Stop press: schemes must equalise GMPs

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Today (26 October 2018), the High Court decided in the Lloyds Bank case that guaranteed minimum pensions must be equalised. This Insight looks at the main points of the judgement and what happens next.

GMPs: a quick reminder

GMPs (or guaranteed minimum pensions) had to be provided by contracted-out occupational pension schemes between 6 April 1978 and 5 April 1997. GMPs were calculated in broadly the same manner as the state earnings related pension scheme (SERPS) benefits they replaced, but they were not identical to those benefits.

The GMP legislation is complicated and creates a number of inherent inequalities as between men and women. As a result, occupational pension schemes which fully comply with the GMP legislation provide unequal benefits to male and female members who have GMPs.

What did the Lloyds Bank case decide?

The High Court decided the following:

  • Trustees are under a duty to amend their schemes in order to equalise GMPs for men and women. This obligation includes GMPs which have been transferred in.
  • GMP equalisation is required only between 17 May 1990 (the date of the Barber case which requires pension schemes to provide equal benefits for men and women) and 5 April 1997 (the last date a scheme could contract-out on the GMP basis).
  • Trustees are not obliged to adopt a particular GMP equalisation methodology.
  • Beneficiaries are entitled to receive arrears of pension. Simple interest of 1% above Bank of England base rate should be applied on those arrears.
  • The period for which beneficiaries are entitled to receive arrears of pension is governed by the rules of the scheme.
  • There is no relevant limitation period in relation to proceedings to recover arrears.

What did the Lloyds Bank case not decide?

One of the main issues which the Lloyds Bank case did not decide is whether or not trustees are required to equalise the GMPs in respect of benefits which have been transferred out of the scheme.


The Lloyds Bank case brings a welcome end to the uncertainty as to whether or not schemes must equalise their GMPs. However, the case does not provide all the answers particularly in relation to what equalisation methodology they should use and what should be done about GMPs which have been transferred out to another scheme. It may be that the courts have not seen the last of the GMP equalisation question (especially if any of the parties in the Lloyds Bank case decide to appeal)!

That said, on the assumption that the Lloyds Bank decision stands, very careful thought and good project management will be needed to remove GMP inequalities in practice.