GMP equalisation festered for nearly 30 years before the High Court gave us some clarity, in the Lloyds Bank decision late last year. However, as so often in pensions, any answer tends to give rise to more questions and trustees now face several dilemmas.

Some issues are outside trustees’ control – we await HMRC’s position on tax consequences, and parliament’s, on any changes to the GMP conversion legislation. Other issues fall to trustees, though.

For example, how might they reshape benefits in a conversion exercise, to maximise the benefits of simplification without exposing themselves to the risk of member complaints by creating significant winners and losers?

Another issue – which goes beyond GMP equalisation – is the forfeiture question. Many schemes have forfeiture rules allowing unclaimed benefits to be forfeited after six years, often with a discretion to pay them if trustees choose. Lloyds established that most such rules extend to corrections of underpaid benefits, not just to pensions that have not been claimed at all.

Few pensioners will have proactively made a claim for GMP equalisation, so trustees have a dilemma over whether to enforce the forfeiture rule and not correct instalments that are more than six years old. Well-funded schemes with a strong employer covenant may choose to be generous. Others are not in such a fortunate position.

The same question must now also be asked whenever any underpayment comes to light. The job of a trustee has therefore become slightly more exposed.

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