A new industry group has been formed to aid pension schemes navigation of the High Court’s ruling on guaranteed minimum pensions (GMP) equalisation.
The group will focus on promoting “best practice” on issues arising from the ruling on issues including missing data, transfer requests and rectifying underpayments.
The Pensions Administration Standards Association (PASA) will aim to bring together representatives from the legal, administrative, advisory, actuarial, data and trustee sector to tackle the issues.
On 26 October 2018, the High Court ruled that Lloyds must now equalise pensions benefits for men and women, which could cost the bank up to £150m, in a case that set a precedent for thousands of companies.
PASA board member and chair of the GMP working group, Geraldine Brassett, said: “We recognise the value that best practice guidance on GMP equalisation will provide and are pleased to lead this cross industry initiative.
“GMP equalisation projects are likely to be complex so it is important that advisors, administrators, trustees and employers work collaboratively to ensure cost-effective delivery and clarity for scheme members impacted.”
The Pensions Regulator said it will play an "observational role" to ensure industry best practice aligns with its "regulatory expectations and requirements".
The working group will hold its first meeting at the end of January, in which it plans to outline its initial terms of reference and scope.
PASA and TPR have invited independent trustees and trustee advisers to deliver their perspective. The group hopes to produce guidance documents for trustees and other stakeholders to use.
TPR executive director of policy analysis and advice, David Fairs, added: “Delivering GMP equalisation will be challenging and we welcome this initiative to bring clarity to the market.
“It will take some time to work through all the issues. Establishing best practice will help industry do this as efficiently as possible, and minimise disruption to routine scheme business.”
The Department for Work and Pensions is expected to issue guidance on the suggested methodology schemes should use to implement equalisation “shortly”.
The support for pension schemes is likely to be well received by the industry, which has been widely split on how best to implement the ruling.
Despite this, schemes have been quick to assess the impact of the ruling, and yesterday Taylor Wimpey estimated that the equalisation process will increase its DB pension scheme liabilities by £15-20m.
In December, Dixons Carphone estimated that the High Court ruling could increase liabilities by 18m, while Stage Coach put the cost at £24.2m.
Compass Group estimates it would cost them between 1-2 per cent of liabilities, around £20-40m.