GMP working group releases equalisation advice

The Guaranteed Minimum Pension Equalisation Working Group (GMPEWG) has published guidelines for scheme managers, trustees and sponsors on how to traverse equalising benefits, urging schemes to take action.

In its Call to Action paper, the cross-industry group encouraged schemes to begin working now on understanding and progressing with GMP reconciliation, reviewing their quality of data, and managing impacted transactions, including preparing for future transactions.

The Call to Action sub-group chairs, Lynsey Ellis, Akash Rooprai and Geraldine Brassett, stated: “Equalisation has the potential to be a highly complex project for many schemes.

“We felt all stakeholders in the operation of a scheme could benefit from some information and guidance to help them take the first step on this journey. This Call to Action aims to provide exactly that kind of assistance to the industry.”

The GMPEWG called on all stakeholders to work together to help the plan succeed, and noted that, although its a complex project, the total cost to schemes and members could be “relatively modest”.

The publication encouraged the industry to ensure that its guidance seeks to identify good practice in the planning, management and efficiency of the project, while recognising which aspects would be scheme-specific, and which would be common to all.

The Pensions Regulator executive director for regulatory policy, analysis and advice, David Fairs, welcomed the publication, as it “provides trustees and their advisers with practical guidance on how to take the first steps in meeting GMP obligations.”

He continued: “Taking early action will help trustees to be in the best possible position to deliver this complex work.”

Buck head of retirement in the UK, Vishal Makkar, also welcomed the Call to Action, but warned that there “is still a lot more to do to ensure pension schemes fulfil the requirements of GMP equalisation”.

He added: “We recognise that GMP equalisation has the potential to be a complex, costly and time-consuming project.

“We are dedicated to helping trustees plan for GMP equalisation, so it’s great to see this latest guidance supporting those in charge of managing schemes in the same way.”

The Call to Action will be followed up with a guidance paper on the relationship between GMP rectification and equalisation. Later this year the first version of full guidance documents for data, impacted transactions, methodology, and tax will also be issued.

The GMPEWG is a cross-industry group chaired by the Pensions Administration Standards Association.

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