The Association of Consulting Actuaries (ACA) has welcomed the Department for Work and Pension’s (DWP) GMP conversion guidance, but said that it is “imperative” that HMRC addresses the tax implications of GMP equalisation.

It noted that the guidance was the first step in achieving the “ultimate goal” of the simplification of the DB pensions landscape, but that there is a need for “significantly more detail” before work can begin.

Although it welcomed the DWP’s GMP conversion advice, it said that many schemes were still waiting for final confirmation of member records from HMRC, which needed to be addressed before the pensions industry can build on the guidance.

Commenting, ACA chair, Jenny Condron, said: “We believe that adoption of a model scheme structure to which benefits could be converted will offer many schemes the opportunity to achieve radical efficiencies.

“The resulting cost reductions in the ongoing administration, actuarial calculations and necessary legal advice will, we expect, be material.

“Risk management options will also improve, with better accuracy in hedging and potentially accelerated access to affordable buyouts.”

The DWP delivered the guidance on 18 April 2019, which detailed a 10-stage process that will offer a “roadmap” for trustees.

Condron concluded: “The ultimate beneficiary of such simplification is of course the member – with a better understanding of their DB and DC benefit entitlements and, with the implementation of pension dashboards to collate that information, they stand a better chance of providing for an adequate retirement income.

“Surely, that is a goal worth striving for.”

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