GMP equalisation means adjusting older final salary pensions so men and women are treated alike. A 2018 High Court ruling confirmed it is needed.

What guaranteed minimum pension equalisation means

Guaranteed minimum pension equalisation is the clean-up of an old unfairness. A contracted-out final salary scheme still owes at least the GMP for membership up to 5 April 1997, and the GMP rules can treat men and women differently. HMRC's guidance says schemes are required to remove that difference under their equal treatment obligations. Wondering whether a contracted-out pension of yours is affected? Completing the form on this page today gets your GMP questions unpicked by an FCA-authorised adviser, phoning you free.

HMRC lists three causes: men and women reach GMP age at different ages, the GMP builds up at different rates, and schemes often gave different revaluation or indexation to the part of the pension that the GMP underpins than to benefits above it. The Government Actuary's Department traces it back to the Barber judgment of May 1990; it affects pensions, GMP included, earned from 17 May 1990 to 5 April 1997. What a GMP is lives on its own page, and how to find yours is covered separately.

What the 2018 Lloyds Banking Group judgment required

The test case was brought by the trustee of three Lloyds and HBOS schemes and decided by Mr Justice Morgan on 26 October 2018 ([2018] EWHC 2839 (Ch)). The judge noted that the same issues arose in many other occupational pension schemes. His summary of conclusions is the heart of it:

"The Trustee is under a duty to amend the Schemes in order to equalise benefits for men and women so as to alter the result which is at present produced in relation to GMPs;"

— National Archives, Find Case Law, [2018] EWHC 2839 (Ch), summary of conclusions, read 26 October 2026

That summary also frees the trustee from the single method one side said was compulsory. Methods A and D1 were ruled out; B, C1 and C2 all gave equal benefits, and the banks could insist on C2. Converting GMPs into other benefits was lawful in principle but needed the banks' consent, not yet given. Other schemes choose their own method. On the past, the summary says beneficiaries "are entitled to receive arrears of payments due to them", and that arrears "should bear simple interest at 1% over base rate".

The Government Actuary's Department, writing in January 2024, put the effect this way: "The judgment means that no member can be worse off compared to someone of the opposite sex." Equalising means some members' benefits will need to be uplifted, at extra cost to the scheme.

What the 2020 judgment added for people who transferred out

A second judgment, handed down on 20 November 2020 ([2020] EWHC 3135 (Ch)), dealt with members who had moved their pension to another scheme. For transfers made under the cash equivalent legislation, the court held that the trustee "owed a duty to a transferring member to make a transfer payment which was correctly calculated and which reflected the member’s right to equalised benefits". Some transfers were too low. The trustee stayed liable for that, and a claim for an order that it belatedly pay the correct amount "is not time barred, either under the rules of the Schemes or under the Limitation Act 1980".

Members moved in a compliant bulk transfer now hold their benefits in the receiving scheme instead. For individual transfers made under a scheme's own rules, the judge said any breach of duty needed an investigation that the trial did not carry out. Those are findings on the schemes before the court; how your own transfer is treated depends on the scheme and the facts. Transfers are a topic in themselves, covered in how a transfer value is worked out.

What schemes have to do

HMRC's February 2020 newsletter states that "there’s no single method by which pension schemes can equalise benefits for the effect of GMPs", and that each scheme's trustees and employers decide. HMRC's guidance page recommends that schemes take their own legal advice. One option is GMP conversion, which turns GMPs into other scheme benefits under sections 24A-H of the Pension Schemes Act 1993.

In practice that means working out the adjustment to each member's pension. HMRC says schemes wanting individual or bulk GMP calculations to help convert GMPs can use its GMP Checker service. The Government Actuary's Department, which built a modeller to assess the effect on individual members, reported at the start of 2024 that many schemes had not finished.

What you might see: top-ups and back payments

A scheme working through equalisation may write to you with a revised pension figure, a payment for past underpayments, or, if you transferred out earlier, a top-up to the scheme that received your money. HMRC's April 2022 newsletter describes the transfer case: where a transfer was underpaid, administrators may decide the member has a right to a top-up transfer payment made to another pension scheme. It also allows a lump sum paid directly to the member if the conditions are met: up to £10,000 after a relevant accretion; up to £10,000 as a small lump sum, unless there was a transfer out in the previous three years; and up to £18,000 if the scheme is winding up (limits as printed in April 2022).

The arrears and interest findings were made for the Lloyds schemes. There, how far back arrears go was governed by the schemes' own rules: of five examples the judge was shown, four gave no arrears for the period more than six years before a claim, and the fifth left that period to the trustee's discretion. Your scheme's letter is where your own answer is, and an adviser can help you read it after a free call-back.

Before such a lump sum can be paid, the scheme has to find you. HMRC explains that the six-month window for a relevant-accretion lump sum starts only once the administrator has traced the member and obtained any necessary information or consents.

How HMRC taxes equalisation payments

HMRC's newsletters set out the tax treatment, and the figures here are as they print them. On back payments of pension, the February 2020 newsletter says the pension payer "is required to operate PAYE on the lump sum". But "the amount of pension income charged to tax is the amount of pension the member is entitled to in the tax year", so the tax taken under PAYE may be more than is due, and members can contact HMRC to have it put right.

For top-ups after a transfer, the April 2022 newsletter treats the right to a top-up as uncrystallised. Where a lump sum is paid to the member for it, "tax is due on 75% of the lump sum but not on the remaining 25%", in the tax year of payment, with PAYE operated. Both newsletters predate 6 April 2024, from which HMRC's pension schemes rates page records the standard lifetime allowance as abolished, so their lifetime allowance sections are out of date. Back payments can land in a tax year already crowded with other income, and an FCA-authorised adviser can size up yours after a call-back request.

Questions people ask about GMP equalisation

Is there a GMP equalisation calculator for members?

HMRC's checker and the Government Actuary's modeller are both built for schemes, as finding your own GMP explains for the checker. Your scheme works out the figures, and you can ask it for the basis it used.

Where can I read HMRC's GMP equalisation newsletters?

HMRC issued them in February 2020, July 2020 and April 2022, the last covering transfers corrected after the 2020 Lloyds judgment. The old GOV.UK addresses now open a general newsletters collection, so Sources links archived copies.

Do I need to claim anything?

If you think you were contracted out between 1990 and 1997 and have heard nothing, ask the scheme administrator; the final salary guide helps with the type of scheme. Puzzled by an equalisation letter? Jot your name onto the form on this page; that letter can then be talked through, free, once an FCA-authorised adviser has phoned you back.

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