Statement on Equalisation for GMPs AND the application of a ...

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B.10 Back-paymentsB.10.1 Back payments fall into two categories:(a)Payments of PPF compensation after the Assessment Date (including during theassessment period)Where a scheme will transfer to the PPF, applying Modified Method (2) and the StatutoryMinimum is suitable for all payments after the assessment date, including those madeduring the assessment period. Where payments during the assessment period have notmet PPF compensation levels (including equalisation for GMP) the PPF must retrospectivelytop up pursuant to s161 and s163 of the Pensions Act 2004. S163 also requires interestto be paid at Bank of England base rates for any period of late payment.(b)Payments of pension before the Assessment DateS166 of the Pensions Act 2004 also requires the PPF to redress under payments in schemebenefits to which entitlement had arisen before the Assessment Date. Given the PPF'sview on the obligations arising as a result of the equal treatment rule imported into allscheme rules 11 , this top up requirement will be triggered where payment of such benefitshas not been made on a basis that accounts for equalisation for GMPs. For pensioners anddependants (where the scheme has not already equalised for GMPs prior to entering a PPFassessment period) a year on year (or more frequent) comparison of the male and femalepension prior to the Assessment Date also needs to be made, as envisaged by Method (2).S166 only provides for the PPF to redress entitlement to payments due under the schemerules before the assessment date. Adding interest on back-payments due prior to theAssessment Date, where the scheme rules did not include a provision requiring it can beseen to be going further than is required or permitted.Any shortfall between the actual pension paid before the Assessment Date and the higherpension applicable after equalisation for GMP should therefore be made as a one-offpayment, if applicable. Interest should not be paid unless the scheme rules required it.B.10.2 Back-payments may be due to the following: 12(a)(b)(c)(d)(e)Pensioners at the Relevant Time;Dependants at the Relevant Time;New pensioners who have retired between the Relevant Time and the date thescheme has been equalised for GMPs;New dependants between the Relevant Time and the date the scheme has beenequalised for GMPs; andHistoric members with no current entitlement, if applicable.Full details of the back-payments that may be due for the different categories of pensionerand dependants identified have been set out below.11 Previously by s62 of the Pensions Act 1995 and now by the Equality Act 2010.12 Note that, whilst the Board recognises that the equalisation process may give rise to a new entitlement for anon-pensioner to payment of an element of pension (because of the female GMP Age of 60), the Board hasdecided to add the appropriate late retirement factor, rather than assuming that the person would have broughttheir benefit into payment at the earliest opportunity. See B.3.4 for further details.27
(a) Pensioners at the Relevant TimeTimeline(1) (2)Date ofRetirement(DOR)RelevantTime(RT)Datecalculationsdone(DOC)Pensioners at the Relevant Time may be due back-payments both in respect of anyadditional scheme pension due prior to the Relevant Time and any additional PPFcompensation due after the Relevant Time for equalisation for GMP.As these relate to two different forms of benefit these two periods have been consideredseparately.(i)(ii)Additional pension due from DOR to RTAdditional compensation due from RT to DOC(i) Date of Retirement to the Relevant TimeBecause these underpayments are of scheme benefits (whose rate of revaluation/increasediffers between men and women), rather than PPF compensation, in theory the method tobe adopted should be a comparison of the payments made on a year by year basis (ormore frequently) with those that would have been made to a member of the opposite sexunder the scheme rules. At any time the higher benefit would be paid. However, the PPFwill consider pragmatic approaches which can act as a proxy for that approach (seeC.3.10).Interest for late payment covering the period from Date of Retirement to the RelevantTime should only be added if the scheme rules state this as a requirement. The interestadded should be in accordance with the scheme rules.No interest should be added to any shortfall in scheme payments to reflect the delay forlate payment from the Relevant Time to the date that the calculations are carried out.(ii) Relevant Time to date of calculationAny uplift in compensation covering the period after the Relevant Time relates to pre 5April 1997 service and therefore receives no increases in payment. The uplift at theRelevant Time is after application of the compensation cap, 90% multiplier (if applicable)and the application of the “admissible rules”. This will be zero for capped members.Interest, at Bank of England base rate (on a daily basis) from the date the compensationwas due should be added to the uplift in compensation due.(b) Dependants at the Relevant TimeBack-payments can be calculated in the same way as those for pensioners above withDate of Retirement replaced with the date pension became payable.28
