Sixty-one per cent of pension schemes say they do not have sufficient data to equalise guaranteed minimum pensions (GMPs), according to research from Herbert Smith Freehills.
The survey comes in the wake of a High Court ruling on Lloyds Banking Group, which stated that men and women’s GMPs must be equalised. The survey also found that 53 per cent of respondents said the ongoing administration associated with paying equalised benefits as the biggest challenge with implementing the judgment, while 40 per cent think it will be incomplete data.
A further 17 per cent of respondents said that their scheme (or those that they advise) have decided to temporarily suspend transfers while they decide their approach. Despite the work involved, 78 per cent of respondents thought that the judge was correct to conclude that trustees need to equalise members' benefits for the effect of GMPs.
Commenting, Herbert Smith Freehills pensions partner, Samantha Brown, said: "It is unsurprising that so many schemes will face challenges with their data given how long ago the relevant benefits accrued and the fact that much of the data required to equalise benefits has not previously been relevant.
“The key question is what can trustees do where their records are inadequate? Depending upon the circumstances trustees may be able to make certain assumptions about the missing data, which they can then use to calculate members' equalised benefits. Alternatively, this could provide grounds for trustees to compromise members' claims which may actually be a helpful way of cutting through some of the complexity associated with equalising benefits."