PASA publishes guidance on GMP pension equalisation
30 Sep 2019
The cross-industry GMP Equalisation Working Group launched by The Pensions Administration Standards Association (PASA), has published a guidance note outlining methods that schemes can use to equalise pensions to address the sex-based inequalities of Guaranteed Minimum Pensions (GMPs)
30 Sep 2019
This follows the outcome of the Lloyds pension equalisation case which also impacted the Pension SORP's accounting treatment of GMP.
The guidance also suggests how schemes should deal with common issues that can arise when implementing an equalisation project and puts forward good practice suggestions as to how schemes may achieve GMP equality.
This follows on from the Group's call to action in July which encouraged pension schemes to take immediate steps in preparation for implementing GMP equalisation.
Duncan Buchanan, chair of the sub-group responsible for preparing the guidance, said: ‘The Court's judgment in the Lloyds Bank case last October means schemes know for sure that they must adjust members' benefits to correct the inequalities in GMPs between males and females earned in the period 17 May 1990 to 5 April 1997.
‘While the Court helpfully approved a number of methods to achieve GMP equality, many technical issues remain unanswered. These issues are unlikely to be subject to judicial consideration but need to be addressed by schemes implementing GMP equality.
‘For most pension members any changes to benefits will be modest and not all members will need an adjustment.’
David Fairs, executive director for regulatory policy at The Pensions Regulator added: ‘Choosing a methodology, and tackling some of the more complex, technical issues, are critical steps in achieving GMP equalisation.’
Further guidance from the GMP Equalisation Working Group will be issued in the coming months covering data, impacted transactions and tax. The Group plans to update its guidance in the future to reflect developments such as the outcome of the next instalment of the Lloyds Bank case and any guidance from HMRC on tax implications.