GMP Equalisation

GMPEqCommenter

https://forums.moneysavingexpert.com/discussion/comment/82064374#Comment_82064374

Agreed this is a possibility, although there is a requirement to consult with the membership, so assuming the Scheme had your address you should definitely have heard something if it's happened.

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

The female GMP will have been higher than the male GMP at leaving, but that doesn't mean that the female pension was higher than the male pension at the same date. The way Final Salary pensions usually work is that you accrue an amount of pension equal to Service x Accrual x Final Pensionable Salary, and then of that the GMP is the GMP and the "pension in excess of GMP" is the remainder.

So for example, if you had 10 years of service, an accrual rate of 60ths and a £12,000 p.a. salary, your total pension would be 10/60 x 12000 = £2,000 p.a.. Then of this, the male GMP might be £500 p.a., and the male excess would be £1,500. Meanwhile the female GMP might be £550 and the female excess £1,450. There are some edge cases where the GMP is so high it's bigger than the total pension given by the formula, and therefore the (underpinned) total pension does differ between sexes, but those are fairly rare.

Similarly, what in most schemes the female having a GMP age of 60 and the male having a GMP age of 65 means if you're retired earlier than 60 is that before GMP age, all of your pension is treated as excess. At GMP age, your total pension is split into a GMP and excess amount, but unless an underpin applies (e.g. your total pension was less than the GMP), your total pension doesn't change.

So for example, let's say you retire from active service at age 57. At 60 the female GMP was 550 x 1.0625^3 = 660, and at 65 the male GMP was 500 x 1.0625^8 = 812. Your total pension at retirement was £1,350 (say), and you've had 5% p.a. increases in payment. Then immediately before 60, your total pension is 1,350 x 1.05^3 = £1,563, which for the female is then split into £660 GMP and £903 excess. For the male, their total pension at 65 is 1,350 x 1.05^8 = £1,995, of which 812 becomes GMP and £1,183 excess. If both your GMP and excess get the same 5% p.a. pension increases then at 65 the female pension will also still be £1,995 in total. An exception would again be if the total pension before GMP age was less than the GMP due to come into payment.

The inequalities come from the excess and GMP having different rates of revaluation in deferment, pension increases in payment, and males and females having different ages GMP comes into "payment". If your excess and GMP behave in the same way as each other in your scheme, you're unlikely to have any inequalities unless an edge case underpin applies (or your scheme does something else weird I'm not accounting for - schemes do a lot of weird things and I have no knowledge of your scheme).

Billopp

GMPEqCommenter,

I have never been contacted by my pension provider. The only reason I contacted them was that I had seen articles and wanted to know if they were working on GMP equalisation for the pension scheme I was in. There was reply was that I did not have a GMP which was a surprise to me as I had old correspondence from my scheme mentioning I had a GMP as well as correspondence from HMRC in February 2005 telling me about my GMP. I also receive a letter from the DWP every year since 2005 when I reached state pension age showing the split of my GMP into pre and post as they require it to work out the increase not paid by the occupational pension which is nothing on pre 1988 GMP and up to max of 3% on post 1988 GMP as all the pre 1988 GMP was paid by the DWP and anything in excess of 3% on post 1988 GMP.

I dont know if I will receive anything or not. All I was asking was were they working on GMP equalisation for the scheme. They said no as they told me they were not because their records did not show I had a GMP. I just think the information was deleted in the by out which was with themselves because I was working for one of the largest insurance companies that deal with by outs.

That is where I am having a problem as they won't admit I have a GMP.

I might have to go to the pensions Ombudsman if they cant come up with a satisfactory explanation why I don't have a GMP so they have no need to do the complex calculation.

Marcon

All I was asking was were they working on GMP equalisation for the scheme. They said no as they told me they were not because their records did not show I had a GMP. I just think the information was deleted in the by out which was with themselves because I was working for one of the largest insurance companies that deal with by outs.

That is where I am having a problem as they won't admit I have a GMP.

If the trustees bought out your benefits with no GMP included for you, then the pension provider is giving you an accurate answer; they can't 'admit' to something which isn't in the buy out contract.

You might no longer have a GMP within this scheme for the reasons outlined in my previous post. Clearly something has gone wrong with the comms process if the scheme has equalised using Method D2 and you've had nothing in relation to this (?assuming they have your current postal address, and would have had consistently for at least the last six years or so), since it's quite prescriptive and involves personalised communications rather than the merely generic.

I'd write to the employer and say you've been told you have no GMP now that your benefits in the scheme have been bought out (sending copies of your correspondence with the pension provider would be helpful), and ask them what's happened to your GMP. I wouldn't waste your time going into any detail, or levelling any accusations/speculative comments until the employer has had a chance to respond.

Marcon

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?

Have you read the individual annuity policy which will have been issued to you after the buy out concluded? That should identify whether or not a GMP element was included in the pension bought out for you.

Billopp

Update: Provider has now confirmed my GMP does exist

Quick follow-up to my post above. After sending my DWP annual increase letters and an old 2002 GMP confirmation letter, my provider has now accepted my GMP does exist and apologised for the earlier wrong answer. It turns out their first check had actually been run against the wrong pension arrangement entirely — a records mix-up rather than genuine data loss.

They've now confirmed my GMP and Barber equalisation position will be reviewed as part of an ongoing exercise, being carried out post-buyout (agreed between the insurer and the outgoing trustee as a "data cleansing" step) — so don't assume equalisation was sorted before a buyout; it may still be pending afterwards.

Takeaways for anyone in a similar spot:

1. If told "no GMP exists," ask them to double-check they've matched the correct scheme/arrangement to your record — especially after any corporate restructure or buyout.
2. Keep your DWP annual increase letters and old scheme correspondence — this is what forced a proper recheck for me.
3. GMP and "Barber" equalisation are related but separate issues — check both are being covered, not just one.
4. If pointed to the Financial Ombudsman Service for this kind of complaint, double-check — it should usually go to the Pensions Ombudsman instead.

Will update once the equalisation exercise actually concludes. Interested to hear if others have been through similar post-buyout delays.

GMPEqCommenter

Is it definitely happening post buy-out, or is it post buy-in, pre buy-out? The difference being that the buy-in stage is when the Trustee first buy the insurance policy, but haven't yet completely offloaded responsibility for the pensions (basically, the insurer pays the money for the pensions, but the Trustee are still ultimately on the hook for making sure you get your benefits), whereas the buy-out is the stage at which the bulk policy held by the scheme with the insurer is converted to individual policies in members' names and the scheme is no longer associated with them.

The reason I'm asking is that data cleanses are very common between buy-in and buy-out, but I've not heard of any happening post buy-out before.

Billopp

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GMPEqCommenter It is deffnetly happening post by out as I have been told that by the person dealing with my complaint. The problem with my case I worked for one of the large Insurance companies who specialised in by in/out and they bought it with them selves but for some reason the people I have been corresponding with did not know their own old staff pension scheme was contracted out. It is amess. As far as I can see they are only doing the GMP equalisation now because I contacted them about what was happening about GMP equalisation as it is several years since the Lloyds judgement. I have also been told that the Trustees still exist but they have refused to give me their address.