GMP conversion was cited in the Court judgment as one of the methods available to implement GMP equalisation of future pension benefits and so envisages equalisation and conversion being a combined process. From an administrative and efficiency perspective, we consider it makes good sense to combine the equalisation and conversion steps. See also the FAQ entitled “Why conversion and not dual records?” that was uploaded to the consultation website on 21 July 2023.

At this time, we cannot tell you precisely what proportion of your pension would be split across increasing and non-increasing parts if the proposal is implemented. This is because each member’s circumstances are different and the split will only be determined once the Fund’s actuary has carried out their calculations after the conversion date. The calculation process involves the actuary determining a member’s revised future pension, allowing for equalisation of the member’s GMP built up on or after 17 May 1990. The Fund’s actuary is required to certify that the change to a member’s benefits made through GMP conversion does not reduce the overall expected value of those benefits (based on the actuarial assumptions used for the conversion process).

The part of your pension that is currently classed as GMP would be converted into a pension that would become ‘non-GMP’ pension. This would mean all of your pension from the Fund would be a non-GMP pension. All of the non-GMP pension will be split between increasing and non-increasing elements.

Currently, if you want your pension to start before your normal pension age under the Fund’s governing documents then an early retirement reduction may be applied to your benefits. In such a situation, a check would be made to ensure your early retirement pension would be sufficient to cover your GMP at GMP age. If it is not, you would be prevented from starting your pension at that time. 

If GMP conversion is implemented, then the GMP checking process that currently applies would not be necessary and you would be permitted to take your pension, subject to the Fund’s other (non-GMP related) requirements relating to early commencement of pension, and an early retirement reduction may be applied.

Information about steps members should consider taking in relation to their own income tax position as a result of GMP equalisation is set out in the booklet you received. See also the FAQ entitled “If arrears are due, will the lump sum and interest payable be split by tax years? [Added 21/07/2023]".

GMP equalisation is a legal requirement following a High Court ruling in 2018. Conversion is one of the methods permitted to address the equalisation of GMP benefits. The Trustee has been working with its legal and actuarial advisers on this project since this ruling, as mentioned in member newsletters since that date. See also the FAQ entitled “The court judgment was in 2018, why is GMP equalisation only being tackled now? [Added 21/07/2023]”. 

Any potential future transaction involving the Fund, such as a potential buy-in with an insurance company is completely distinct from the GMP conversion proposal. Please refer to the Trustee’s comment on the media speculation concerning any such transaction through PensionLine and a recent separate communication to members. 

A member’s pension entitlement under the Fund (whether it has been converted or not) would not change in the event of any such potential future transaction.

We are not ignoring members’ views and we are considering all feedback received during the consultation period. 

We have been consulting on the GMP conversion proposal we would point out that GMP conversion is not the same as GMP equalisation or GMP rectification. The Trustee is legally required to consult on GMP conversion only. ‘GMP equalisation’ relates to the legal obligation on the Trustee to ensure that members are not disadvantaged on grounds of their sex in respect of any GMP built up on or after 17 May 1990. ‘GMP rectification’ relates to the process of reconciling the Fund’s GMP records with HMRC.

The booklet issued as part of the consultation mailing is a document that is specific to the GMP consultation only. It does not replace or override the Fund’s current governing documents that, among other things, set out the Fund benefits payable to members. 

If there is any discrepancy between the description of current Fund benefits as between the GMP consultation booklet and the Fund’s governing documents, the Fund’s governing documents override the booklet. The consultation materials will not be updated and reissued to reflect any clarifications provided via the FAQs added to the consultation website.

Current position 

Your Fund pension is made up of three parts: 

Any GMP built up before 6 April 1988 

+ Any GMP built up after 5 April 1988 

+ Pension in excess of GMP 

= Total Pension 

Prior to GMP age, your total pension increases in line with the BC increase rules (please see your consultation booklet for further details on the BC increase). 

However, when your GMP comes into payment at GMP age, you would see your GMP elements split out into these individual parts and a “step-up” in relation to your GMP pension, as described in your consultation booklet. 

As a matter of law, for any GMP that is in payment: 

• there is no statutory requirement to increase any part of a GMP to the extent it was built up before 6 April 1988 

• the statutory annual increase applicable to any part of that GMP that was built up between 6 April 1988 and 5 April 1997 is the increase in prices (currently measured using CPI) capped at 3%. 

The Fund's governing documents require that the Trustee follows these statutory requirements when increasing GMPs. 

If conversion does not proceed, the process to split out your pension and increase in this way from GMP age would continue. 

Proposal Post Conversion 

If you are a deferred member, as part of the conversion process, it is proposed that your pension at retirement would instead be split immediately into two parts: 

1) a non-increasing part* 

2) a part that increases in line with the Fund’s governing documents*  

For a deferred member under GMP age, your total deferred pension amount will increase to reflect the bringing forward of the step-up. Post conversion, most members will see a greater proportion of their pension increase in line with the increases that currently apply to non-GMP pension when compared with their pre-conversion post GMP age pension. However, to maintain the same actuarial value, there will also be a greater proportion of pension that will not increase in payment. The amount of pension attributed between these two parts will be specific to each member to satisfy the requirement for the actuarial value of benefits before and after conversion to be at least the same. 

*It is possible that a larger amount of increase than the amount required under the Fund’s governing documents might be applied in any future year where we exercise our discretionary increase power. This is not guaranteed and the exercise of that power is subject to bp’s consent. 

For members who are not yet in receipt of a pension: your leaver’s statement, provided to you when you stopped building up new benefits under the Fund, may set out the proportion of your pension that is made up of pre-88 and/or post-88 GMP. 

For pensioners: your retirement quotation would have set out any applicable GMP elements. In addition, for members over GMP age, your annual increase statement will show any GMP amounts currently in payment.

The court judgments concerning equalisation do not require the equalisation of any benefits accrued before 17 May 1990. All non-GMP benefits built up in the Fund on and after 17 May 1990 have been equalised. This proposal includes the equalisation of any GMP benefit accrued on and after 17 May 1990. It is not possible to say which sex has been better off in general because there are too many variables for each member’s situation. Each member with a GMP needs to be considered individually to determine whether they would be better off based on their own sex, or the opposite sex.

Pensioners aged 65 or over have already had their pension split into two or three parts depending on whether they built up GMP before 6 April 1988 and whether they also built up GMP after 5 April 1988. Those different parts will increase at different rates [see FAQ “I am a pensioner aged over 65, will I see any change to how my pension increases following conversion?” for further details]. 

The majority of these members will not see any tangible change to their benefits unless they are impacted by equalisation. Maintaining the same parts of these pensioners’ pensions after conversion is the simplest approach. 

However for deferred members or for pensioners below GMP age, this splitting process does not currently occur until the member reaches their GMP age. The proposal for these individuals is to simplify their benefits by bringing forward and changing this splitting process, so that: (1) the pension is split into different parts at the date of conversion and (2) it would only be split and allocated across two, rather than three parts with one part that increases in line with the Fund’s rules that, prior to conversion, applied to non-GMP benefits and one part that does not increase at all. This splitting process would be assessed by the Fund’s actuary and would be done so on an actuarially equivalent basis. This means the expected value of your benefits after conversion has to be at least the same as before conversion [see FAQ “What is ‘actuarial equivalence?” for further details]. 

For female pensioners aged between 60 and 65, whilst GMP is already in payment for these members, because the male comparator for GMP does not come into payment until age 65, consistent treatment is needed for the purposes of equalisation. Therefore the proposal of changing the splitting process (as described above) is extended to these female members.

If a member’s pension were split between a part that increases in line with Non-GMP Increases and a part that increases in line with CPI capped at 3%, then, in order to maintain the same actuarial value of both pre and post conversion benefits, the member’s starting pension would need to reduce. Under conversion regulations the trustee is not able to reduce any member’s pension and we did not consider that this would be appealing to members. Therefore the proposal reflects a split between a part that increases in line with Non-GMP Increases and a part that is non-increasing.

