Trustees have been warned not to “unreasonably delay” the equalisation of guaranteed minimum pensions (GMPs) following a recent decision by the Pensions Ombudsman.
The Ombudsman awarded a member of the Volkswagen Group Pension Scheme, known as Mr N, £500 in compensation for a failure to keep them updated with the progress of GMP equalisation for the scheme.
The Pensions Ombudsman stated that “failure to keep Mr N informed on progress, even if there was not a great deal to report, would have continued to cause him unnecessary distress and inconvenience”.
It acknowledged that there was no prescribed deadline for pension schemes to complete GMP equalisation.
It added that the pensions industry faced “significant demand” while undertaking GMP equalisation, with only “finite resources to meet that demand”.
Paul Ashcroft, senior associate at law firm Wedlake Bell, said: “Trustees should be mindful not to unreasonably delay the equalisation process and not to delay issuing updates and communications, including to those who are no longer scheme members (even if trustees may feel there is nothing much to report).”
The Ombudsman said the Volkswagen scheme’s trustee board had otherwise taken appropriate action by working closely with the employer and professional advisers to develop and adopt an appropriate methodology for calculating GMP redress.
The member had complained to the Ombudsman that the trustee board did not have a satisfactory plan to issue revised GMP equalisation calculations to members.
GMP represents the minimum guaranteed level of pension that a scheme was required to provide to members who were contracted out of the state earnings-related pension scheme between 1978 and 1997. Men and women were treated differently due to differences in the state pension age at the time.
However, High Court rulings in 2018 and 2020 relating to the Lloyds Banking Group pension scheme declared that schemes were required to equalise benefits for men and women.
Since then, pension schemes, administrators and consultants have been working to understand the implications of the ruling and to calculate and pay redress to members affected.
