The Government Actuary’s Department (GAD) has developed a modeller to support pension schemes as they work towards fully equalising benefits for their members.

The modeller seeks to assess the individual member impact of equalising guaranteed minimum pensions (GMP) and the associated costs of addressing the inequalities.

GAD noted that, as scheme-specific circumstances differ, its modeller allowed it to provide bespoke GMP equalisation solutions depending on clients’ needs.

For example, it had helped one client complete its GMP equalisation, which enabled it to move to buyout and progress on winding-up the scheme.

“This was a complex project for the trustees and their advisers, as it was one of the first schemes to tackle GMP equalisation following the Lloyd’s judgment,” GAD stated.

“GAD advised the trustees on calculating compensations which were due to current members before their benefits could be bought out.”

According to GAD, its modeller helps determine the adjustments required to equalise individual pension amounts and understand the range of outcomes, and produced estimates of the additional liabilities to be included in funding assessments, either in regular actuarial valuations or accounting disclosures.

Through the tool, trustees and employers decide on the choice of method they want to adopt to equalise pensions, with the modeller aiming to inform the way pension administrators can most effectively approach the project work, including actions to address historic data gaps.

GAD actuary and project lead, Mark Shaw, commented: “Our modeller is an important addition to our work helping pension schemes understand their potential costs when it comes to GMP equalisation.

“It’s specific to each scheme, supporting with the full range of historic benefit remedying, including GMP rectification and equalisation.

“We understand every scheme is different and GAD has worked closely with clients who are addressing these issues. The modeller helps clients understand the impact of what this will mean now and to get equalisation done.

"If you would like GAD’s help with GMP equalisation or modelling pension scheme costs, then contact your usual GAD adviser.”

---