Methods explained
Choosing the right equalisation method for you
There is a choice of 3 key methods to equalise for GMPs
- Method B: Higher of member and comparator at all times
- Method C2: Cumulative calculation from retirement
- Method D2: Using GMP Conversion
Our video explains how these work in practice.
Method C2 is the 'default' under the Lloyds judgment but also the most complex to administer.
LCP insight:
- Method B is in theory more expensive but we have found in many cases the extra cost is tiny and outweighed by the relative simplicity and administrative cost savings of method B.
- Complete the initial arrears calculations for existing pensioners before making a final choice on method, so you can see what methods B and C2 would really mean in practice.
- Method D2, using GMP conversion, can provide wider simplification but is a significant project so there needs to be a clear justification.
Choosing the right equalisation method for you
There is a choice of 3 key methods to equalise for GMPs
- Method B: Higher of member and comparator at all times
- Method C2: Cumulative calculation from retirement
- Method D2: Using GMP Conversion
Our video explains how these work in practice.
Method C2 is the 'default' under the Lloyds judgment but also the most complex to administer.
LCP insight:
- Method B is in theory more expensive but we have found in many cases the extra cost is tiny and outweighed by the relative simplicity and administrative cost savings of method B.
- Complete the initial arrears calculations for existing pensioners before making a final choice on method, so you can see what methods B and C2 would really mean in practice.
- Method D2, using GMP conversion, can provide wider simplification but is a significant project so there needs to be a clear justification.
LCP insight:
- Method B is in theory more expensive but we have found in many cases the extra cost is tiny and outweighed by the relative simplicity and administrative cost savings of method B.
- Complete the initial arrears calculations for existing pensioners before making a final choice on method, so you can see what methods B and C2 would really mean in practice.
- Method D2, using GMP conversion, can provide wider simplification but is a significant project so there needs to be a clear justification.
LCP insight:
- Method B is in theory more expensive but we have found in many cases the extra cost is tiny and outweighed by the relative simplicity and administrative cost savings of method B.
- Complete the initial arrears calculations for existing pensioners before making a final choice on method, so you can see what methods B and C2 would really mean in practice.
- Method D2, using GMP conversion, can provide wider simplification but is a significant project so there needs to be a clear justification.
Complete the initial arrears calculations for existing pensioners before making a final choice on method, so you can see what methods B and C2 would really mean in practice.
Method D2, using GMP conversion, can provide wider simplification but is a significant project so there needs to be a clear justification.
Digging into the detail
The pension schemes that say they will use method C2 are mainly early in the process.
Those in the survey that have calculated arrears and are close to implementation for future payments have mainly used methods B or D2.2.
Initial indication of the method to be adopted
to equalise for future payments
Case studies
GMP conversion after full buy-in
We helped the trustees equalise for GMPs to enable them to wind up the pension scheme quickly and efficiently whilst managing the pensions tax position for individual members
We helped the sponsor and trustees bridge the gap to buy-out using GMP conversion combined with a Pension Increase Exchange (PIE) exercise.
We helped the trustees of a pension scheme select the equalisation method that was right for them based on cost, risk and member understanding.
How we helped the trustees of the Telefonica UK Pension Plan implement GMP equalisation “Method B”.
GMP conversion after full buy-in
We helped the trustees equalise for GMPs to enable them to wind up the pension scheme quickly and efficiently whilst managing the pensions tax position for individual members
GMP conversion after full buy-in
We helped the trustees equalise for GMPs to enable them to wind up the pension scheme quickly and efficiently whilst managing the pensions tax position for individual members
We helped the sponsor and trustees bridge the gap to buy-out using GMP conversion combined with a Pension Increase Exchange (PIE) exercise.
We helped the sponsor and trustees bridge the gap to buy-out using GMP conversion combined with a Pension Increase Exchange (PIE) exercise.
We helped the trustees of a pension scheme select the equalisation method that was right for them based on cost, risk and member understanding.
We helped the trustees of a pension scheme select the equalisation method that was right for them based on cost, risk and member understanding.
How we helped the trustees of the Telefonica UK Pension Plan implement GMP equalisation “Method B”.
How we helped the trustees of the Telefonica UK Pension Plan implement GMP equalisation “Method B”.