If your pension is not yet in payment, you can transfer your Fund pension to another registered pension scheme or a qualifying recognised overseas pension scheme, subject to that transfer satisfying certain requirements. This option does not change as a result of the conversion proposal or in the event conversion is implemented. 

If you transfer your benefits after any conversion proposal is implemented, any necessary GMP equalisation of your benefits would have been carried out, meaning the correct transfer value should be paid. 

If you transfer your benefits before the equalisation and proposed conversion process has been implemented, the transfer value may not have taken into account certain necessary changes. A future project will address any equalisation uplifts due to members who have previously transferred out of the Fund and how those can be best provided. 

If your Fund pension is already in payment, it is not possible to transfer out your pension.

State Pension statements issued by the Department for Work & Pensions (“DWP”) include a COPE amount. This is an estimate of the amount of State Pension an individual would have received if they hadn’t been contracted out. The COPE amount quoted by the DWP is based on all periods of contracting out, so if an individual has been a member of more than one scheme that was contracted out, the COPE amount represents the COPE in respect of all those schemes. The COPE amount is meant to be broadly equivalent to any GMP accrued in contracted out schemes, but not necessarily an identical amount. The way GMP is revalued within a contracted out scheme may differ to the way the DWP revalues COPE, so GMP totals may not be the same as COPE amounts.

We appreciate that this is a complex topic to communicate and to understand. The provision of worked examples was considered as part of this consultation process but was not pursued. This was because a simple generic example or set of generic examples would not reflect the numerous different scenarios that could be relevant to an individual member and their circumstances. Using a simple generic example or a set of generic examples could also result in further confusion where a member’s actual individual converted benefits did not align with the examples.

If you have accrued any GMP, or had GMP transferred into the Fund, then you should have received a consultation booklet. 

You will not have received a booklet if: 

• you do not have GMP in the Fund – this consultation will not affect you 

• we do not hold the correct address for you. If you think this may be the case for you then please contact the pension team to update your details. 

The relevant consultation booklets are available to view in the Documents section of this site. There are different consultation documents depending on whether you are a pensioner or deferred member and which section of the Fund you are a member of (Burmah Castrol members are covered by a different set of consultation documents to other Fund members – your member number will begin with BCF if you are a Burmah Castrol member).

No, your normal retirement age is unchanged. You can still choose to retire at your normal retirement age, prior to this or defer your retirement in accordance with the Rules. The proposed conversion does not change this.

When you submit feedback on the consultation microsite, you should receive a ‘thank you for your feedback’ message as shown below which is the confirmation that the feedback has been received. 

Successful submission of feedback and receipt of the acknowledgement requires that you tick the ‘I am not a robot’ box; this is a common design feature on many websites to prevent automated responses.

As a matter of law, for any GMP that is in payment: 

• there is no statutory requirement to increase any part of that GMP to the extent it was built up before 6 April 1988 

• the statutory annual increase applicable to any part of that GMP that was built up between 6 April 1988 and 5 April 1997 is the increase in prices (currently measured using CPI) capped at 3%. 

The Fund's rules require that the Trustee follows these statutory requirements when increasing GMPs. However depending on when you reached State Pension Age, increases above those provided by the Fund will be provided as part of your State Pension. 

Prior to 2016 (when contracting-out ended), when people with GMPs reached State Pension Age, the Department for Work & Pensions (DWP) carried out an annual comparison to check if they were receiving the same as they would have done if they had not ‘contracted out’ of SERPS (additional State Pension). The aim was to ensure those with additional State Pension and those with GMPs received roughly the same amount after they reached State Pension Age. This annual calculation meant that DWP essentially paid inflationary increases (indexation) to some people with GMPs. 

In April 2016 those reaching State Pension Age had the basic and additional State Pension replaced by the new State Pension. The amount people get from the new State Pension depends on their National Insurance record. People who had previously ‘contracted out’ from SERPS made lower NI payments, so their starting amount was lower than those who had ‘contracted in’. Those who contracted out would continue to receive their GMP through their employer’s pension scheme. However, the DWP no longer compares the amount people receive from their GMP with what they would have got if they had ‘contracted in’ to SERPS.

We are aware that a group of members with GMP benefits were omitted from the consultation mailing in error. This arose as a result of an administrative error that affected 218 members who did not build up GMP under the Fund but who, in the past, had certain former pension benefits (including GMP) transferred into the Fund. We are sorry that this error arose. Having identified that error, corrective action was taken and an instruction was sent to our printers to post the consultation communication to those members on 30 June. 

We are aware that this group of members have a shorter period to consider the proposals. Unfortunately we cannot extend the consultation period for this group of members. This is because the Trustee needs to consider the consultation feedback and decide whether to proceed with the conversion proposal before the proposed conversion date, which is 15 August 2023. Extending the consultation period would likely delay this decision and, depending on the outcome of the consultation, potentially delay GMP equalisation and conversion for thousands of members. 

The Trustee is legally obliged to take all reasonable steps to consult with affected members, and there is no prescribed minimum consultation period. We consider that, notwithstanding the delay in this group of members receiving the consultation communication, the Trustee has taken all reasonable steps to consult and that they still have sufficient time to provide their views or raise any questions as the process continues until 31 July 2023.

We are asking pensioners with Enhanced Protection, and deferred members with either Enhanced or Fixed Protection, to let us know about those protections. If you do not fall into one of those categories then you don’t need to actively tell us about any lifetime allowance protection that you might have. 

Enhanced Protection was introduced in 2006 when the Government introduced the lifetime allowance. Fixed protection was introduced at various dates in subsequent years when the Government reduced the level of the Lifetime Allowance (those reductions occurred in 2012, 2014 and 2016). 

You would have had to apply to HMRC for Enhanced or Fixed Protection and would have received a letter from HMRC with details, including a protection reference number. Therefore, you should know if you have one of these forms of protection. 

You may be able to check your protection status by reviewing your personal tax account on the Government Gateway. Further details about accessing your personal tax account can be found at https://www.gov.uk/personal-tax-account

GMP conversion could have an effect on pensioner members with enhanced protection and deferred members with either enhanced protection or a form of fixed protection. This is why we have asked those members to let us know, as a matter of importance, whether they have those particular protections. 

Any GMP equalisation uplifts that are applied to your benefits will not frustrate any lifetime allowance protection you have secured with HMRC. 

For further information about the lifetime allowance and lifetime allowance protection please refer to the consultation booklet and the FAQ entitled: “How do I know if I have Enhanced Protection or Fixed Protection?”

If you are aged over 65 and in receipt of your pension, your GMP will already be in payment. Depending on when you were a member of the Fund, you will have some, or all of the following parts to your pension: 

Pre-88 GMP – this is GMP that accrued for any period you were a member of the Fund between 6 April 1978 and 5 April 1998. This part of your pension currently does not receive any increases in payment. 

Post-88 GMP – this is GMP that accrued for any period you were a member of the Fund between 6 April 1988 and 5 April 1997. This part of your pension currently receives increases of CPI up to 3%. 

Non-GMP Fund pension – this is the remaining part of your pension. This part of your pension currently receives increases as defined in the Fund rules. The rate of increase varies depending on your section of membership. For the majority of members this is RPI up to 5% (excluding any potential future discretionary increases granted). 

For the majority of these pensioners, if the conversion proposal goes ahead, the way these parts of your pension increase will not change. However, for some members who are affected by either equalisation or rectification, the proportion of pension attributable to each pension increase tranche may change. 

If you fall into this category, your GMP will already be in payment. Depending on when you were a member of the Fund, you will have some, or all of the following parts to your pension: 

Pre-88 GMP – this is GMP that accrued for any period you were a member of the Fund between 6 April 1978 and 5 April 1998. This part of your pension currently does not receive any increases in payment. 

Post-88 GMP – this is GMP that accrued for any period you were a member of the Fund between 6 April 1988 and 5 April 1997. This part of your pension currently receives increases of CPI up to 3%. 

