On the go: Schemes that thought they might be unaffected by a recent court ruling could still owe savers more than £500 each in top-up payments on their defined benefit transfers, analysis has found.
Analysis by XPS Pensions, published on Wednesday, found that savers could be owed up to £32,000 by pension schemes under guaranteed minimum pensions equalisation, with more than half owing £10,000.
As the group carried out more GMP equalisation calculations, it also found that all schemes so far owe at least one individual a minimum of £500.
Vicky Mullins, GMP equalisation lead at XPS Pensions, said: “Although the largest payments are eye-catching, it is also interesting that even schemes that consider themselves largely unaffected owe some pensioners more than £500 each, cash which would be most welcome to many.”
This comes after the High Court ruledin November that trustees committed a breach of duty if they did not equalise the member’s GMP benefits at the time of calculating the cash equivalent transfer value.
Therefore, trustees of DB schemes will have to revisit transfers made in the past 30 years for individuals with contracted-out benefits, and provide a top-up if necessary.
According to XPS, GMP equalisation affects almost every DB scheme and is expected to impact more than 5m members.
Ms Mullins said that while the recent judgment does not change what schemes need to do to correct members’ benefits, it does add “a whole new set of members that need consideration”.
She added: “Finding and communicating with these members may be difficult. Pension schemes will need a process to find, verify and get payments to each of them.
“As schemes review their business plans for 2021, it is vital to ensure getting GMP equalisation done is firmly on the agenda to get these back payments paid to members promptly.”
This article originally appeared on ftadviser.com
