Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Equalisation definition

What does Equalisation mean? Equalisation is a fund‑accounting and distribution mechanism used by unit trusts, OEICs and other authorised funds to allocate income fairly between investors who buy or sell during a distribution period. As income from the fund’s assets accrues between distribution dates, it is reflected in the unit price/NAV. A purchaser therefore pays a price that includes accrued income. On the next distribution, the portion attributable to income accrued before acquisition is returned to that investor as “equalisation”, so that only the post‑acquisition element is treated as income. In UK practice (England & Wales, Scotland and Northern Ireland), equalisation is recognised in the...

Equalising Guaranteed Minimum Pensions: legal obligations, Lloyds rulings, permitted methods (B, C2, D2), arrears and interest, transfers, forfeiture and limitation, tax treatment, and PPF/public sector approaches

Published by a LexisNexis Pensions expert

Practice notes

What are guaranteed minimum pensions?

Guaranteed minimum pensions (GMPs) came into being on 6 April 1978, arriving at the very moment the State Earnings-Related pension scheme (SERPS) was launched. The legislation in force at the time — namely the Social Security Act 1975 and the Social Security Pensions Act 1975 — allowed an employee’s employment to be contracted out of SERPS provided particular conditions were met. In essence, those conditions required the employee to be enrolled in a pension scheme that promised to pay a pension of at least a guaranteed minimum amount. That guaranteed minimum was intended to match the pension the employee would otherwise have received under SERPS. Generally, it was expected that the benefits actually payable from the relevant scheme would exceed the GMP. The principal appeal of contracting-out was that, because the state would not be required to pay SERPS as well as the individual’s basic state pension (except where, in a specific case, the GMP proved lower than the SERPS entitlement would have been), a reduced rate of national insurance contributions became payable in respect of employees who belonged to a contracted-out scheme...

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Elizabeth Ovey

Radcliffe Chambers

Elizabeth has a general Chancery practice with particular emphasis on pensions (developing from the trust side of her practice) and on retail financial services (developing from an early specialisation in building society law). She also does a considerable amount of professional negligence work in these areas and other areas in which a Chancery background is of assistance.Her first substantial involvement in pensions law came when she was instructed in relation to a small miners’ pension scheme during the days of the miners’ strikes in the 1980s and she has done an increasing amount of pensions work since those days. She is a contributing editor of Halsbury’s Laws vol. 80 (Personal and Occupational Pensions) (2020). She is now on the Lexis PSL pensions section editorial board and is a contributor to Lexis PSL through a series of practice notes on various aspects of...

Web page updated on 21/05/2026

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