Non-GMP Fund pension – this is the remaining part of your pension. This part of your pension currently receives increases as defined in the Fund rules. The rate of increase varies depending on your section of membership. For the majority of members this is RPI up to 5% (excluding any potential future discretionary increases granted). 

For the majority of these pensioners, if the conversion proposal goes ahead, the way these parts of your pension increase will not change. However, for some members who are affected by either equalisation or rectification, the proportion of pension attributable to each pension increase tranche may change. 

If you are in receipt of a survivor’s pension any GMP parts of your pension will already be in payment. Depending on when the original member was in the Fund, you will have some, or all of the following parts to your pension: 

Pre-88 GMP – this is GMP that accrued for any period the original member was in the Fund between 6 April 1978 and 5 April 1998. This part of your pension currently does not receive any increases in payment. 

Post-88 GMP – this is GMP that accrued for any period the original member was in the Fund between 6 April 1988 and 5 April 1997. This part of your pension currently receives increases of CPI up to 3%. 

Non-GMP Fund pension – this is the remaining part of your pension. This part of your pension currently receives increases as defined in the Fund rules. The rate of increase varies depending on your section of membership. For the majority of members this is RPI up to 5% (excluding any potential future discretionary increases awarded) 

For the majority of these pensioners, if the conversion proposal goes ahead, the way these parts of your pension increase will not change. However, for some members who are affected by either equalisation or rectification, the proportion of pension attributable to each pension increase tranche may change. 

Current position 

Your Fund pension is made up of three parts: 

Any GMP built up before 6 April 1988 

+ Any GMP built up after 5 April 1988 

+ Pension in excess of GMP 

 = Total Pension 

Prior to GMP age, your total pension increases in line with the Fund’s rules. 

However, when your GMP comes into payment at GMP age, you would see your GMP elements split out into these individual parts. As a matter of law, for any GMP that is in payment: 

• there is no statutory requirement to increase any part of a GMP to the extent it was built up before 6 April 1988 

• the statutory annual increase applicable to any part of that GMP that was built up between 6 April 1988 and 5 April 1997 is the increase in prices (currently measured using CPI) capped at 3%. 

The Fund's governing documents require that the Trustee follows these statutory requirements when increasing GMPs. 

If conversion does not proceed, the process to split out your pension and increase in this way from GMP age will continue. 

Proposal post conversion

If you are a deferred member, as part of the conversion process, it is proposed that your pension at retirement would instead be split immediately into two parts: 

1) a non-increasing part* 

2) a part that increases in line with the Fund’s governing documents* 

Unless you are due an equalisation uplift, your total deferred pension amount will be unchanged. Post conversion, most members will see a greater proportion of their pension increase with the Fund Rule increases when compared with their pre-conversion post GMP age pension; However, to maintain the same actuarial value there will also be a greater proportion of pension that will not increase in payment. The amount of pension attributed between these two parts will be specific to each member to satisfy the requirement for the actuarial value of benefits before and after conversion to be at least the same. 

*It is possible that a larger amount of increase than the amount required under the Fund’s governing documents might be applied in any future year where we exercise our discretionary increase power. This is not guaranteed and the exercise of that power is subject to bp’s consent. 

In summary, yes but due to various protections built into the GMP conversion process the amount of any difference in outcome should be small in the majority of cases. Further details are set out below. 

GMP conversion involves us setting certain assumptions about the future (based on actuarial advice) and this will result in the potential for there to be a difference in outcome for members as compared with other GMP equalisation methods. 

This difference can go either way, meaning that in practice, depending on whether those assumptions are borne out, some members might be slightly better or worse off. Those assumptions include factors (such as how long a member will live for) that cannot be determined with absolute certainty upfront. Any such difference in a member’s outcome is expected to be small in the majority of cases. There are statutory protections that are built into the legislation governing the GMP conversion method that are intended to mitigate the risk of members being worse off as a result of GMP conversion. In particular: 

- pensions in payment cannot be reduced 

- pre-conversion benefits and post-conversion benefits must be certified by the Fund’s actuary as being actuarially equivalent in value, based on a number of assumptions (thereby reducing the risk of a material difference in outcome as compared with adopting a different GMP equalisation method) 

- GMP benefits cannot be converted into defined contribution benefits 

- survivors’ benefits post-GMP conversion must continue to be paid in the same circumstances, and satisfy certain other conditions including being of a minimum value.

At the end of the consultation period, we will reflect on any feedback about the consultation that has been received from affected members and beneficiaries and decide whether to proceed with the proposal to go ahead with GMP conversion. We will then write to you to communicate the outcome of the consultation and any next steps. 

In advance of the above process, we are also actively considering feedback on the consultation as it arrives and this includes our posting non-personal FAQ responses on this website to common questions and/or themes that we have identified from the consultation feedback. While we may not respond to each individual piece of feedback, we will consider all feedback received.

We will consider all feedback received about the GMP conversion proposal during the consultation period but the decision about whether to proceed with the proposal is not subject to a member vote.

GMP equalisation and conversion is a very complex task, that requires an extensive period of checking. If the conversion proposal is implemented, the post-conversion calculations can only be completed once the conversion date has passed. Those calculations would need to be completed and thoroughly checked for over 40,000 members. The administration team would then need to update their systems to reflect the post-conversion benefits. Once all this has taken place we are able to notify members of their post-conversion benefits.

If you have any GMP built up between 17 May 1990 and 5 April 1997, we will check whether the pension you are receiving would be larger if you were the opposite sex. This will be completed before we convert members’ GMPs. If you’re due a back payment as a result of equalisation, we’ll be in touch with details of this payment.

No, your normal retirement age is unchanged as a result of this proposal. Your ability to retire either before or after your normal retirement age is not affected. We are not permitted to provide financial advice (including when the best time to retire may be) so please consider contacting an independent financial adviser who is authorised by the Financial Conduct Authority. You can find out at www.moneyhelper.org.uk - search for 'retirement adviser'.

If an arrears payment is due, we’d provide you with a statement which would break down that payment by tax years, to allow you to spread this across the tax years in which the arrears payment relates to. 

You would need to contact HMRC to get any arrears payment spread in this way and your tax liability recalculated (this is not something the Fund would be able to do for you). Further information about this would be provided to members if the Proposal proceeds. 

Any interest due would be identifiable at an aggregate level and not be split by tax year. Any interest due is paid without any tax deducted for UK residents and is covered by the Personal Savings Allowance. Whether tax is due on this amount will depend on your individual circumstances. We cannot provide you with any financial or tax advice in relation to your benefits.

Pension schemes, as a condition of being registered with HMRC, can only make payments which are permitted by tax legislation. The Trustee can only pay a tax-free PCLS (pension commencement lump sum) within 12 months of a member taking their pension. After this deadline has passed, a new or additional PCLS cannot be paid – it is a one-off lump sum paid when the pension commences. Paying a lump sum from a pension scheme outside these rules would be unauthorised and, in those circumstances, would incur significant tax charges. Whilst we appreciate some members may have preferred this option, members will receive the full value of their GMP equalisation uplifts in the form of pension adjustments instead. This issue would apply regardless of the method the Trustee adopts to correct GMP.

No, any funds built up by previously paying money purchase AVCs are not affected by this proposal. If you have already retired and used your AVC fund to purchase additional pension in the Fund, that additional pension amount would not change if the conversion proposal is implemented.

The levelling option is independent of GMP equalisation and GMP conversion. The Fund’s actuary will not change any of the historic levelling amounts associated with the levelling option as part of their calculations for the purposes of GMP conversion.

The legal minimum requirement is for trustees to equalise pensions between men and women for the unequal effects of GMPs accrued between 17 May 1990 and 6 April 1997 by one of the permitted methods considered in the Lloyds judgment. One of those methods is GMP conversion, and the process for converting GMPs into non-GMP benefits is set out in legislation. 

GMP conversion has been chosen to ensure benefits are equalised going forwards, and has a number of advantages in terms of simplifying the benefit structure under the Fund as well as its administration (see the FAQ entitled “Why conversion and not dual records?” and the Consultation Booklet for further details about why GMP conversion is being proposed). 

