GMP equalisation

GMP equalisation is complicated. We’re experts at this puzzle, we can help you.

Admin system BAU calculations

Administration systems and procedures are likely to require a significant overhaul to administer equalised benefits under any of the methods approved under the Lloyds Bank judgment.

Member data updates

Additional data items will need to be stored e.g. additional tranches of pension in respect of service post 17 May 1990, opposite sex elements of pension.

Scheme calculation changes

Systems will need to be updated to calculate benefits on an equalised basis (including opposite sex GMPs and the resulting excess benefits) and output the additional data items required to administer equalised benefits going forwards. Many calculations will require updating, for example:

  • Benefits on leaving service – additional tranches of pension are likely to be required in respect of service between 17 May 1990 and 5 April 1997.
  • Retirement benefits – on retirement it will be necessary to calculate the benefit due to the member based on their true sex and the equivalent benefit for an opposite sex comparator – for service between 17 May 1990 and 5 April 1997.
  • Death benefits – calculations will need to be amended to calculate equalised death benefit lump sums and dependants’ pensions.
  • Transfer values – calculations will need to be updated to calculate these on an equal basis.

Dual payroll or GMP conversion?

Dual Payroll

The Lloyds Bank judgment approved a number of methods. Methods B and C under the judgment are often referred to as “dual payroll” methods. These methods involve a year-on-year comparison of the member’s current pension elements in payment with those that would apply for the alternate sex.

GMP Conversion

The Lloyds Bank judgment made it clear that existing GMP conversion legislation could be used to equalise GMPs by converting GMPs and other pre-1997 benefits into alternative non-GMP benefits of equivalent actuarial value. This approach has the advantage of removing GMPs entirely, and will be of particular interest if you have a fiduciary objective such as buyout planned.

How can ITM help?

Our data consultants and GMPe application are the perfect partnership to help you prepare your data for GMP conversion.

Our pensions administration platform, PenScope, has been updated to cope with equalisation. It can calculate equalised benefits due under any of the methods approved under the Lloyds judgment including dual payroll approaches.

If your own administration system and processes need updating we can provide advice, independent audit and calculation of any additional data items.

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