High Court ruling on Guaranteed Minimum Pensions (GMPs)
22 November 2018
SAUL has to pay Members who built up benefits between 6 April 1978 and 5 April 1997 a minimum level of pension set by the Government. This minimum is called Guaranteed Minimum Pension (GMP).
The High Court recently ruled that pension schemes like SAUL may have to change pensions paid to Members to make them equal between men and women for the effect of GMPs. This applies to Members who have built up benefits in SAUL between May 1990 and April 1997. The SAUL Trustee welcomes this decision because it finally resolves this issue after years of uncertainty.
The High Court ruling is complex and so the Trustee is working with its advisers to understand the impact. Pensions paid to affected Members might change in the future but no Members will see their benefits reduced.
Pensions, retirement lump sums, dependants’ pensions and transfers to other schemes will still be paid while the Trustee considers the outcome of the Court case. This means the Trustee has restarted payment of transfers to other pension schemes which were recently suspended.
However, following advice from SAUL’s actuary and legal adviser, the payment of small pensions as lump sums (known as ‘trivial commutation’) will be suspended for Members whose benefits include a GMP built up between May 1990 and April 1997. This is because if a trivial commutation was to be paid, and then changed in the future, it could breach tax limits.
We’ll tell Members once the Trustee has considered how GMPs will be equalised and when trivial commutation payments can be restarted. If you have any questions, please contact us.