GMPs were created due to contracting out, which meant DB schemes could prevent their members tripling up on pension benefits by building up a basic state pension – state earnings-related pension scheme – and an earnings-related occupational pension. In exchange for giving up Serps, both employees and employers paid less in national insurance contributions.
But as a consequence of the different treatment of men and women in state pensions being ruled discriminatory under EU law, in October 2018 the High Court ruled that trustees must also equalise benefits between women and men who have GMPs.
Both Mr Pennie and Mr Brooks said this had the potential to hit thousands of transfer clients.
Mr Pennie said: “There is a huge amount of work to review all CETVs over the past 30 years to identify where a GMP exists between 1990 and 1997.
“Schemes will then need to decide how these member benefits should have been equalised and identify all who have lost out financially.
“Thousands of people are expected to be impacted by this ruling and potential member compensation is estimated to range between a few pounds and, in a minority of extreme cases, tens of thousands.”
Mr Brooks added: “The numbers are hard to estimate but we know there have been over 500,000 transfers since 2015 (when DB transfers became very popular) and 25 years of transfers before that.
“We are easily considering hundreds of thousands of people affected.”
amy.austin@ft.com
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