not see a change to their pension. If we haven’t written to you, it means that either no change was needed to equalise your benefit, or the change to your pension was less than £1 and/or your lump sum back payment was less than £5.

Due to the size of the Sainsbury’s Pension Scheme, equalising GMPs for all members will take some time to complete, and changes to pensions will take place over a number of phases. Members included in the first phase will see the change applied to their December pension. Where the change to your annual pension is more than £1 and/or the lump sum back payment is valued at more than £5, you will have received a letter setting out the details of the change. Where the change is smaller than this, no letter will have been sent. 

The second phase will take place in the summer of 2026.

If we work out that you would’ve received a higher pension income in previous years if you were the opposite sex, you’ll receive a one-off lump sum back payment to address this. Tax will be deducted at your highest marginal rate from this payment, which could mean that you’re liable to pay more tax than you would have paid had you received the correct amount of pension in previous years. You will be able to apply to HMRC for a tax refund, by requesting that this payment is assessed against the previous years when your pension was underpaid due to GMP. If you’re affected by this, the letter we sent you includes the information you need to provide HMRC to arrange this. 

If you have any questions about your personal tax situation, you may wish to speak with an impartial financial adviser. You can find an adviser online at www.moneyhelper.org.uk or you can call MoneyHelper on 0800 011 3797.

There could be some potential tax implications for you if the amount of pension you receive changes or if you receive a lump sum payment, both of which will be subject to income tax. Tax will be deducted at your highest marginal rate from the lump sum payment, which could mean that you’re liable to pay more tax than you would have paid had you received the correct amount of pension in previous years. You will be able to apply to HMRC for a tax refund, by requesting that this payment is assessed against the previous years when your pension was underpaid due to GMP. If you’re affected by this, the letter we sent you includes the information you need to provide HMRC to arrange this. 

If you have any questions about your personal tax situation, you may wish to speak with an impartial financial adviser. You can find an adviser online at www.moneyhelper.org.uk or you can call MoneyHelper on 0800 011 3797. 

More about how pension back payments are taxed can be found here. 

In most cases, we’re only looking at a relatively small part of members’ pensions built up over a relatively short time period. This means that, for most members, any impact is likely to be small in comparison to their total pension.

GMP equalisation is an ongoing process, and we’ll continue to monitor your affected GMP benefits. 

After we’ve completed this initial GMP equalisation exercise, we’ll need to review the adjustment required to make sure you receive the right total GMP-equalised payments. Over time, the additional pension arising from GMP equalisation could increase, reduce or stop and others may become eligible for additional pension. If we need to make changes, these will be taken into account when your pension increase is worked out, but your pension will not be reduced.

The pension your spouse/civil partner and/or dependants receive will be based on your pension when you die. If GMP equalisation changes your pension, it will change theirs too. 

If you’re currently receiving a spouse’s/civil partner’s or dependant’s pension, it may be affected if any adjustments are required to the initial member’s benefits due to GMP equalisation.

The LTA used to be the maximum amount of pension savings that an individual could benefit from over the course of their lifetime (across all registered pension arrangements) before a tax charge known as the Lifetime Allowance charge (LTA charge) applied. Most individuals were subject to the standard LTA. However, when the LTA was introduced, and in certain years when it was reduced, protections were offered to safeguard individuals who had already built up significant pension savings on the expectation of a certain level of LTA. 

LTA tax charges were abolished with effect from 6 April 2023, and the LTA was abolished in full on 6 April 2024. From 6 April 2023, benefits over the LTA are taxed as normal pension income. However, in assessing the effect of any changes to your benefits, it’s the tax rules in force at your retirement date that apply and, therefore, we are still requesting that you inform us of any LTA protections you may have. 

LTA protection is something you would have requested from HMRC yourself. You can check if you have protection and find out how to apply for certain LTA protections online at gov.uk/guidance/pension-schemes-protect-your-lifetime-allowance 

The abolition of LTA tax charges will not change the rules applicable for assessing tax that might be due for events taking place in tax years before 6 April 2023. Following GMP equalisation, in rare cases, an increase to a member’s starting pension could result in a new or increased LTA charge (in respect of a previous tax year). The letter we sent you includes details of the percentage of LTA used up by your Sainsbury’s pension, if this has changed as a result of GMP equalisation. If your letter doesn’t include this information, you aren’t impacted.