Your pension is increased on 1 April each year in line with inflation as measured by the increase in the Retail Prices Index (RPI) over the 12 months to the previous September, up to a maximum of 5%.

If the increase in RPI is greater than 5%, any increase in excess of 5% is payable solely at the discretion of National Grid.

If you have not yet reached age 65 for men, and 60 for women, the increase is applied to the whole of your pension. Once you get past these ages, things are a little more complicated!

GMP increases

If you were a member before 6 April 1997, then part of your pension will be made up of the Guaranteed Minimum Pension (GMP). GMP is the name given to the minimum level of pension income that workplace pension schemes had to provide to employees who were ‘contracted out’ of the State Second Pension (between April 1978 and April 1997, when GMP stopped being accrued).

It is made up of two elements built up before and after 6 April 1988. Legislation sets out the increases to be applied to these benefits. The GMP accrued in the first period does not increase; and increases for the second period are limited to 3% per year and are based on the Consumer Prices Index (CPI) over the 12 months to the previous September.

Non-GMP increases

Increases to your pension in excess of the GMP will be made in line with inflation as measured by the increase in the Retail Prices Index (RPI).

If your pension has not been in payment for a full year, you will receive a proportional increase. Railpen send out a statement each April giving you the breakdown of how your pension increase has been calculated.

GMP equalisation

GMP equalisation is the name given to the process of reviewing the benefits people built up when they were contracted out between 17 May 1990 and 6 April 1997, and correcting these benefits where necessary, so that men and women are treated equally.

In October 2018, a court case in relation to GMPs and gender equality was determined, which has implications for many defined benefit schemes across the UK, including the Group. The industry is still waiting for guidance on GMP equalisation from the Department for Work and Pensions, HMRC and an industry working group, who are considering how GMP equalisation will work in practice.

The Group Trustee is currently working with its support team and advisers to consider what this means for the Group and to identify members who are affected. This is a complex process for all affected occupational pension schemes, and it’s expected to take more than a year to complete.

It’s not yet possible to say exactly who will be affected and how they will be affected. For many members, there will be little or no change at all.

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