DWP consults over the equalisation of GMPs

The Department of Work and Pensions is consulting on proposed regulations which would introduce an express statutory requirement to ensure that men’s and women’s benefits are equalised so as to iron out any differences attributable to guaranteed minimum pensions (GMPs). 

The effect would be to require a man’s benefits to be levelled up to those of a notional woman with the same age and service history (if her benefits would have been greater), and vice versa. This would be a complex exercise for schemes, with considerable costs and administrative implications. Many schemes would face the additional problem of having insufficient employment records to be able to carry out this work. 

The Government states that the draft regulations are “only changing domestic legislation to reflect [EU case law] … thereby codifying a scheme’s existing obligations in EU law into UK law”. However, that analysis of the proposals is based on a questionable understanding of current EU law:

  • The consultation is based on the premise that it is well-established that European law already requires benefits to be equalised for GMP differences. In fact there is no binding legal decision to that effect, and the arguments against there being such a requirement have never been fully addressed.
  • The consultation document also says that a member is entitled to this “levelling-up”, even if there is nobody of the opposite sex who has been treated better. This goes directly against the equalisation decisions of the 1990s. The DWP appear to be basing their view on a passage from a European Court decision in 2004 (Allonby v. Accrington & Rossendale College), involving very different issues. 

We will be making a formal submission to the Government about these proposals. In the meantime, the links to the consultation document and draft regulations can be found on this page. The deadline for responses is 12 April 2012.