... Another long-standing question has related to the treatment of past transfers out. The receiving scheme needs confirmation that the GMP cost at 60/65 is covered by the reserved amount. The original judgment left several questions unanswered. If the GMP cost isn’t covered, the transfer can’t happen. GMP equalisation: High Court rules on past transfers 24 November 2020 The latest piece of the GMP equalisation jigsaw was handed down by the High Court on 20 November 2020, as part of the long-standing litigation relating to Lloyds Banking Group’s pension schemes. This issue affects transfers with GMP accrued from from May 17 1990 to April 5 1997, and paid before before the original GMP Equalisation court decision on 26 October 2018. Chief among them was the position as regards past transfers-out. GMP equalisation is one of the biggest current projects for DB pension schemes, and while a great deal of time has already been spent on this, few schemes are close to being fully equalised for the effects of GMP. Having to revisit past transfers out and in over the last thirty years will be no mean feat and will undoubtedly add to the time and cost involved in equalising for the effect of GMPs. Where transfers had been made without allowing for GMP equalisation, what liability if any did the transferring trustees retain? If the cost isn’t covered the transfer can’t go ahead unless the ceding scheme is willing to increase the transfer value to the point that it is covered. In some cases, transfers out will have consisted of the non-GMP element of a member's benefit, while the GMP was retained in the transferring scheme (for example, where the transfer was being made to a scheme which had never been contracted out). Four out of 10 pension schemes recognise the need to move quickly on the issue of GMP equalisation of historic transfers according to research by Aon. Resolving this aspect of GMP equalisation will not be at all straightforward. Complying with the judgment will present a range of … That question is addressed in the follow-on judgment. The third judgment in the Lloyds court proceedings on Guaranteed Minimum Pension (GMP) equalisation has now been handed down (Lloyds Banking Group Pensions Trustees Ltd v Lloyds Bank PLC & Ors [2020] EWCh 3135 (Ch)) (Lloyds 3).This covers the duty of pension scheme trustees to equalise past transfers out of the scheme. GMP equalisation and past transfers out is a complex area and the judgment raises a number of issues for trustees that will need detailed consideration as part of their GMP equalisation projects. A Guaranteed Minimum Pension (GMP) is the minimum level of pension that an occupational pension scheme has to provide for those employees who were contracted out of the State Earnings Related Pension Scheme on a salary-related basis, between 6 April 1978 and 5 April 1997. GMP is a minimum pension that employers were required to provide their members of final salary schemes who contracted out of the state second pension from 1978 until 1997. Will the number of transfer top-up claims be any more predicable than the weather – can we expect a blizzard or a light flurry? On the assumption that most transfer values are paid pursuant to the statutory power, trustees will need to consider the correction of historic transfers as part of their GMP equalisation exercises.

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