Getting value and efficiency from GMP equalisation
At a glance
The cost to employers of GMP equalisation is two-fold: the liability impact, which is very small for the vast majority of schemes, and the expenses of completing this complex exercise, which could be as much as the original liability impact again
But it is an important exercise to get completed. XPS research shows that for an individual pensioner due back-pay, this averages £1,000 per person, rising to up to £25,000 in extreme cases
It is important to make sure that the equalisation project isn’t unnecessarily expanded into a historical data cleanse project. See our explanatory video here
Employers also have the opportunity to derive value from the GMP equalisation process – using the communication opportunity to offer members options and incorporate strategic projects to reduce costs and risk
Opportunity to engage with members
The GMP equalisation projects provides two excellent opportunities to engage with members.
Do we need really need all this data?
Reviewing historical data that ultimately doesn’t make a difference to the equalisation outcome is a waste.
Identifying which items are actually important to the equalisation calculation can streamline the whole process.
Actions employers can take
- Check what approach your scheme is taking to GMP equalisation and make sure it isn’t causing unnecessary costs.
- If you have more than one scheme, consider setting up a joint working party for GMP equalisation to ensure consistency and efficiency.
- Identify the areas you can get value from the equalisation process, such as offering members options, and work these into the project early on.
Add value to your GMP equalisation exercise by combining with other strategic projects
For further information, please get in touch with Vicky Mullins or speak to your usual XPS Pensions contact.