Although the bare legal minimum would involve only equalising and converting all GMPs for members who had accrued some or all of their GMPs during the 17 May 1990 to 6 April 1997 equalisation window, to achieve the advantages discussed, it is also proposed to convert GMPs into non-GMPs for all other members with GMPs, regardless of when they were built up. The intention is that once GMP conversion has been implemented, the Fund will no longer contain any GMPs. Whilst permitted by legislation, this aspect goes beyond the legal minimum. 

The GMP conversion legislation allows GMPs to be converted into non-GMPs, subject to several requirements having first been satisfied, and allows changes which are “necessary or desirable” to effect conversion. The Trustee has taken legal and actuarial advice throughout this project to ensure that the GMP conversion proposal complies with these requirements.

Having fully considered the various methods available to achieve GMP equalisation, we decided that the GMP conversion method had the principal advantage of allowing the simplification of the Fund’s benefit structure by enabling the complex GMP provisions in the Fund’s governing documents to be removed in their entirety. 

GMP equalisation is mandatory. Therefore, if we do not equalise and convert GMPs in one exercise, we would need to equalise GMPs using one of the other GMP equalisation methods identified in the Lloyds Banking Group court judgment. This would necessitate the creation and administration of a dual record system whereby regular checks would need to be carried out to make sure no member’s GMP is lower as a result of their sex. 

In the longer term, adopting a dual record system would likely result in an increased administrative burden and a higher risk of administrative errors arising. In contrast, GMP conversion involves a one-off exercise and a single set of calculations. GMP conversion should therefore be of benefit to all the Fund’s stakeholders including the Fund’s membership because it is expected to result in less of the Fund’s resources being expended on administering a complex and potentially more risk-prone dual GMP record system. 

Another potential benefit of GMP conversion is member experience and that GMP conversion should help improve member understanding of their benefits under the Fund.

The main Court decision relating to the requirement to equalise GMPs was made in Lloyds Banking Group Pensions Trustees Limited v Lloyds Bank plc and others [2018] EWHC 2839 (Ch). 

The Court made two further decisions in related cases as follows: 

Lloyds Banking Group Pensions Trustees Ltd v Lloyds Bank plc and others [2018] EWHC 3343 (Ch); and Lloyds Banking Group Pensions Trustees Ltd v Lloyds Bank plc [2020] EWHC 3135 (Ch).

Whilst the court judgment made in late 2018 determined that trustees had a duty to equalise certain benefits, there were many unanswered questions about how the issue should and could be dealt with. Since the judgment, there has been (and continues to be) a steady stream of additional judicial decisions, guidance from government bodies like DWP and HMRC and industry guidance. The equalisation process is a complex one and it has taken time to determine the optimal approach and resolve a number of uncertainties around the process. In addition, the Fund was required to reconcile its GMP data with HMRC’s data prior to beginning any equalisation of benefits, which involved substantial correspondence with HMRC.

Actuarial equivalence is a test comparing the expected value of your benefits both before and after conversion. Legislation requires that after conversion the actuarial value has to be at least the same as before conversion. This test is assessed over the period in which your future pension payments are expected to be paid for (i.e. your expected lifetime).

No. You can still retire as planned. 

If you are approaching your retirement age, you will have received a retirement pack providing details of your retirement options from the Fund. That information will be based on your current benefits, namely before any changes for equalisation or conversion of your GMP benefits. Subject to the outcome of the consultation, the equalisation and conversion calculation results should be available late 2023/early 2024. We do not intend to delay putting your pension into payment, so if you are due to retire before the calculation results are available, the pension put into payment will be based on current benefits. Once the results of the calculations are known, we will review your pension and make any required changes to the amount in payment.

No. The proposal to convert GMP to non-GMP benefits relates to your Fund pension only and, if implemented, will have no impact on any state pension you already receive or will receive when you reach your state pension age.

If you have more than one period of membership in the Fund and accrued GMP benefits in different sections, you have been sent a booklet relating to one period of membership only. You can identify which section the booklet you received relates to from the reference on the front cover. The first three letters of the reference shown on the bottom right of the front cover will either be ‘BPF’ for the BP section or ‘BCF’ for the Burmah Castrol section. 

All the different versions of the booklets are available on the Documents page. The main difference between the information in the BP section and Burmah Castrol section booklets is the detail relating to pension increases. Under the rules of the Fund, different pension increases apply to these two sections, both before retirement and after retirement. If you have benefits in both the BP and Burmah Castrol sections of the Fund, please read the pension increase section in both booklets.

We’ve received feedback that some members would have liked indicative personalised statements to review alongside the consultation materials to aid their understanding of the proposal. 

Personalised statements showing the effect of GMP conversion on Fund benefits will be provided to each affected member if, following the end of the consultation process, a decision is made to proceed with implementation.

If the proposal is implemented, then the Fund’s actuary will need to carry out a large number of individual calculations to enable them to issue the required actuarial equivalence certificate and provide data for the personalised statements. These calculations are complex and will take some time, given the large number of affected members.

Carrying these complex calculations out and communicating them on an individual basis as part of the consultation process would incur a disproportionate amount of time before a decision has been taken about whether to proceed to implement the conversion proposal. 

Our approach is consistent with guidance on the use of the GMP conversion legislation published in 2019 by the Department for Work and Pensions. The guidance states that ‘consultation should be at a high level’ and that consultation materials should state that 'more personalised information will be made available once calculations have been concluded and benefits adjusted'. We understand that other pension schemes consulting on GMP conversion have adopted a similar approach to this matter.

We appreciate some members will find this disappointing. However, we would like to assure all members that we have taken a considered and rigorous approach when deciding what to include in the consultation pack, including having regard to the DWP’s guidance and taking professional advice.

Under the GMP conversion legislation the Fund Trustee is obliged to take reasonable steps to consult with affected members. The conversion legislation does not specify the length of the consultation period.

In the absence of a defined period in the GMP conversion legislation, the Trustee has decided to run the consultation for six weeks. The Trustee considers this to be a reasonable timescale for affected members and survivors to review and feedback on the proposals.

No. The GMP conversion proposal, if implemented, would have no effect on this discretionary power and the requirement for bp’s consent. GMP conversion regulations only allow for guaranteed (not discretionary) benefits to be considered in the conversion calculations and so the consultation communication focused on guaranteed benefits only.

As a general rule, if you built up a pension in the Fund between 6 April 1978 and 5 April 1997, a portion of your Fund pension is called your guaranteed minimum pension (GMP). The reason you have GMP is because the Fund was contracted out of the earnings-related part of the State pension (known as SERPS or S2P). Contracting out meant you paid lower National Insurance contributions, but it also meant you built up less State pension. Instead, the Fund had to promise to provide a pension that was broadly equal to the reduction in State pension that resulted from the Fund being contracted out. 

You might also have a GMP under the Fund if you were transferred to the Fund from another scheme with a portion of GMP.

Historically, State pension payments started at different ages for men (65) and women (60). As the GMP element of your pension is broadly equal to what SERPS/S2P would have provided, the Fund has to calculate benefits for this part of your pension assuming different starting ages for males and females. Therefore, the age at which GMP becomes payable is 65 for men and 60 for women. This is despite the fact that men and women now have the same State pension age (currently age 66).

In 2018, the High Court ruled that the inherent sex-based inequalities in GMP built up between 17 May 1990 and 5 April 1997 were unlawful. Consequently, all UK pension schemes must, by law, ‘equalise’ GMPs so that they do not cause anyone’s pension to be lower as a result of their sex.

This is a different exercise from GMP equalisation and GMP conversion. It involves cross-checking our GMP records against those held by His Majesty’s Revenue & Customs (HMRC). If this process shows that our GMP data for you doesn’t match HMRC’s, we may need to correct (rectify) our records. 

