The wait is over. After years of uncertainty we now have the High Court ruling that GMP equalisation is required.  There’s still of course some uncertainty as the judgement could be appealed and the DWP are likely to respond and provide further guidance on their preferred method.  Nevertheless it seems certain that the requirement for GMP equalisation is here to stay.

GMP equalisation will almost certainly place new data requirements on your scheme.  Kick start your journey to GMP equalisation-ready data with these five steps.

If you haven’t yet finishing reconciling your GMP data with HMRC’s records, crack on.  The 31 October deadline for clerical queries is fast approaching.  Before equalising benefits for unequal GMPs, you need to ensure your GMP records are accurate.  You need to reconcile both the scheme membership and the level of GMP to which each member is entitled.  Only then can benefits be correctly equalised.

The next step is to rectify members’ benefits for any errors identified as part of the GMP reconciliation.  PASA guidance is a good starting point or ask your advisers or GMP specialists such as ITM for help.  In some situations it may be appropriate to hold off taking action on reconciliation and to instead dovetail this with future work on GMP equalisation. For example, you may not want to start recovering overpayments only to increase benefits again some months down the line.  However where you are underpaying a member it’s likely to be more difficult to argue that should delay rectification.

Regardless of the equalisation methodology adopted, you’ll almost certainly need to slice up your data into the relevant benefit segments.  This will require you to identify the element of GMP and excess pension accrued between 17 May 1990 and 5 April 1997 with further slicing required on a scheme specific basis depending on, for example, the data at which retirement ages were equalised.

For each member calculate the 1990-1997 element of the GMP were the member of the opposite sex.   How accurately you are able to do this will depend on the availability of data.  Once you have your opposite sex GMPs you can assess by how much a member’s benefits might differ were they the opposite sex.

In many cases, particularly for pensioners and dependants, you may have a lack of sufficiently detailed historic data to accurately calculate the impact of GMP inequalities.  For these individuals suitable approximations will need to be made.  Focus data work in areas where it is likely to add most value by allocate members to different risk bands depending on the anticipated change to a member’s GMP and scheme benefits. The impact of GMP equalisation will be scheme and member specific so careful thought will be required.

See our previous article on GMP equalisation