Pension trustees continue to grapple with Guaranteed Minimum Pension (“GMP”) equalisation more than 6 years after the Lloyds judgment. Calculating comparator benefits is difficult enough: if a member has changed their gender this adds another layer of complexity. To equalise benefits, trustees have to balance the legal requirements of the Equality Act 2010, the Gender Recognition Act 2004, and the Lloyds judgment.

Gender Recognition Certificates

A Gender Recognition Certificate (GRC) is a certificate legally recognising a person’s acquired gender. Anyone whose gender identity does not match the gender on their birth certificate can obtain one. When a GRC is issued, a person’s gender changes for all purposes from that date forward.

Discrimination and pension schemes

Under the Equality Act 2010, trustees cannot discriminate against members based on their gender (sex discrimination) or based on gender reassignment (gender reassignment discrimination). This includes a member living as the opposite gender, whether or not they have a GRC or have pursued any treatment.

On 16 April 2025 the UK Supreme Court ruled that for the purposes of the Equality Act 2010, “sex” means “biological sex”, so that sex discrimination is by reference to someone having been born male or female (as opposed to their acquired sex/gender based on a GRC). This ruling does not change the provisions of the Gender Recognition Act 2004, and does not change the fact that a trans person will be protected under the Equality Act 2010 through the protected characteristics of gender reassignment as well as sec based on their perceived sex. It does, however, have potential wide-ranging impacts for other sex-based discrimination issues.

Most pension schemes have already addressed Barber sex discrimination issues. Members are unlikely to see any change to their total benefit if they obtain a GRC. But there are elements of benefits which remain unequal. These include state pension deductions, actuarial factors and, most importantly, GMPs.

Gender Transition and GMP Equalisation

A person’s gender changes for all legal purposes from the date of their GRC. But there are exceptions for GMP.

If a person with GMP has a GRC, under the Gender Recognition Act 2004:

• Accrued GMP remains unaffected. A person who accrued GMP as a male keeps the same £ and p amount of GMP, even if their GRC confirms their gender is female.

• Depending on their age, there may be a change to their GMP age:
  • Members under 60 at their GRC Date: GMP age corresponds with acquired gender, e.g. the GMP for a male transitioning to female would be revalued to and payable from age 60.
  • Members over 60 and under 65 at their GRC Date: If the GRC shows a change from female to male, GMP age will be 65. If the GRC shows a change from male to female, their GMP age will be their GRC Date and any payments of GMP between 60 and their GRC Date are to be disregarded.
  • Members over 65 at their GRC Date: GMP age remains unchanged (i.e. no effect on GMP).

Why does this matter?

This matters because women accrued GMP at a higher rate than men to reflect the fact that the benefit could only be accrued until age 60. A person who accrued a male GMP before acquiring a GRC will, all other things being equal, have a lower GMP than if they had accrued a female GMP.

The Lloyds judgment requires trustees to compensate for unequal GMPs and make sure male and female benefits are the same. Equality legislation also requires trustees to treat a person with a GRC the same as a person who had not transitioned.

How can trustees achieve both at the same time?

Who is our comparator for GMP equalisation purposes?

Alex, aged 55, has a GRC confirming a gender transition from male to female.

The Gender Recognition Act tells trustees that Alex is female, and that Alex has a male GMP with a (female) GMP age of 60.

The Lloyds judgment tells trustees to compare Alex’s benefits at the date of GMP equalisation against their opposite sex comparator.

To comply with both the Gender Recognition Act and the Lloyds judgment, trustees must compare Alex’s benefits against a male member with GMP who will have a GMP age of 65.

BUT…

• Had Alex not transitioned, their opposite sex comparator would be female, with female GMP and a GMP age of 60.

• Had Alex been born female and transitioned to male, their comparator (for GMP equalisation purposes) would have a female GMP with a GMP age of 60.

Do trustees have to consider these additional comparators? At the moment, we don’t think so.

An argument could be made for indirect discrimination in respect of the first case as Alex is potentially being treated less favourably than female members who have not transitioned. This is because Alex will have accrued GMP at a lower rate as a male member. However, this discrimination is not unlawful as it can be objectively justified on the basis that the trustees are simply applying their obligations under statute. The Gender Recognition Act is clear: Alex is female, but Alex’s GMP remains male.

As for the second case, there is also currently no case law or legislation which requires trustees to treat people equally with those who have transitioned the opposite way. However, we understand that there are discussions ongoing in Government which may change this position.

Does the Supreme Court ruling change this conclusion?

No. The Supreme Court ruling on 16 April says that for the purposes of sex discrimination under the Equality Act, Alex’s comparator would be a female. However, in the context of GMPs, the Gender Recognition Act clearly tells trustees how to treat GMP where a person has a GRC, and the ruling does not cut across this legislation.

What is the message for trustees?

Equalisation calculations are commonly completed on a bulk basis and GRCs are relatively rare. In practice, trustees will have no choice but to use a comparator based on a member’s gender on record at the time they are doing the calculations. This is also what the legislation currently tells trustees to do. But if a member has a GRC, trustees should understand the nuance and risk of uncertainties over the comparator.