Page 5 and 6: If you have any questions regarding
Page 8 and 9: A.4 Section 143 valuation requireme
Page 10 and 11: Combining information from several
Page 12 and 13: A.6 Schemes not included in the pil
Page 14 and 15: B.1 BackgroundB.1.1 Content of Part
Page 16 and 17: B.3 Statutory requirements for cont
Page 18 and 19: B.5 Interaction of the statutory re
Page 20 and 21: greater, no further adjustment is r
Page 22 and 23: For actives, the application of the
Page 24 and 25: B.7.4 Typically male deferred pensi
Page 26 and 27: B.8.3 Back-paymentsWhere pensioner
Page 30 and 31: (c) New Pensioners between the RT a
Page 32 and 33: C.1 Data requirementsFor members of
Page 34 and 35: C.3 AssumptionsThis section contain
Page 36 and 37: females joining the scheme after ag
Page 38 and 39: C.4 PPF Standard FormsThese forms c
Page 40 and 41: Form 1 - Active members at the Rele
Page 42 and 43: Generalised formula for male deferr
Page 44 and 45: Generalised formula for female defe
Page 46 and 47: 1 MGMP 65 = 0 if the member is aged
Page 48 and 49: Pensioner Form 3(b) - GMP only case
Page 50 and 51: GMP pensioners - use this section i
Page 52 and 53: Age at DOR = DOR - DOB (years and m
Page 54 and 55: PLUS applicable to pensioners who h
Page 56 and 57: Calculation of Accumulated Back-pay
Page 58 and 59: Calculation of uplift at Relevant T
Page 60 and 61: Uplift in Pension at Date of Retire
Page 62 and 63: C.5 Examples of theoretical calcula
Page 64 and 65: Active Example 1. Male active membe
Page 66 and 67: Form 1 - Active members at the Rele
Page 68 and 69: Statutory minimum test for NPA 60 t
Page 70 and 71: Deferred pensioner examplesThe exam
Page 72 and 73: Modified Method (2): Opposite sex c
Page 74 and 75: Adjustment to Pension revalued to t
Page 76 and 77: Generalised formula for male deferr
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Modified Method (2): Opposite sex c
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The revised NPA 65 tranche = total
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Generalised formula for male deferr
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Adjustment to Pension revalued to t
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Generalised formula for female defe
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Factors used in the form 2(a) for E
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eing a late retirement pensioner fo
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Pensioner NPA 60 trancheThe member
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Factors used in the Pensioner Form
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1 MGMP 65 = 0 if the member is aged
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Factors used in the Male Deferred P
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Example 5 - Member with tranches of
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Pre 97 Pension at Date retired from
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Back-paymentsThe member is entitled
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Pensioner Form 3(a) - not GMP only
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PLUS applicable to pensioners who h
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Pre 97 PPF compensation at Relevant
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Age at DOR = DOR - DOB (years and m
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Calculation of Accumulated Back-pay
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Pre 97 Pension at Date of LeavingPr
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2.8% and 3% are UK Guaranteed Minim
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Factors used in the Form 3(a) for E
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Factors used in the Form 3(a) for E
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Pensioner Example 6. Male pensioner
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Factors used in the Form 3(b) for E
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May use instead of standard calcula
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Back-payments Form 4(b) - GMP only
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Uplift at Relevant Time (before app
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Calculation of Accumulated Back-pay
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D.1 Factors for calculating opposit
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D.2 Questionnaire to gather scheme
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Early retirement information15. Did
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Late retirement from either active
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NPAFGMP DOLFemale Deferred Pensione
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e.g. 65 MGMP DOL = male GMP at date
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65 to RTEnter 1 if pension does not
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