If you are a pensioner and this exercise shows that we’ve underpaid you, we’ll pay you a lump sum, with interest, and adjust your pension so it is paid at the right level in future. If we’ve overpaid you, we’ve decided that we won’t ask for money back or reduce the level of your current pension in payment, but we will correct the different elements that make up your pension to reflect the revised GMP element before the conversion process. 

We have already completed GMP rectification for some members of the Fund. For members where this exercise has not been completed, GMP rectification will take place at the same time as GMP equalisation and conversion. The consultation communication we have sent to you confirms whether your Fund pension has already been rectified. This exercise to reconcile and rectify our records is necessary whether or not GMP conversion goes ahead.

GMPs are not straightforward and can cause a lot of confusion. Converting GMP into a non-GMP Fund pension will not only equalise the required elements of members’ GMPs for future pension payments, it will also help to simplify pensions across the Fund and make it:

• easier for our members to understand their benefits and how they increase each year

• simpler to administer the Fund. 

If we go ahead with these proposals, the current plan is to convert your GMP pension into non-GMP pension with an effective date of 15 August 2023 (although the actual calculations will be done later). This is called the ‘conversion date’. If this conversion date changes, we will let you know. 

Yes, pensions law allows us to change the Fund’s benefits in this way. However, certain steps need to be taken first because the change we are proposing affects benefits that have already built up. We’ve obtained bp’s consent, taken professional advice, and are consulting with all affected members and beneficiaries of the Fund. The law also requires that your new Fund pension (assessed over your expected lifetime) has at least the same actuarial value as it does now, and we are making sure this is the case. 

The court judgments concerning equalisation do not require the equalisation of any benefits accrued before 17 May 1990. All non-GMP benefits built up in the Fund on and after 17 May 1990 have been equalised. 

We will confirm the amount in your personal statement. In most cases, if a member’s pension is going to go up, it will probably be by a relatively small amount.

Your personal statement can only be finalised once we have made a decision to proceed with conversion and we have undertaken the calculations. If the proposal goes ahead, there’s a large number of affected members whose benefits are being converted so this is a complex process. We expect personal statements would be issued in late 2023/early 2024.

It’s possible that there may be future changes to your pension, for example as a result of legislation or case law. We know that pension changes can be unsettling. The reconciliation and equalisation of your GMP benefits is necessary to ensure the Fund complies with overriding law.

As part of GMP equalisation, we looked at the various options available to comply with the High Court judgment and received extensive actuarial and legal advice. We also considered the practical implications of the various options from an administrative perspective. 

If we don’t convert GMPs, we would need to hold two administration records for each member: one to record their GMP based on their actual sex and one to show what their GMP would be if they were the opposite sex. Both records for each member would need to be updated annually. This would increase our administration costs and create more complexity, with a higher risk of errors developing over time.

If you can’t see your question answered here, contact us using the feedback form.

The value of your overall pension from the Fund is expected to be at least the same as it would have been had we not converted GMPs (we say ‘expected’ because our view is based on various assumptions about the future at the time your GMP is converted). For the majority of the Fund’s members, the conversion process is not expected to have a material effect on their starting pension at retirement, although it’s also possible that the conversion process might result in a lower or higher starting pension. This is because the conversion process involves a change to the way your pension increases in the period before and after retirement. However, the value of all the payments you are expected to receive from the Fund in the future will be independently assessed to check that it is the same or higher than it would have been, but for conversion. We call this ‘actuarial equivalence’. 

Your personal statement will set out the different parts of your new pension, showing what has changed.

The newly converted part of your pension will increase in a different way from how a GMP would increase. The way this happens is set out below. 

Pre-retirement increases 

Current position: the Fund operates a ‘greater of’ test to increase pensions before retirement for most deferred members (the position may differ for members of some sections of the Fund). This means that, after leaving pensionable service up to retirement, most members’ benefits are increased by whichever of the following two methods produce the greater amount:

• RPI (Retail Prices Index) up to a maximum of 5% on an annual basis applied to the whole deferred pension (‘the Scheme Basis’) 

• statutory pre-retirement increases (‘the Statutory Basis’). 

Before conversion, the statutory method for increasing GMP benefits before GMP age differs from the statutory method for increasing non-GMP benefits. GMP does not affect the Scheme Basis. For most members, the Scheme Basis produces the greater amount. 

Proposal: following conversion, there will be no change to pre-retirement increases for the majority of members (namely for members where the Scheme Basis produces a greater increase). For these members, the starting pension at retirement will either be the same or higher than expected before and after conversion. 

For members where the Statutory basis is higher, pre-retirement increases on the part of your pension that has been converted will use the same pre-retirement increase method that applied to your non-GMP benefits. For these members, the starting pension at retirement is expected to be the same as it would have been had we not converted GMPs. 

Increases once your pension is in payment

Current position: if you retire before GMP age (65 for men and 60 for women), all your pension would increase in line with the Fund rules until you reach GMP age. For most members, this would be in line with RPI up to a maximum of 5% on an annual basis. The exact rate(s) that apply to you depend on which membership section you are in. 

When you reach GMP age, your pension would then be split into the following components:

• Any GMP you built up before 6 April 1988 would not increase in payment

• Any GMP you built up after 5 April 1988 would increase annually in line with the cost of living (currently defined by the government as the annual change in the Consumer Prices Index to September each year, up to a maximum of 3%) 

• Any remaining non-GMP pension would continue to increase in line with the Fund’s rules.

Proposal: we are proposing to simplify the way your pension increases in retirement as part of the GMP conversion exercise. Following conversion, your converted pension would consist of two parts rather than three:

• Part of your pension would increase in line with the Fund’s rules, which for most members would be in line with RPI up to a maximum of 5% on an annual basis.

• The remaining part of your converted pension would not increase in payment.

There would no longer be a change to the split of your pension at GMP age.

Post-conversion, the value of all the payments you are expected to receive from the Fund in the future will be independently assessed by the Fund’s actuary and certified to be actuarially equivalent. Your overall expected level of pension will not reduce as a result of these proposed changes. However, it is possible that your pension may be higher or lower at different points during your retirement when compared with the position had we not made this change. 

Your personal statement will show how the different parts of your pension which increase at different rates have changed.   

Please see the diagram for further details.

Overall, after GMP conversion, members’ benefits would no longer contain GMP, but the future benefits are expected to be of the same value as before (and this is reviewed and certified by the Fund’s actuary). 

In the event of your death, one or more survivor pensions based on your pension may be paid from the Fund. This means that if your pension changes following any rectification, equalisation or conversion of your benefits, any survivor pension will too. 

Lifetime Allowance (LTA) 

Before 6 April 2023, the LTA was a limit on the total value of pension benefits (calculated on a statutory basis) that could be held under pension schemes without triggering an extra tax charge in certain circumstances (for example, when a pension starts). The LTA applies across all of the UK registered pension schemes you belong to; it’s not a ‘per scheme’ limit. 

The Government’s March 2023 budget made changes to the LTA: no LTA charges will arise in the 2023/24 tax year and the Government intends to remove the LTA entirely from April 2024. Therefore, we do not expect you to trigger an LTA charge as a result of the proposed GMP conversion exercise. 

LTA protections 

If you have certain LTA protections, this may affect how we implement the proposed changes to your benefits. While we have some records of members’ LTA protections, it is important that you let us know as soon as possible if you have applied or you are planning to apply to HMRC for any of the following LTA protections:

• any ‘enhanced protection’ 

• any form of ‘fixed protection’.

(Please note that you are no longer able to apply to HMRC for enhanced protection.) 

Please inform us about this even if you have, or think you have, notified us before. The easiest way to do this is to email a copy of your protection certificate to pensions@bp.com. Alternatively, you can post a copy of your certificate to BP Pension Fund, Pensions Administration Team, Chertsey Road, Sunbury on Thames, Middlesex, TW16 7LN. You should know if you have any of these protections because you would have had to apply to HMRC to secure them. If you do not have a certificate, please provide a copy of a screen shot from HMRC’s website showing your protection details. The administration team will not confirm receipt of your certificate, but your record will be updated to reflect your protection position. If you have registered for PensionLine, you will see the protection details on your record when it has been updated. 

