The Government has issued a plea to the pensions industry for help devising a solution for equalising guaranteed minimum pension payments between men and women.
GMPs are the minimum level of pension an occupational scheme must provide to people who contracted-out of the state earnings related pension scheme between 6 April 1978 and 5 April 1997.
The issue of how to equalise GMPs, and whether pension schemes are required to do this, has divided industry opinion for over 20 years.
The Government believes the Barber judgement of May 1990 means all schemes are required to treat men and women equally in relation to their pension rights. It says the ruling covers any pension accrued from the date of the judgement, including GMPs.
In January 2012, the DWP published a consultation setting out a possible method for equalising GMPs. But a joint letter from seven influential trade bodies, including the ABI and the NAPF, urged pensions minister Steve Webb to reconsider the proposed method, which they said is complicated and would cost schemes around £13bn.
The DWP has now published an interim response to the consultation asking experts for help in agreeing guidance on how to equalise GMPs.
Syndaxi Chartered Financial Planners managing director Robert Reid says: “Any solution will be a nightmare for pension schemes because calculating GMPs is incredibly complex.”