Forty per cent of UK pension schemes recognise the need to move quickly on the guaranteed minimum pension (GMP) equalisation of historic transfers where data is readily available, and before they get harder and increasingly complex, research from Aon revealed.

Of these schemes, a further 3 per cent of respondents identified the matter as urgent, whilst over half (52 per cent) of schemes stated that they preferred to focus on their existing members first, before addressing transfers.

The survey, which polled 300 pension schemes, also found that 93 per cent of all respondents had begun considering how they are going to incorporate historical transfer cases, those accrued from 17 May 199 to 5 April 1997 and paid before the original GMP equalisation court decision in October 2018, into their overall GMP equalisation project.

The findings follow the latest High Court judgment on GMP issues, which ruled that trustees of defined benefit (DB) schemes that provided GMPs should revisit and, where necessary, top-up historic cash equivalent transfer values (CETVs) that were calculated on an unequalised basis if an affected member makes a successful claim.

Aon partner, Tom Yorath, highlighted that the task of equalising three decades of transfers as “monumental”, acknowledging that many schemes are therefore looking for “pragmatic ways” to approach the exercise.

Furthermore, he emphasised that whilst it is encouraging to see that almost every scheme has begun to consider how they are going to tackle this, it is important to set a roadmap as early as possible to avoid timing and workload constraints.

Considering this, he warned that whilst it can be understood why the focus is not on historic transfers, with over half of the schemes considering a sequential approach, this could risk adding to the difficult, as members with whom the scheme is not in contact with move house or changes to their pension arrangements.

He continued: “The level of individual transfers has increased dramatically since the introduction of Freedom and Choice in 2015, and these recent cases should provide schemes with a reasonable level of data to calculate the top-up, contact the member and pay it faster and with greater ease.

“The remaining 7 per cent of schemes plan to tackle GMP equalisation of transferred members on an ad-hoc basis - which may be down to cost and bandwidth.

“However, given the complexity in dealing with the cases individually, an ad-hoc approach may end up being more expensive than managing cases through a bulk exercise.

“Although I recognise that schemes may have a few very historic cases with little or no data - for which a reactive approach can be the only option - trustees may find that for many schemes a bulk exercise targeted at cases with readily available data, may end up being the most cost-effective way to comply with the ruling.”

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