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GMP Equalisation: Don’t Face It On Your Own

Wednesday, 27 January 2021

By Stewart Winter, Operations Director, Data Solutions, EQ (Equiniti)

For most defined benefit (DB) schemes, guaranteed minimum pensions (GMPs) are at best a major headache, and at worst, something to be fearful of.

But there is something every scheme should remember. Every scheme has to go through the GMP equalisation process, but you’re not on your own.

Stewart Winter Stewart Winter Operations Director, Data Solutions

Bringing in the big hitters

In order to get through this in one piece with the fewest sleepless nights, you will need people to help you.

Your actuaries will probably expect to do the heavy lifting. After all, they have the actuarial muscle and the badges showing they can do the difficult sums.

Your lawyers will also expect to have a big say in how you handle the process. And that’s fair enough, too, as they have all the chops when it comes to the law.

But they’re not the only ones to consider having onside when embarking on this important project.

Scheme and sponsor working together

It probably goes without saying that the trustees need to be involved at every stage of the process, but the sponsor also needs to be not only involved, but actively engaged with the process. There will be an awful lot of education and explanation required to get decisions made. It is much easier if everyone can be brought together to avoid duplication of effort.

Working in partnership will also help to ensure the messaging is consistent for all major stakeholders. But the simple reduction of sessions needed will save time, resources and – potentially – place the scheme in a better position for making important decisions.

Don’t forget the administrator

An excellent working relationship between scheme, trustees, sponsor and key trusted advisers is essential to achieve a successful outcome. But that’s not the whole team.

All too often, some schemes miss a trick by only bringing their administrators into a major project like this near the end. OK, you’re thinking: “He would say that, wouldn’t he?”. But let me explain why.


GMP equalisation is all about data and your administrator knows the scheme’s data better than anyone else. They have completed data projects with many other clients, even if they haven’t with your scheme, yet. They have a considerable amount of knowledge and experience to bring to the table.

From our point of view, we provide the scheme with a unique perspective. We are familiar not only with the data, but its weaknesses. We also have a deep understanding of the scheme’s structure and rules. We know that schemes don’t have bottomless pockets for projects such as this and can offer pragmatic and proportionate solutions for equalisation based on facts, not fears.

All in it together

A working party that has every key stakeholder, not only represented but engaged, can test the methodology regularly and consistently.

It can avoid the recriminations and finger-pointing that can be the result of exposing a potential problem late in the day.

Fostering a culture of partnership and collaboration will benefit the scheme in relevant experience across all areas, with everyone empowered to bring something important to the table.

Don’t wait to call in the A team, when the chance to build that powerful force is in your hands at the planning stage.