GMP Equalisation

Cobbler_tone

I'll be honest, I did loads of reading about the GMP but can't proclaim to ever fully understand the calculation, although understand the background. I am pleased to read how hard it is...and I have read (and tried to digest) the government site.
I'm grateful for my extra £278 a year though and work on the assumption that it is correct.

Billopp

Hi everyone,

I'm looking for some insight or advice on a data mismatch issue I've run into regarding GMP equalisation.

I took early retirement in 1997 and reached state pension age in February 2005. Earlier this year, after reading up on the ongoing GMP equalisation exercises, I contacted my current provider to ask how they were progressing with my calculations, as I hadn't received any correspondence about it.

To my surprise, they replied stating that I do not have a GMP element on my record at all.

This is completely incorrect, and I have black-and-white proof:

1. Every year, my annual state pension increase letter from the DWP explicitly breaks down my pre- and post-1988 GMP figures.
2. I hold a physical letter from my original pension fund dated 2002 confirming my exact GMP figures at that time.

The Data Chain Failure During my 29 years of retirement, the administration of my pension has changed hands four times. It started with my original company scheme, moved through two different third-party administration firms, and was finally bought out by a major insurance company two years ago. I can only assume that my GMP records were dropped or deleted during one of these corporate handovers.

The Indexation Quirk There is a specific reason why the scheme never needed to actively look at my GMP splits for annual increases: the rules were incredibly generous. Even though the scheme was contracted out, they paid full scheme indexation (inflation increases) on my entire pension. This included the GMP elements where they technically weren't responsible for the indexation (which should have been 0% on pre-88 and capped at 3% on post-88). Because of this setup, I effectively received indexation twice on the pre-88 GMP and twice on anything over 3% on the post-88 GMP.

Now that the buyout provider has taken over, they are using their own lack of records as an excuse to deny that equalisation applies to my file, ignoring the historical DWP data.

Has anyone else dealt with a provider flatly denying a GMP exists after a buyout? What is the most effective way to force them to accept the statutory DWP data and rebuild the missing history?

Thanks in advance for any insights.

xylophone

You have documentary proof of the GMP situation.

Write to the Administrator concerning the matter and include copies of the documentation?

Billopp

"I have already sent them the black-and-white proof, but they are still denying it.

The core of the problem is that I worked for a major insurance company that specialized in scheme buyouts. Ironically, my own staff pension scheme—which was originally managed by independent trustees—was eventually bought out by my own former employer.

Because my scheme had a unique rule where they paid inflation increases on my entire pension without needing to separate the GMP parts, they never actually required the GMP split to calculate my annual increases. When the administration was transferred from the staff trustees into the company's main commercial buyout database, I believe they completely failed to transfer the historical GMP records, or simply deleted them because their modern systems didn't show an immediate need for the split. Now, they are experiencing an immense amount of trouble recognizing their own internal data transfer error, choosing instead to ignore the statutory DWP evidence I have right in front of me.

The reality is that if they recognize and admit that I do have a GMP, they have a massive problem on their hands. Admitting it means they will be forced to contact all former employees in my position who have GMPs. Worse still for them, it could make them realize—and have to admit—that they do not hold correct or complete GMP information for the numerous other corporate schemes they administer. It is far easier for them to stonewall an individual than to expose a systemic data failure."

PensionsStuff

https://forums.moneysavingexpert.com/discussion/comment/82063828#Comment_82063828

Unless I am missing something, why do you feel GMPE needs to apply ?. If your pension has historically (in payment, and possibly in deferment?) been increased by much higher than the statutory minimums then realistically there is no need to work out the better of across both male and female statutory calculations because in either way your pension is higher. Somewhere along the line I expect actuarial sign off would have occurred to this effect.

There would not be anything to hide, it is very tin hat theory to think they worry one member will bring it all crashing down, they will have actuarial teams and pension scheme lawyers involved and very likely lawyers on behalf of the sponsoring employer too, and they will have in their expertise decided nothing needs to be done. In a world where Trustees are very responsible for such decisions and where every party acts independently its not really a thing that they would just try to sweep such a huge thing under the rug.

Billopp

You are missing a massive mathematical and factual point here.

First, on the math: A "generous indexation" rule applies equally to both men and women in the scheme. It does not erase historical discrimination. My pension started in 1997, and I reached state pension age in 2005. Because women in my scheme had a lower retirement age and a higher build-up rate, a female equivalent started on a fundamentally higher baseline pension. Applying the exact same "generous" annual percentage increase to her larger starting figure means the actual cash gap between us has compounded and grown wider over the last 20+ years. You cannot know if equalisation is achieved without running a year-by-year comparative calculation.

Second, this isn't a "tin hat theory" about a calculated legal decision to sweep things under the rug. It is a straight-up administrative data blunder. The company isn't telling me, "We've reviewed the actuarial sign-off and equalisation doesn't apply to your scheme." They are telling me, "You don't have a GMP on your record."

You mention that Trustees are responsible for these decisions, but in my case, there are no longer any independent trustees to go to. Because the scheme was completely bought out by the employer with itself, the trustee board was wound up. I am dealing purely with a commercial insurer’s database.

