On 26 October 2018, the High Court judgment on the Lloyds case confirmed the need to improve benefits to make allowance for the inequality between males and females in Guaranteed Minimum Pensions (GMPs) – known as GMP equalisation.

This will mean increasing benefits, although our research shows that the impact of this is less than 1% of liabilities for the majority of schemes. The outcome also risks adding unnecessary complexity in running your pension scheme. We understand that this is unwelcome to both employers and trustees. We are working with our clients, helping them respond in a pragmatic and proportionate way. Our approach will help you manage down the cost and prevent unwanted administration burden.

Get GMP Ready 

GMP equalisation offers a real opportunity to improve scheme data, reduce administrative complexity and provide better options for members. Data quality is critical to achieving this.

There are 5 things that Trustees and employers can do now to get GMP Ready:

  1. Complete reconciliation of GMP contracting out data
  2. Confirm where and who all your members are
  3. Make your data complete and more accurate
  4. Check and record your administrative practices
  5. Collect adjustments to member records to combine with equalisation

Our specialist teams have extensive experience in undertaking these projects, working alongside in-house teams or directly with Trustees.

Employers remain on the front line

It will take many months and even years to confirm GMP benefits, decide on the approach, equalise benefits and ultimately make payments to members.

However, employers need to account for the cost now. A robust approach will be needed for audit but you will want to avoid overestimates - especially as the cost is expected to impact P&L.

We have developed a model that is helping employers reduce the cost - it can quickly calculate a robust estimate, reflecting your scheme. Our survey shows that more than half of schemes modelled have a cost of less than 1%, showing the benefits of a robust approach.

Removing Complexity

We are already working with clients to explore removing complexity and cost through conversion. We are ready to help you obtain the best outcome as you work through equalising benefits for GMPs.

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Which GMP Equalisation method should you choose?

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Key Contact

Vicky Mullins

Senior Consultant

T: 0203 725 7017

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