Actuarial and technology consultants, Buck have launched a new service for pension schemes looking to equalise Guaranteed Minimum Pension (GMP) benefits.
Following a high court ruling at the end of last year, all DB pension schemes must equalise GMP benefits for men and women. These GMPs were designed to provide benefits equivalent to the state pension when the company pension contracted out of the State Earnings Related Pension Scheme (Serps).
Buck will work alongside both trustees and company advisers to deliver this service – known as Square. This will be a one-off self-contained project to deliver GMP equalisation.
As part of this service Buck will provides a list of all member benefit adjustments, a concise summary report for trustees alongside the quantification of the financial impact for the scheme.
Buck says it solution addresses the complex technical implications and uncertainties of GMP equalisation efficiently and at a low cost.
The high court case was brought by three female members of the Lloyds pension scheme, who successfully argued that the lower rate of increase to their GMP benefits (when compared to men) was discriminatory.
Following the high court ruling many pension experts said this equalisation process would create significant additional costs for DB schemes, while providing relatively little benefit for members.
Buck’s UK managing director David Piltz says: “An overwhelming majority of pension schemes in the UK have GMP benefits, meaning the ruling on GMP equalisation presents a significant challenge for the sector to ensure schemes fully comply with this legal requirement.
“We recognise that undertaking GMP equalisation has the potential to be a complex, costly, and time-consuming process, with some advisers quoting three years or more to resolve the issue.
“Through Square, and supported by a dedicated team of GMP equalisation specialists, we offer an accelerated standalone solution that allows us to work with existing advisers to resolve the GMP equalisation challenge.”
Buck’s chief executive Jack Freker adds: “Square will deliver GMP equalisation to affected pension schemes in a flexible way, allowing trustee and company advisers to benefit from an ahead-of-schedule resolution to this complex issue, and bringing their plans into compliance.”