DEFINITION of 'Guaranteed Minimum Pension - GMP'
Pensions earned while working in the United Kingdom's public sector between 1978 and 1997. During those years, the UK's public sector pension plan was contracted out and the pensions earned are handled differently than other years. The amount of pension earned during these years is supposed to be roughly equivalent to the amount an employee would have otherwise earned.
BREAKING DOWN 'Guaranteed Minimum Pension - GMP'
The guaranteed minimum pension applies only to pensions earned during the specified years. If a public sector employee earned income before or after the specified years, in addition to during the specified years, the different time periods of the pension will be calculated separately. After April 6, 1997, guaranteed minimum pensions no longer accumulated and the system was replaced.