The Government has issued its response to the consultation ‘Public Service Pensions: Guaranteed Minimum Pension (GMP) indexation’ and has decided to discount conversion as a long-term policy solution and make full Guaranteed Minimum Pension (GMP) indexation the permanent solution for all public service pension schemes, including the Teachers’ Pension Scheme.

This means that the Teachers’ Pension Scheme will provide full indexation to the GMP element of a member’s pension for those members with a GMP reaching State Pension age from 6 April 2021. This had also been the interim solution, which applied to members reaching State Pension age from 6 April 2016. Prior to this, the amount of indexation applied to the GMP accrued between 6 April 1988 to 5 April 1997 was capped at 3%, with any increase over this being provided via the individual member’s State pension.

The consultation, which took place between 7 October and 30 December 2020, considered how the Government will continue to meet past commitments to public service pension members regarding the full indexation of public service pensions, including any GMP element related to membership of a public service pension scheme, beyond 5 April 2021. It considered options to extend the current GMP indexation methodology to 5 April 2024 or to a later date before reconsidering alternative methodologies, namely conversion, or to make the current methodology the permanent solution. The consultation made clear that the Government remains fully committed to the price protection of GMPs for members of public service pension schemes under any solution adopted.