Actuaries and pensions lawyers up and down the UK are earning good fees providing opinions on the vexed subject of equalisation after Angela Eagle’s welcome announcement. GMP Equalisation continues to be consigned to the “too difficult” tray with prevarication along the lines
…this is an impossible task
…the government’s view is not binding
…trustees should wait for government guidance on how to equalise
For example, and not wishing to single them out, the otherwise esteemed actuaries Lane Clark & Peacock say “The industry has been asking for this for 20 years and not yet received a response.” Well actually no that is not true – we have not been asking, we know what equal means and have done since primary school.
On the other hand as Richard Bryant points out in his excellent Blog Prudential are not completing documentation for annuities on wind-up where there are post 1990 GMPs. Prudential seem to get it – gender equality has been a requirement since 1990 and however much the industry may complain it will have to be addressed.
As my colleague David Davison has written recently on GMP Equalisation – this is not a complicated issue and in my earlier article I set out the practical steps for trustees needed to bring about the equalisation of GMPs.
Equal means equal and any modern pensions payroll system should be able to accommodate this. If trustees have accurate historic data and good administration software it is a relatively simple spreadsheet calculation. If not then there may be approximations required to ensure inequalities are eliminated and these approximations may add to the liabilities which is part of the price to be paid for poor data.
Brian Spence is a founder of actuaries Spence & Partners Limited and a director of independent trustee Dalriada Trustees Limited. You can follow him at @briandspence or @PensionsEndgame on Twitter or link to him on LinkedIn.