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GMP equalisation through conversion

11 June 2019

  • Most defined benefit (DB) pension schemes in the UK are affected by the High Court decision in October last year that schemes must equalise for the unequal effect of guaranteed minimum pensions (GMPs) on men and women.
  • The equalisation required is complex, and may be achieved by a number of different methods.
  • One approach to equalisation is to equalise actuarial values of future benefits and to use existing legislation to convert GMPs into other scheme benefits.  The converted benefits will be subject to the scheme rules and to legislation concerning "mainstream" (non-GMP) benefits.
  • The DWP has recently issued guidance on how it envisages the conversion process working.  The guidance follows extensive deliberation with industry participants, including Hogan Lovells.

This note sets out the DWP's approach to GMP conversion and highlights some of the issues trustees and employers should consider before undertaking a conversion exercise.

Click here to read the full briefing. 

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