XPS launches pension equalisation service

XPS launches pension equalisation service

XPS Pensions has launched a service to help trustees and in-house administrators work out guaranteed minimum pension equalisation. 

Equal GMP provides a planning, preparation and implementation service to assist schemes in ensuring they have equal benefits between men and women following a court ruling last year.

The requirement follows the Lloyds Banking Group court case in 2018 in which the High Court ruled trustees must equalise benefits between women and men who had been contracted-out of the state pension between 1990 and 1997.

There are many ways to carry out equalisation, including a process called conversion, which is seen as a clean-cut approach and believed to be the preferred route for trustees and sponsors.

According to XPS, Equal GMP enables pension schemes to improve their member data, simplify their wider benefits, offer the opportunity to introduce new options to members and provide a clear path to reaching their long-term objectives. 

Sankar Mahalingham, principal at XPS Pensions Group, said: "The court ruling last year has caused a lot of pension schemes to worry about being GMP ready and quite rightly.

"It can take months for pension schemes to be in a position to even start their equalisation journey and even though we are waiting for further clarification on some equalisation options, now is the time to start preparing. 

"We feel this is actually a good opportunity for trustees to improve the running of their schemes and Equal GMP is all about helping pension schemes prepare and implement plans to not only manage their GMP equalisation process but to also provide a clearer outlook to the long-term benefits of their scheme."

Matt Davis, head of GMP Equalisation at Hymans Robertson, said: "This move forms parts of a wider trend of the industry adapting to help pension schemes and companies tackle the challenge of GMP equalisation.  

"Right now there is a lot of interest in the progress of three industry working groups interacting with government and we anticipate that one of the first areas of guidance will drive best practice for processing member events such as transfer values.

"This additional clarity will be welcomed by the industry and will ultimately benefit scheme members."

Earlier this month the government formed a working group to consider the pension tax issues as a result of GMP equalisation. This followed the launch of that by the Pensions Administration Standards Association in January.