The ‘£20 billion’ Lloyds GMP equalisation ruling – what does it mean for you?

Geraldine Brassett, 30 October 2018

Last week the much publicised Lloyds Bank GMP equalisation case finally came to a conclusion in the High Court. Now defined benefit schemes, advisors and administrators need to respond with a joined-up approach.

By Geraldine Brassett, Pensions Administration Client Relationship Director, Capita

The outcome of the Lloyds Bank GMP equalisation case has an impact on all schemes with GMPs accrued between 1990 and 1997. The nationwide cost of equalising those DB contracted-out rights is estimated to be as much as £20 billion.

So now we know what we’re dealing with. 

Or do we?  Yes we know the ‘what’…we need to equalise for GMPs earned between 17 May 1990 and 6 April 1997. But there’s less clarity about the ‘how’ and that’s needed because trustees need to start making decisions about this now to plan for the medium and short-term, and to deal with cases ‘in-flight’.

Medium-term planning

Schemes have a focus on the need to complete GMP reconciliation and rectification activity and this will provide a firm foundation for the next round of changes. The administrators involved in this activity will have the skills, knowledge and experience to manage and deliver GMP equalisation so it makes sense to accelerate the existing work so this resource can be  freed up to support equalisation.

Short-term planning

Straight away you can equip your member-facing teams with a response to GMP-related queries. Even if that is a holding message (“…it’s early days and we will keep you informed”) it will give you the insight you need into the number and types of queries to inform your future communications.

Cases in-flight

Then there are the members with cases ‘in flight’ where a decision needs to be made, specifically around transfers out of the scheme.  Should these go ahead?  If so, are any changes needed to letters, forms or discharges to indicate that the member concerned accrued GMPs in the period from May 1990 to April 1997?

More broadly, schemes need to start thinking about the data requirements for in-flight cases that will quantify the population and reveal the potential impact on liabilities. It’s possible that  GMP conversion (with the consent of sponsoring employers), and the consequent elimination of annual checks, ends up being the easiest long-term solution for administrators.

Whichever way you look at it, advisors and administrators will need to collaborate on what is a significant piece of work for the pensions industry. It is inevitable that more requirements will emerge as we learn more about what GMP equalisation means in practice, so early engagement and ongoing communication between schemes and administration providers is also essential.

Some aspects of a scheme’s equalisation project will be unique to that scheme. But, many schemes will be facing the same challenges, asking the same questions, and communicating the same explanations to members. The industry needs to work together to promote a best-practice approach to these common issues.


Want to find out more or better understand exactly what this means for you? Our experts can help – get in touch here.


About the author

Geraldine Brassett Client Relationship Director

Geraldine Brassett