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Eli Sanchez
Eli Sanchez


Many studies report few socioeconomic (SES) differences in health in youth, a pattern contrasting with that of health inequalities in childhood and adulthood. This paper focuses on the child-youth transition to examine the hypothesis of equalisation in health over this period. Specifically, we test two hypotheses: (a) that equalisation is more likely for health state measures (physical and malaise symptoms and accidents) than health status ([limiting] longstanding illness and self-rated health) or health potential (height), and (b) that the patterning of health over this period is similar between occupational (social class) and non-occupational (deprivation, housing tenure and family affluence) SES measures. Data are derived from the West of Scotland 11 to 16 cohort, followed from late childhood (aged 11) through early (13) to mid (15) adolescence. The results showed very little evidence of SES differences in (limiting) longstanding illness at any age for both sexes, while self-rated health exhibited some differentiation, and height (as expected) consistent gradients throughout. By contrast, among males evidence of equalisation was found for both physical and malaise symptoms and pedestrian road traffic accidents (RTAs). Among females, equalisation was confined to specific physical symptoms, pedestrian RTAs, sports injuries and burns/scalds, while for malaise symptoms a reverse gradient at age 11 strengthened with age. These patterns were generally unaffected by the SES measure used. We conclude that while some of the evidence is consistent with the equalisation hypothesis, it needs extending to accommodate patterns of no SES differences, and particularly reverse gradients, in childhood. These patterns may reflect the increasingly pervasive influence of youth culture, suggesting that in the UK the boundary between childhood and youth should be set at an earlier age. This in turn suggests that international comparisons have considerable analytic potential for identifying the conditions under which equalisation does and does not occur.


The equalisation rates provided allow investors to calculate these adjustments for each purchase that they make. In all cases, the equalisation rate to use will be the rate calculated on the dealing day as defined in the prospectus of the Fund or where that is not available, the most recent equalisation rate available prior to that date.

The High Court has issued a long-awaited follow-on judgment in the Lloyds Bank case. The judgment suggests that many transfer payments made since May 1990 will need to be topped up, to allow for GMP equalisation.

The original judgment left several questions unanswered. Chief among them was the position as regards past transfers-out. Where transfers had been made without allowing for GMP equalisation, what liability if any did the transferring trustees retain?

The Court held that, under the cash equivalent legislation, trustees had a duty to pay a correctly-calculated transfer value. This meant allowing for GMP equalisation. If the trustees had not allowed for GMP equalisation, such that there was a shortfall in a transfer value, then:

The Court held that, provided the trustees had met the requirements of the preservation legislation as to transfers without consent, they had been discharged under the legislation when the bulk transfers were made. Accordingly the trustees retained no liability in respect of GMP equalisation.

Under the rules of the Lloyds schemes, the trustees (or in one case the employer) had considerable discretion as to how non-statutory transfer values were calculated. Against that background, the Court held that a transfer value could not be said to have been incorrectly calculated merely because allowance had not been made for GMP equalisation.

Overall, equalisation systems have a range of impacts on inter-jurisdictional revenue inequality. Systems that have a robust cost-equalising component tend not to realise as great a reduction in inter-jurisdictional revenue inequality. In these cases, the Gini coefficient of per capita SCG revenues may remain the same or even increase after equalising transfers.

Among equalisation systems that reduce revenue inequality, the Gini coefficient declines by 8 percentage points on average after equalisation. This corresponds to an average reduction in fiscal disparities by nearly one-third after equalisation.

Mechanism design approaches to fiscal equalisation centre on reducing the incentive to suppress (or inflate) SCG revenues (or costs). Such approaches often entail the use of a representative tax system or standardised costs to compute equalisation entitlements. In the case of revenue equalisation, certain revenues may be entirely excluded from the assessment of SCG fiscal capacity in order to promote the development of own-source revenues.

