Angela Eagle GMP equalisation written statement - LCP reaction (28/01/2010)

Jeremy Dell, Partner at Lane Clark & Peacock said:

"In requiring schemes to adjust their benefits for unequal GMPs today Angela Eagle has required pension schemes to do the practically impossible. She is asking them to find a solution to a problem that has remained intractable for the past 20 years.

We have great concerns in these straitened times, when trustees are wrestling with large deficits as a result of once in a generation events, that this is a very unwelcome distraction that would add significantly to their costs without any material benefit to pension scheme members (male or female).

Given that GMPs were designed to reflect SERPS benefits, which are still not equal between the sexes, it is vital for government to provide guidance for trustees and their advisers on how to adjust their benefits. The industry has been asking for this for 20 years and not yet received a response."

Note to editors:
Until 1997, the Guaranteed Minimum Pension ("GMP") was the minimum pension that a scheme was required to provide a member in return for contracting out of SERPS. It is designed to be very similar to the benefits payable under SERPS. The introduction of equality legislation in the early 1990s required schemes to equalise benefits for male and female scheme members, but there has been no consensus to date on the appropriate methodology for equalising them for unequal GMPs.