Annual Allowance (AA) 

The AA is a limit on the amount that can be contributed to your pension each year, while still receiving tax relief. It is based on your earnings for the year and for most people is capped at £60,000 for the 2023/24 tax year (but decreases for people with earnings above a certain threshold down to a minimum of £10,000). A ‘money purchase annual allowance’ can also apply to members of money purchase pension schemes in certain circumstances where they access their money purchase benefits. 

The AA applies across all the UK registered pension schemes you belong to, and it includes all of the contributions and other pension input that you or your employer pay or anyone else who pays on your behalf. Subject to certain exceptions, if you exceed the AA in a year, you won't receive tax relief on any contributions and/or other pension input that exceed the AA, and you will be taxed at your marginal rate on those contributions and/or other pension input. 

The 2023 Budget increased the standard AA for the 2023/24 tax year to £60,000 (up from £40,000 in more recent tax years). 

For some members, the increase in your Fund pension at the conversion date as a result of GMP conversion may count toward your AA for 2023/24. If this affects you, we will let you know around the same time that we provide your personal statement. We will also offer you an alternative option if this causes you an issue. 

General points

The changes to the LTA and AA announced in the 2023 Budget will be subject to transitional legislation, the detail of which is (at the time of writing) yet to be finalised. We will monitor the development of the transitional legislation in case it affects this project. 

The rules around the LTA and the AA are complicated. The Trustee is not able to advise you about your personal financial or tax situation and suggests that you take independent financial advice if you are concerned about any tax consequences. We do not expect many members’ tax positions to be materially affected given the relatively small amounts involved. 

I have just received a retirement quote – what does this mean for me? 

If you are approaching your retirement age, you will have received a retirement pack providing details of your retirement options from the Fund. That information will be based on your current benefits, namely before any changes for equalisation or conversion of your GMP benefits. Subject to the outcome of the consultation, the equalisation and conversion calculation results should be available in late 2023. We do not intend to delay putting your pension into payment, so if you are due to retire before the calculation results are available, the pension put into payment will be based on current benefits. Once the results of the calculations are known, we will review your pension and make any required changes to the amount in payment.   

If you are approaching your retirement age, you will have received a retirement pack providing details of your retirement options from the Fund. That information will be based on your current benefits, namely before any changes for equalisation or conversion of your GMP benefits. Subject to the outcome of the consultation, the equalisation and conversion calculation results should be available in late 2023. We do not intend to delay putting your pension into payment, so if you are due to retire before the calculation results are available, the pension put into payment will be based on current benefits. Once the results of the calculations are known, we will review your pension and make any required changes to the amount in payment.   

The value of your overall pension from the Fund is expected to be at least the same as it would have been had we not converted GMPs (we say ‘expected’ because our view is based on various assumptions about the future at the time your GMP is converted). However, the conversion process could affect your starting pension. This is because the conversion process involves a change to the way your pension increases in the period before and after retirement. However, the value of all the payments you are expected to receive from the Fund in the future will be independently assessed to check that it is the same or higher than it would have been, but for conversion. We call this ‘actuarial equivalence’.

Your personal statement will set out the different parts of your new pension, showing what has changed.

The newly converted part of your pension will increase in a different way from how a GMP would increase. The way this happens is set out below. 

Current position: if you retire before GMP age (65 for men and 60 for women), the pension you receive at retirement is normally based on your total deferred pension at date of leaving the Fund, increased by the ‘BC increase’ which is based on a calculation using the lower of:

• cumulative RPI between date of leaving the Fund and retirement date, and 

• 5% a year on a cumulative basis between the date of leaving the Fund and retirement date. (If you are a member of any of the Foseco sections, please note that your pension increases differently. Please refer to your member booklet for further details.)  

When you reach GMP age, you will get a ‘step-up’ in your pension equal to the difference between the ‘BC increases’ and the statutory increases on your GMP from date of leaving the Fund to your GMP age. After GMP age, your GMP increases as follows: 

• Any GMP you built up before 6 April 1988 would not increase in payment.

• Any GMP you built up after 5 April 1988 would increase annually in line with changes in the cost of living (currently defined by the government as the annual change in the CPI to 30 September each year) up to a maximum of 3%. 

Proposal: we are proposing to simplify the way your pension increases in retirement as part of the GMP conversion exercise. Following conversion, your converted pension would consist of two parts: 

• Part of your pension would increase in line with the BC increase (above).

• The remaining part of your converted pension would not increase in payment.

For a member who is under GMP age on the conversion date, the proposed design brings the step-up forward from GMP age. This would provide the member with a higher pension sooner. 

Post-conversion, the value of all the payments you are expected to receive from the Fund in the future will be independently assessed by the Fund’s actuary and certified to be actuarially equivalent. Your overall expected level of pension will not reduce as a result of these proposed changes. However, it is possible that your pension may be higher or lower at different points during your retirement when compared with the position had we not made this change. 

Your personal statement will show how the different parts of your pension which increase at different rates have changed.   

Please see the diagram for further information.

Overall, after GMP conversion, members’ benefits would no longer contain GMP, but the future benefits are expected to be of the same value as before (and this is reviewed and certified by the Fund’s actuary).

In the event of your death, one or more survivor pensions based on your pension may be paid from the Fund. This means that if your pension changes following any rectification, equalisation or conversion of your benefits, any survivor pension will too.;

Lifetime Allowance (LTA) 

Before 6 April 2023, the LTA was a limit on the total value of pension benefits (calculated on a statutory basis) that could be held under pension schemes without triggering an extra tax charge in certain circumstances (for example, when a pension starts). The LTA applies across all of the UK registered pension schemes you belong to; it’s not a ‘per scheme’ limit. 

The Government’s March 2023 budget made changes to the LTA: no LTA charges will arise in the 2023/24 tax year and the Government intends to remove the LTA entirely from April 2024. Therefore, we do not expect you to trigger an LTA charge as a result of the proposed GMP conversion exercise. 

LTA protections 

If you have certain LTA protections, this may affect how we implement the proposed changes to your benefits. While we have some records of members’ LTA protections, it is important that you let us know as soon as possible if you have or you are planning to apply to HMRC for any of the following LTA protections:  

• any form of ‘fixed protection’

• any ‘enhanced protection’.

(Please note that you are no longer able to apply to HMRC for enhanced protection.)

Please inform us about this even if you have, or think you have, notified us before. The easiest way to do this is to email a copy of your protection certificate to pensions@bp.com. Alternatively, you can post a copy of your certificate to BP Pension Fund, Pensions Administration Team, Chertsey Road, Sunbury on Thames, Middlesex, TW16 7LN. You should know if you have any of these protections because you would have had to apply to HMRC to secure them. If you do not have a certificate, please provide a copy of a screen shot from HMRC’s website showing your protection details. The administration team will not confirm receipt of your certificate, but your record will be updated to reflect your protection position. If you have registered for PensionLine, you will see the protection details on your record when it has been updated. 

Annual Allowance (AA) 

The AA is a limit on the amount that can be contributed to your pension each year, while still receiving tax relief. It is based on your earnings for the year and for most people is capped at £60,000 for the 2023/24 tax year (but decreases for people with earnings above a certain threshold down to a minimum of £10,000). A ‘money purchase annual allowance’ can also apply to members of money purchase pension schemes in certain circumstances where they access their money purchase benefits. 

The AA applies across all the UK registered pension schemes you belong to, and it Ies all of the contributions and other pension input that you or your employer pay or anyone else who pays on your behalf. Subject to certain exceptions, if you exceed the AA in a year, y’u won't receive tax relief on any contributions and/or pension input that exceed the AA, and you will be taxed at your marginal rate on those contributions and/or pension input. 

The 2023 Budget increased the standard AA for the 2023/24 tax year to £60,000 (up from £40,000 in more recent tax years). 

For some members, the increase in your Fund pension at the conversion date as a result of GMP conversion may count toward your AA for 2023/24. If this affects you, we will let you know around the same time that we provide your personal statement. We will also offer you an alternative option if this causes you an issue. 