Assessing the impact of cost equalisation presents unique challenges because its effects cannot be captured by straightforward measures of revenue disparity like the Gini coefficient. While cost equalisation aims to facilitate equitable access to public services across SCGs, this outcome is rarely assessed in the context of reviews of equalisation systems. Accordingly, there may be an opportunity to more closely connect cost equalisation to subnational performance benchmarking.

COVID-19 introduces a special set of challenges for equalisation systems which are not well adapted to responding to emerging, short-term crises (see Box 2.2). Many countries anticipate that despite the asymmetric impacts of COVID-19, equalisation payments will fall because they are tied to elastic revenue streams. In some cases, the asymmetries introduced by the pandemic will not be reflected by equalisation payments for several years due to the use of lagged variables in the underlying formulae.

Implementing a representative tax system (RTS) to avoid linking taxation choices to equalisation receipts. An RTS is a theoretical tax rate or set of rates which allows for the transparent computation of a hypothetic per capita revenue level for a given SCG. The RTS is feature common to many equalisation systems and is frequently linked to the average tax rate across all SGCs, as is the case in Australia, Canada and Germany for example.

Using inter-governmental transfers outside of the equalisation system to achieve well-defined policy goals, while equalising transfers remain non-earmarked. Where indicators may struggle to capture certain cost variations, or fundamental differences between regions make them incomparable, other transfers may be necessary to supplement equalisation. For example, in Australia, the Commonwealth Grants Commission noted that the challenges faced by indigenous communities could not be adequately addressed by equalisation alone.

Rewarding SCGs for increasing their own revenues while maintaining redistributive systems. Systems of imperfect equalisation are commonplace, allowing jurisdictions to benefit from increasing their own-source revenues, such as in Ireland. Countries with horizontal equalisation systems, such as Sweden and Germany, allow SCGs with above-average own-source revenue to retain some of their additional tax income according to a progressive schedule.

Fiscal equalisation refers to the transfer of financial resources to and between subnational governments with the aim of mitigating regional differences in fiscal capacity and expenditure needs. However, the determination of fiscal capacity and expenditure needs is not a straightforward task. OECD countries use widely varying mechanism design approaches in their equalisation systems. This paper compares national approaches, covering the three modes of fiscal equalisation: pure revenue equalisation, revenue/cost equalisation and gap-filling equalisation, describing the distinct impacts of each approach on subnational revenue disparities. A clear inverse relationship emerges between the size of the cost-equalising component within a system and the percentage change in subnational per capita revenue disparities after equalising transfers are applied, although no significant relationship emerges between equalisation and regional convergence.

The ruling also considered a variety of potential methods of equalisation and concluded that several were permissible, although the employer can require the trustees to adopt the method which involves the minimum additional liabilities (before allowing for administrative and implementation costs).

We issued a short update survey more recently, and the results are just in. From that survey, we can see that our clients have made progress with the review of the data that is essential to carrying out GMP equalisation calculations, and many trustee boards now have the benefit of a data analysis and review to take into the next stage of their projects. The complexity of the equalisation requirement, when considering the detail of the necessary benefit structure, together with specific benefit design quirks in the particular pension scheme, were regarded by our clients as challenges to be overcome.

In our legal work over the past three years, we have found that GMP equalisation projects, so far, have formed part of pension scheme end-game planning leading to insurance buyout. During the buyout process, GMPs have to be equalised, and so a number of our clients are currently carrying out equalisation projects as part of the wider buyout project, or in preparation for buyout that is expected within the next three to five years. Where pension schemes have longer to go before buyout, we think the GMP project may be further out, although from the pace of data gap review analyses currently being undertaken, it is clear that many pension schemes are now planning their equalisation.

The group brings together representatives from across the pensions industry, including legal, advisory, actuarial, data and trustees sectors, and is chaired by Geraldine Brassett of PASA. The primary objective of the group is to produce good practice industry guidance to support schemes in preparing for and then implementing GMP equalisation and potentially, for some schemes, conversion. 041b061a72


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