Produced in partnership with Peter White

The following Pensions practice note produced in partnership with Peter White provides comprehensive and up to date legal information covering:

  • Anti-franking
  • The concept
  • Terminology
  • Overriding
  • When it applies—members
  • How it applies—members
  • Relevant sum
  • Amount by which GMP in payment exceeds GMP when member leaves pensionable service (or earlier attainment of GMP age)
  • When it applies—spouses/civil partners
  • How it applies—spouses/civil partners
  • More...


The concept

It used to be the case that contracted-out salary-related (COSR) schemes could revalue a deferred member's guaranteed minimum pension (GMP) without increasing the overall deferred pension. The pension in excess of the GMP was effectively reduced so that the overall deferred pension remained the same (ie the excess pension was used to provide the GMP revaluation). This is known as ‘franking’, and ‘anti-franking’ refers to the legislation which prohibits this. It provides for a minimum level of benefit (the ‘relevant aggregate’) to be provided to members and their spouses and civil partners at GMP age. The effect is that rather than reducing the pension in excess of the GMP, schemes must instead protect it, and increase a member’s total pension.

The anti-franking legislation is contained in sections 87–92 of the Pension Schemes Act 1993 (PSA 1993) and applies where:

  1. a member has any COSR employment between 6 April 1978 and 6 April 1997, and is therefore entitled to a GMP, and

  2. either:

    1. he left contracted-out employment between 1 January 1985 and 5 April 2016, or

    2. he was still in contracted-out employment when contracting-out was abolished on 6 April 2016 but ceases to be in pensionable service (or reaches GMP age, if earlier) on or after 6 April 2016

HMRC has also produced some guidance which touches on anti-franking.

Anti-franking crops up quite regularly in practice when

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