General points 

The changes to the LTA and AA announced in the 2023 Budget will be subject to transitional legislation, the detail of which is (at the time of writing) yet to be issued. We will review the transitional legislation once available in case it impacts this project. 

The rules around the LTA and the AA are complicated. The Trustee is not able to advise you about your personal financial or tax situation and suggests that you take independent financial advice if you are concerned about any tax consequences. We do not expect many members’ tax positions to be materially affected given the relatively small amounts involved. 

I have just received a retirement quote – what does this mean for me? 

If you are approaching your retirement age, you will have received a retirement pack providing details of your retirement options from the Fund. That information will be based on your current benefits, namely before any changes for equalisation or conversion of your GMP benefits. Subject to the outcome of the consultation, the equalisation and conversion calculation results should be available in late 2023. We do not intend to delay putting your pension into payment, so if you are due to retire before the calculation results are available, the pension put into payment will be based on current benefits. Once the results of the calculations are known, we will review your pension and make any required changes to the amount in payment.

If you are approaching your retirement age, you will have received a retirement pack providing details of your retirement options from the Fund. That information will be based on your current benefits, namely before any changes for equalisation or conversion of your GMP benefits. Subject to the outcome of the consultation, the equalisation and conversion calculation results should be available in late 2023. We do not intend to delay putting your pension into payment, so if you are due to retire before the calculation results are available, the pension put into payment will be based on current benefits. Once the results of the calculations are known, we will review your pension and make any required changes to the amount in payment.   

The level of your current pension in payment will remain the same or possibly increase. Your pension might increase as a result of our findings from our GMP reconciliation and/or GMP equalisation review. Any such increase is likely to be small. 

If we find we owe you money because we’ve been underpaying your benefits, then we’ll pay you a lump sum, with interest, and adjust your pension so it is paid at the right level in future. If we find we’ve been overpaying your benefits, we won’t ask for the money back or reduce your pension in payment from its current level. 

Everyone affected will receive a personal statement in late 2023/early 2024, setting out their new pension and showing what has changed.

Your personal statement will show the revised breakdown of the parts of your pension which increase at different rates compared with the current breakdown. Some general information about this is set out below.

GMP reconciliation and rectification

As part of the GMP reconciliation process, we have identified a small proportion of members who have been overpaid pension. In cases where that overpayment involves an error with a member’s rate of pension increases, the member’s record will be rectified to ensure the correct rate of pension increase applies in future. 

We have already completed GMP rectification for some members of the Fund. For members where this exercise hasn’t yet been completed, GMP rectification will take place at the same time as GMP equalisation and conversion. The consultation communication that we’ve sent to you confirms whether your Fund pension has already been rectified.

GMP conversion

Your pension is made up of different parts which increase at different rates (and some parts may not increase at all). 

Under current practice, before you reach GMP age (age 65 for men and age 60 for women), your pension is increased in line with the Fund’s rules. The exact increase rate(s) applicable depends on which membership section of the Fund you are in. 

From GMP age, the part of any GMP that you have built up after 5 April 1988 increases on an annual basis in line with the cost of living (currently defined by the government as the annual change in the Consumer Prices Index (CPI) to 30 September each year), up to a maximum of 3%. No increase applies to any GMP built up before 6 April 1988.

If, on 15 August 2023 (the proposed conversion date), you’re a pensioner aged 65 or over or you’re a survivor of a member (regardless of age) in receipt of a pension: your pension will continue to increase with the same set of increases that currently apply to the various parts of your pension. You may see a small change in the amount of pension which increases at the various different rates if you are impacted by GMP equalisation. 

If, on 15 August 2023 (the proposed conversion date), you’re a pensioner under the age of 65: we are proposing to simplify your pension increases as part of GMP conversion. Please see the next question for further details.

We are proposing a different approach for the treatment of pension increases based on whether you are under or over age 65. This is because from age 65, regardless of sex, all GMP is in payment. While female members’ GMP may be in payment from age 60, we are proposing to keep the conversion approach consistent between male and female members.

The Fund’s actuary will assess the value of all payments you are expected to receive from the Fund in the future under the proposed benefit structure to check, on an actuarial basis, that such value is the same or higher than it would have been before conversion.

Current position: if you’re a pensioner under GMP age (65 for men and 60 for women), all of your pension increases in line with the Fund’s rules until you reach GMP age. The exact rate(s) that apply to you depend on which membership section you are in. 

When you reach GMP age, your pension is split into the following parts:

• Any GMP you built up before 6 April 1988 does not increase in payment.

• Any GMP you built up after 5 April 1988 would increase annually in line with the cost of living (currently as measured by the Consumer Prices Index), up to a maximum of 3%. 

• Any remaining non-GMP pension would continue to increase in line with the Fund’s rules.

Proposal: we are proposing to simplify the way your pension increases as part of the GMP conversion exercise. Following conversion, your converted pension would consist of two parts rather than three:

• Part of your pension would increase in line with the Fund’s rules.

• The remaining part of your converted pension would not increase. 

After conversion, this combination of increasing and non-increasing parts is intended to be value neutral (the Fund’s actuary will assess the value of the proposed benefit structure as being the same or higher than it would have been before conversion) and so your overall expected level of pension will not reduce as a result of these proposed changes. However, it is possible that your pension may be higher or lower at different points during your retirement when compared with the position had we not made this change. 

Your personal statement will show how your pension has changed.

Please see the diagram for further details.

If you’re owed something, you will be paid a lump sum which may be taxable. This payment is likely to be paid through our pensioner payroll (PAYE), but you can apply to HMRC to have the tax spread over the relevant tax years in which the overpayment built up. We will provide a breakdown of the underpaid amount by tax year with your personal statement.

Your current pension in payment will not reduce following GMP conversion.

We do not expect many members’ tax positions to be materially affected given the relatively small amounts involved in GMP equalisation and conversion. However, there are some potential tax implications as follows:

Income tax position

If you receive an increase in your pension, you will pay income tax on that increased pension. It’s possible that any adjustment to your pension might push you into a higher tax bracket. Also, if you are eligible to receive a lump sum payment from the Fund, this will be taxable. We will provide you with extra information around the time the lump sum payment is made so you can ask HMRC to spread it across the tax years in which you earned it. The Trustee is not able to advise you on your personal financial or tax situation and suggests that you take independent financial advice if you are concerned about tax consequences. 

Lifetime allowance (LTA) charge 

The Government’s March 2023 budget made changes to the LTA: no LTA charges will arise in the 2023/24 tax year and the Government intends to remove the LTA entirely from April 2024. Therefore, we do not expect any member to have an LTA charge as a result of the proposed GMP conversion exercise. Your historic LTA position may change as a result of the GMP rectification and equalisation process, and there is a possibility that any increase could result in an LTA charge. The changes to the LTA will be subject to transitional legislation, the detail of which (at the time of writing) is yet to be issued. We will review the transitional legislation once available in case it impacts this project. 

Enhanced protection 

If you have enhanced protection, this may affect how we implement the proposed changes to your benefits. While we have some records of members’ enhanced protection status, it is important that you let us know as soon as possible if you have enhanced protection. Please inform us even if you have, or think you have, notified us before. The easiest way to do this is to email a copy of your protection certificate to pensions@bp.com. Alternatively, you can post a copy of your certificate to BP Pension Fund, Pensions Administration Team, Chertsey Road, Sunbury on Thames, Middlesex, TW16 7LN. If you do not have a certificate, please provide a copy of a screen shot from HMRC’s website showing your protection details. The administration team will not confirm receipt of your certificate, but your record will be updated to reflect your protection position. If you have registered for PensionLine, you will see the protection details on your record when it has been updated.

Any back payments would normally be paid to your estate.

In the event of your death, one or more survivor pensions based on your pension may be paid from the Fund. This means that if your pension changes following any rectification, equalisation or conversion of your benefits, any survivor pension will too. 

