Pensioners owed up to £32,000 in GMP back payments

Pensioners could be owed as much as £32,000 in guaranteed minimum pension (GMP) back payments, with over half of affected schemes owing individual pensioners £10,000, according to analysis by XPS Pensions Group.

The firm has also revealed that all schemes so far owe at least one pensioner a minimum of £500, emphasising that GMP equalisation will affect almost every defined benefit (DB) scheme in the UK, and more than 5 million members.

XPS Pensions GMP equalisation lead, Vicky Mullins, commented: "As we produce GMP equalisation calculations for more and more schemes, we are getting a clearer picture of the amounts that are likely to occur.

“Although the largest payments are eye catching, it is also interesting that even schemes that consider themselves largely unaffected owe some pensioners over £500 each, cash which would be most welcome to many."

The findings follow the recent High Court judgment, which ruled that pension scheme trustees should revisit and, where necessary, top-up historic cash equivalent transfer values that were calculated on an unequalised basis if an affected member makes a successful claim.

Mullins added that whilst the supplementary judgment does not change what schemes need to do for their current members to correct their benefits, it does add a "whole new set" of members that need consideration.

She added: "Finding and communicating with these members may be difficult. Pensions schemes will need a process to find, verify and get payments to each of them.

"As schemes review their business plans for 2021, it is vital to ensure getting GMP equalisation done is firmly on the agenda to get these back payments paid to members promptly.”

XPS's analysis also follows warnings from Lane Clark and Peacock that companies could be met with an "unwelcome end-year headache" by having to adjust their 2020 accounts following the ruling.

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