From 6 April 2026, the guaranteed minimum pension (GMP) slice of many defined benefit pensions will rise by 3%. MPs approved the Guaranteed Minimum Pensions Increase Order 2026, which covers GMP built up in contracted‑out schemes between 6 April 1988 and 5 April 1997. This is the routine annual uprating schemes plan around each spring. (hansard.parliament.uk)

Why 3% rather than the headline inflation rate? By law, post‑1988 GMP in payment increases with prices but is capped at 3%. The latest statutory review put consumer price inflation at 3.8% in the September 2025 reference month, so the cap applies this year and schemes will pay 3% on that GMP slice. The House of Commons Library briefing sets out the mechanism and confirms the CPI figure used. (commonslibrary.parliament.uk)

This sits alongside April’s state pension changes. The Government Actuary’s report confirms the full new State Pension will rise by 4.8% under the triple lock, while other legacy components such as Additional State Pension and protected payments go up with CPI at 3.8%. In practice, a pensioner may see 4.8% on their state pension but only 3% on the post‑1988 GMP paid by their occupational scheme. (gov.uk)

Who is affected is specific. GMP is a legacy promise for employees who were contracted out between 1978 and 1997; only GMP earned from 1988 to 1997 is subject to statutory price‑linking and therefore increased by this Order, while pre‑1988 GMP has no statutory increase. People who reached State Pension age before 6 April 2016 could receive some of any above‑cap increase through the Additional State Pension; for those reaching State Pension age on or after 6 April 2016 there is no state mechanism to top up their GMP beyond the scheme‑paid cap. (commonslibrary.parliament.uk)

What this means in pounds and pence. Take someone with £2,000 a year of post‑1988 GMP: a 3% uprating adds £60 a year (£5 a month). If CPI at 3.8% applied without the cap, the increase would have been £76, leaving a £16 difference on that GMP slice. The state pension they receive is adjusted separately under the triple lock and CPI rules above, so the overall change in income reflects both systems working in parallel.

For trustees and administrators, the job list is familiar. Confirm members’ GMP splits between pre‑ and post‑1988 accrual, apply the 3% increase to the post‑1988 element, update payroll and member communications, and ensure GMP equalisation and rectification projects reflect the 2026/27 index. With an in‑force date of 6 April 2026, operational changes should sit within the standard April payroll cycle. The UK Parliament’s SI portal lists the coming‑into‑force date and that the instrument was laid on 12 January 2026. (statutoryinstruments.parliament.uk)

For finance directors, the funding effect is modest but real because only a thin slice of liabilities is GMP and the cap is 0.8 percentage points below September CPI this year. As a back‑of‑the‑envelope guide, every £10 million of pensions in payment that is specifically post‑1988 GMP implies roughly £80,000 less outgo over 2026/27 versus uncapped CPI at 3.8%. The impact on the scheme’s overall funding level will depend on the size of the GMP slice and the assumptions already built into valuations.

Policy context matters. In the Commons debate, ministers argued the 3% cap balances inflation protection for members with predictability for schemes and sponsoring employers. That is the rationale for maintaining the cap in a year when CPI exceeds 3%. (hansard.parliament.uk)

Timelines and scope are straightforward. The Order is part of the annual uprating cycle, was laid on 12 January 2026 and comes into force on 6 April 2026. It applies in Great Britain; Northern Ireland makes its own social security legislation but typically mirrors Great Britain for pensions uprating. Members should see the change in April payments, with routine confirmations from administrators to follow. (statutoryinstruments.parliament.uk)

If you’re a member, the cleanest check is your April payslip or remittance from your scheme: look for a 3% uplift on any post‑1988 GMP line. If you reached State Pension age after April 2016, don’t expect the state to top up that GMP above 3%; if you reached State Pension age before that date, increases to the Additional State Pension may cover some of the difference. For plain‑English background, the House of Commons Library explainer remains a useful reference. (commonslibrary.parliament.uk)