If the rectification exercise shows that your pension has been overpaid, your current pension in payment will not be reduced but any future survivor’s pension will be based on the pension you should have received from the Fund. This is only in relation to a survivor’s pension that is not in payment before GMP conversion.

Your pension was based on the original member’s pension, so if their pension would have been adjusted had they been alive, yours will too. 

Your pension will continue to increase with the same set of increases that currently apply to the various parts of your pension. You may see a change in the amount of pension which increases at the different rates if you are impacted by GMP equalisation. In general, we expect any such change to be small. The Fund’s actuary will assess the value of all payments you are expected to receive from the Fund in the future under the proposed benefit structure to check, on an actuarial basis, that such value is the same or higher than it would have been before conversion.

The level of your current pension in payment will remain the same or possibly increase. Your pension might increase as a result of our findings from our GMP reconciliation and/or GMP equalisation review. Any such increase is likely to be small. 

If we find we owe you money because we’ve been underpaying your benefits, then we’ll pay you a lump sum, with interest, and adjust your pension so it is paid at the right level in future. If we find we’ve been overpaying your benefits, we won’t ask for the money back or reduce your pension in payment from its current level. 

Everyone affected will receive a personal statement in late 2023/early 2024, setting out their new pension and showing what has changed.

Your personal statement will show the revised breakdown of the parts of your pension which increase at different rates compared with the current breakdown. Some general information about this is set out below.

GMP reconciliation and rectification

As part of the GMP reconciliation process, we have identified a small proportion of members who have been overpaid pension. In cases where that overpayment involves an error with a member’s rate of pension increases, the member’s record will be rectified to ensure the correct rate of pension increase applies in future. 

We have already completed GMP rectification for some members of the Fund. For members where this exercise hasn’t yet been completed, GMP rectification will take place at the same time as GMP equalisation and conversion. The consultation communication that we’ve sent to you confirms whether your Fund pension has already been rectified.

GMP conversion

As you may know from your annual pension increase letter, your pension is made up of different parts which increase at different rates (and some parts may not increase at all). 

Under current practice, before you reach GMP age (age 65 for men and age 60 for women), your pension is increased in line with the Fund’s rules. For most members, this is based on the Retail Price Index to 31 December each year, up to a maximum of 5%. However, the exact increase rate(s) applicable will depend on which membership section of the Fund you are in. 

From GMP age, the part of any GMP that you have built up after 5 April 1988 increases on an annual basis in line with the cost of living (currently defined by the government as the annual change in the Consumer Prices Index (CPI) to 30 September each year), up to a maximum of 3%. No increase applies to any GMP built up before 6 April 1988.

If, on 15 August 2023 (the proposed conversion date), you’re a pensioner aged 65 or over or you’re a survivor of a member (regardless of age) in receipt of a pension: your pension will continue to increase with the same set of increases that currently apply to the various parts of your pension. You may see a small change in the amount of pension which increases at the various different rates if you are impacted by GMP equalisation. 

If, on 15 August 2023 (the proposed conversion date), you’re a pensioner under the age of 65: we are proposing to simplify your pension increases as part of GMP conversion. Please see the next question for further details.

We are proposing a different approach for the treatment of pension increases based on whether you are under or over age 65. This is because from age 65, regardless of sex, all GMP is in payment. While female members’ GMP may be in payment from age 60, we are proposing to keep the conversion approach consistent between male and female members.

The Fund’s actuary will assess the value of all payments you are expected to receive from the Fund in the future under the proposed benefit structure to check, on an actuarial basis, that such value is the same or higher than it would have been before conversion.

Current position: if you retired before GMP age (65 for men and 60 for women), the pension you receive is increased each year by the ‘BC increase’ which is based on a calculation using the lower of:

• cumulative RPI between date of leaving the Fund and the increase date, and 

• 5% a year on a cumulative basis between the date of leaving the Fund and the increase date. (If you are a member of a Foseco section, please note that your pension increases differently. Please refer to your member booklet for further details.)  

When you reach GMP age, you will get a ‘step-up’ in your pension equal to the difference between the BC increases and the statutory increases on your GMP from date of leaving the Fund to your GMP age.

After GMP age, your GMP pension increases as follows:

• Any GMP you built up before 6 April 1988 would not increase in payment.

• Any GMP you built up after 5 April 1988 would increase annually in line with changes in the cost of living (currently defined by the government as the annual change in the CPI to 30 September each year), up to a maximum of 3%. 

Proposal: we are proposing to simplify the way your pension increases in retirement as part of the GMP conversion exercise. Following conversion, your converted pension would consist of two parts:

• Part of your pension would increase in line with the BC increase (above).

• The remaining part of your converted pension would not increase in payment.

For a member who is under GMP age on the conversion date, the proposed design brings the step-up forward from GMP age to the conversion date. This would provide the member with a higher pension sooner.

Your personal statement will show how your pension has changed.

Please see the diagram for further details.

If you’re owed something, you will be paid a lump sum which may be taxable. This payment is likely to be paid through our pensioner payroll (PAYE), but you can apply to HMRC to have the tax spread over the relevant tax years in which the overpayment built up. We will provide a breakdown of the underpaid amount by tax year with your personal statement. 

Your current pension in payment will not reduce following GMP conversion.

We do not expect many members’ tax positions to be materially affected given the relatively small amounts involved in GMP equalisation and conversion. However, there are some potential tax implications as follows:

Income tax position 

If you receive an increase in your pension, you will pay income tax on that increased pension. It’s possible that any adjustment to your pension might push you into a higher tax bracket. Also, if you are eligible to receive a lump sum payment from the Fund, this will be taxable. We will provide you with extra information around the time the lump sum payment is made so you can ask HMRC to spread it across the tax years in which you earned it. 

The Trustee is not able to advise you on your personal financial or tax situation and suggests that you take independent financial advice if you are concerned about tax consequences. 

Lifetime allowance (LTA) charge

The Government’s March 2023 budget made changes to the LTA: no LTA charges will arise in the 2023/24 tax year and the Government intends to remove the LTA entirely from April 2024. Therefore, we do not expect any member to have an LTA charge as a result of the proposed GMP conversion exercise. 

Your historic LTA position may change as a result of the GMP rectification and equalisation process, and there is a possibility that any increase could result in an LTA charge. The changes to the LTA will be subject to transitional legislation, the detail of which (at the time of writing) is yet to be issued. We will review the transitional legislation once available in case it impacts this project.

Enhanced protection

If you have enhanced protection, this may affect how we implement the proposed changes to your benefits. It is important that you let us know as soon as possible if you have enhanced protection. Please inform us even if you have, or think you have, notified us about this before. The easiest way to do this is to email a copy of your protection certificate to pensions@bp.com. Alternatively, you can post a copy of your certificate to BP Pension Fund, Pensions Administration Team, Chertsey Road, Sunbury on Thames, Middlesex, TW16 7LN. If you do not have a certificate, please provide a copy of a screen shot from HMRC’s website showing your protection details. The administration team will not confirm receipt of your certificate, but your record will be updated to reflect your protection position. If you have registered for PensionLine, you will see the protection details on your record when it has been updated.  

Any back payments would normally be paid to your estate.

In the event of your death, one or more survivor pensions based on your pension may be paid from the Fund. This means that if your pension changes following any rectification, equalisation or conversion of your benefits, any survivor pension will too.

If the rectification exercise shows that your pension has been overpaid, your current pension in payment will not be reduced but any future survivor’s pension will be based on the pension you should have received from the Fund. This is only in relation to a survivor’s pension that is not in payment before GMP conversion.

Your pension was based on the original member’s pension, so if their pension would have been adjusted had they been alive, yours will too.

Your pension will continue to increase with the same set of increases that currently apply to the various parts of your pension. You may see a change in the amount of pension which increases at the different rates if you are impacted by GMP equalisation. In general, we expect any such change to be small. The Fund’s actuary will assess the value of all payments you are expected to receive from the Fund in the future under the proposed benefit structure to check, on an actuarial basis, that such value is the same or higher than it would have been before conversion.