DEFINITIONS

SERPS is the State Earnings Related Pension Scheme, introduced in 1978. Unlike the universal flat basic pension it depends on your earnings history from 1978 till the date of retirement. Its name has been changed to S2P, State Second Pension, but it is shown on DWP pension statements as "Additional Pension".

GMP is Guaranteed Minimum Pension. When an occupational scheme is contracted out of SERPS it is obliged to provide a GMP, which is broadly the same amount and subject to the same rules as SERPS. In 1978 it was uncommon for private sector schemes to index pensions, so the obligation was to provide a flat unindexed GMP as part of the total pension. The National Insurance Fund made up the difference. In 1988 the rules were changed so that the scheme had to provide indexation up to 3% maximum, with the NIF making up the excess if any, then in 1997 the rules were changed again and the scheme then had to provide indexation to the whole pension.

If you live in a frozen country the SERPS is frozen, and if you have a GMP in your occupational scheme pension the DWP no longer indexes it.

In 1978 the DHSS (as it then was) issued a leaflet. Here is what the front page looked like

What we are asking you is "Do you remember, at the time you joined SERPS being told that the SERPS pension would be frozen if you moved to a frozen country?"

If you were in a contracted out scheme "Do you remember, at the time you joined the scheme being told that the GMP would be frozen if you moved to a frozen country?"

By the way, pensioners in public sector schemes living in frozen countries have their GMP indexed by the scheme in compensation for not getting it from DWP.

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