On the go: GMP equalisation has soared up the list priorities for pension schemes following the Lloyd’s Banking Group case earlier this year, Equiniti research has found.
In the landmark case, it was held that schemes must equalise male and female members' benefits for the effect of guaranteed minimum pensions.
The proportion of professionals who now say that GMP equalisation is a key priority has rocketed from 13 per cent in 2018 to 58 per cent this year, a rise of 45 percentage points, even though the sample size of 322 individuals is small.
The figures for most other projects are unchanged but the significance of GMP was underlined by 45 per cent of respondents stating that GMP rectification is a priority, the second most common response. Nearly a quarter (23 per cent) also said that working towards either a buyout or a buy-in was on the agenda.
Despite more focus on GMPs, a fifth (19 per cent) of the 322 professionals surveyed confessed that they had low knowledge of GMP legislation.
Chris Connelly, propositions and solutions director at Equiniti’s pension business, warned that the clock is ticking and that the time for decision-making was fast approaching a critical stage.
He said: “Pension schemes have had GMP Equalisation looming over them for years now. Wednesday’s news that a second hearing on past pension transfers in the Lloyds case will be scheduled in 2020 is likely to extend the saga. However, it is no excuse for firms to continue postponing the problem – they must start assessing their data and getting on with the corrections that they will inevitably have to carry out.”
He added: “Good data is absolutely critical, yet it remains an undervalued aspect of scheme management. Some schemes may encounter huge problems causing major time delays and financial outlay if they don’t work on these fundamentals. It will also carry a significant impact on their ability to achieve a long-term goal of buyout which remains a major focus for trustees, as these figures reveal.”
Longstanding issues with data make equalisation a tough kernel to crack. Last November a survey by Herbert Smith Freehills found that 61 per cent of professionals said they did not expect that their scheme (or those that they advise) would have sufficient data to equalise members' benefits.
