GMP equalisation rises top priority for pension schemes

GMP equalisation is now the top priority for nearly six in 10 (58 per cent) pension professionals over the next 6-12 months, according to research from Equiniti.

This represents a sharp jump from this time last year (2018), when just 13 per cent said that it was top of their priority list.

GMP equalisation has grown as an issue for schemes since the High Court ruling on Lloyds Banking Group, which stated than men and women’s GMPs must be equalised.

GMP reconciliation was named as the second most important project, with 45 per cent citing it as a top priority, while 23 per cent said that working towards a buy-in or buyout was on their to-do list, following a record year for bulk annuity deals.

Despite the increased focus on GMPs, 19 per cent of professionals surveyed said that they had little to no knowledge of the current legislation on GMPs.

Equiniti propositions and solutions director, Chris Connelly, commented: “Pension schemes have had GMP equalisation looming over them for years now. Wednesday’s news that a second hearing on past pension transfers in the Lloyds case will be scheduled in 2020 is likely to extend the saga.

“However, it is no excuse for firms to continue postponing the problem – they must start assessing their data and getting on with the corrections that they will inevitably have to carry out.

“In its business plan, The Pensions Regulator (TPR) stressed the importance of record keeping and how it intends to focus on those schemes who are not taking data quality seriously. We can infer that it will not be long before the regulator includes schemes who are not making significant progress on their GMP equalisation.”

Equiniti also found that 58 per cent of respondents were planning to embark on a project to improve their scheme’s TPR score, despite the value of robust data and processes for GMP and de-risking solutions.

Connelly concluded: “Good data is absolutely critical, yet it remains an undervalued aspect of scheme management.

“Given the timescales involved, many schemes may have changed platforms or administrators, and may not have easy access to some of this data if they have not already gone through their rectification cases.

“Some schemes may encounter huge problems causing major time delays and financial outlay if they don’t work on these fundamentals. It will also carry a significant impact on their ability to achieve a long-term goal of buy-out which remains a major focus for trustees, as these figures reveal.”

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