When a provider claims a contracted-out member has zero GMP—despite the member holding annual DWP statements and historical fund letters proving otherwise—that isn’t an expert legal strategy. It’s missing data from a corporate handover. They cannot look at an actuarial sign-off for a GMP equalisation exercise if their modern database currently denies the GMP even exists on my file.

PensionsStuff

https://forums.moneysavingexpert.com/discussion/comment/82064048#Comment_82064048

Not missing the point at all.

GMPE is about statutory minimums and the implications of that. A Scheme paying above statutory minimums will naturally erase any, if any, discrepancy in the pension owed once pensions have been equalised. Not least because if any above-minimum increase has been applied that is discretionary they can sue those discretionary increases to offset past possible underpayments.

They are telling you you dont have GMP because you dont. Your GMP no longer exists, it no longer needs to. As by the name, it is a minimum, if a Scheme in every way (revaluation, escalation, spouse benefits etc) opts to pay above the minimum, you no longer need to know what the minimum is.

The point about the Buyout further enhances the point of no huge conspiracy. The list of people included in a buyout is no less then : Scheme lawyer, company lawyer, insurer lawyer, insurer actuary, scheme actuary, covenant advisor, administrator, investment manager and so on. A buyout transaction where people just go "let's ignore this GMP issue" simply isnt a thing.

Actuarial sign-off off would have happened long ago and a buyout transaction wouldn't have happened without it

xylophone

They are telling you you dont have GMP because you dont.

The OP seems to be saying that he has been told that there is no GMP on his record.

Clearly he had a GMP - the documentation proves it.

If the Administrators mean that he had a GMP but they have no record and that in all events it is no longer relevant to his case, then they should say so, clearly and unequivocally?

Billopp

I appreciate your perspective, but you are missing a couple of key legal and mathematical realities here.

First, a GMP never simply "disappears." By law, it remains a permanent part of the pension's foundation. Because the rules were inherently different for men and women, the High Court requires a year-by-year comparison against a member of the opposite sex to prove true equality. You physically cannot run that comparative test if the database is missing the starting GMP figures.

Second, paying "above the minimum" does not automatically erase inequality. If a female colleague started on a higher baseline due to historical sex-based rules, applying the same generous annual increase to her larger figure means the actual cash gap between us has grown wider over the last 20 years. You cannot know if a discrepancy exists without running the math.

Finally, this isn't a conspiracy theory—it is a straightforward administrative data error. You listed a long line of lawyers, accountants, and actuaries involved in a buyout as proof that mistakes can't happen.

But out of curiosity, if the Post Office scandal taught us anything, isn't it that massive organizations, their computer specialists, and their legal teams can look straight at flawed data for years and confidently insist "the system is robust" rather than admit a systemic blunder? In that case, it was proven that they actively lied and tried to cover it up rather than confess to a massive problem.

The reality is that when they tell me they have no GMP record, it is simply because they forgot to transfer it when the scheme moved into their commercial database a couple of years ago. In fact, they should have been actively looking into and resolving the GMP equalisation issue before that transfer ever took place. Instead, the data was dropped during the handover.

Given that the provider is telling me, "You have no GMP on your record"—which is factually impossible because the DWP actively uses my GMP splits every year—I have to ask: why are you so quick to take their side and assume their computer systems are infallible?

Ultimately, it comes down to a very simple question: when I tell you I have physical DWP and fund documentation proving I have a GMP, and they claim I don't, do you actually believe me, or do you truly think their database is incapable of making a mistake?

Marcon

Unless I am missing something, why do you feel GMPE needs to apply ?. If your pension has historically (in payment, and possibly in deferment?) been increased by much higher than the statutory minimums then realistically there is no need to work out the better of across both male and female statutory calculations because in either way your pension is higher.

As by the name, it is a minimum, if a Scheme in every way (revaluation, escalation, spouse benefits etc) opts to pay above the minimum, you no longer need to know what the minimum is.

You certainly are missing something. There is a need - because paying higher than the statutory minimum doesn't deal with the equality issue, which is what OP is worried about - and what GMP equalisation is all about. The clue's in the name!

First, a GMP never simply "disappears." By law, it remains a permanent part of the pension's foundation.

Ultimately, it comes down to a very simple question: when I tell you I have physical DWP and fund documentation proving I have a GMP, and they claim I don't, do you actually believe me, or do you truly think their database is incapable of making a mistake?

The reality is that when they tell me they have no GMP record, it is simply because they forgot to transfer it when the scheme moved into their commercial database a couple of years ago. In fact, they should have been actively looking into and resolving the GMP equalisation issue before that transfer ever took place. Instead, the data was dropped during the handover.

Ever heard of method D2 for use when equalising GMPs? It's called conversion and the GMP morphs into 'standard' scheme benefits after a plethora of hugely complex actuarial calculations. I would expect it to have cropped up somewhere along the way in the various scheme communications prior to the buy out concluding.

Your buyout provider will pay the benefits bought out by the trustees - which, if the trustees used method D2 to equalise, will mean there is no longer a GMP separately identifiable/payable within the scheme benefit structure. They are therefore correct when they say there is no GMP on the records they hold in respect of your scheme benefits.

There is no impact on the GMP records held by DWP.