Equalisation of GMPs 1

United Kingdom
The Pensions Ombudsman has found in favour of a complainant (an actuary) who claimed that the trustees of the Sedgwick Group Pension Scheme should have equalised the Guaranteed Minimum Pension element of his benefits.

The statutory method of calculating GMPs reflects the State Earnings-Related Pension Scheme benefits they replace. As such, it is based on the current unequalised State Pension Ages and so differs for men and women. The Pensions Ombudsman rejected arguments that this was acceptable as it was intended to provide equal total benefits once SERPS entitlements were taken into account.

The Pensions Ombudsman ordered the trustees to calculate GMPs on an equalised basis but did not give any directions as to the correct method of doing so.

This determination is important for the majority of contracted-out UK schemes as they have not equalised GMPs to date, predominantly on the grounds of complexity.

For further information contact Mark Grant, Mark Atkinson or your usual contact in the Pensions team on Tel 0171 367 3000. Alternatively, E-mail Mark Grant at msg@cms-cmck.com or Mark Atkinson at maa@cms-cmck.com.