55% of schemes on track for GMP equalisation by close of 2022

More than half (55 per cent) of trustees and employers expect to be paying pensions in payment on an equalised basis by the end of 2022 as optimism about guaranteed minimum pension (GMP) equalisation builds, according to Sackers.

The law firm, which obtained the information through a survey of employers and trustees, said the results showed that most schemes were acting and “optimism abounds”, despite the feeling that “GMP equalisation was an issue that might never end”.

Sackers partner, Janet Brown, commented: “There are clear signs that, even with resourcing demands being placed on the industry, the majority of schemes have GMP equalisation underway in some capacity. Aside from resource, the main challenges are data, tax uncertainty and a desire to get things perfect, in an imperfect world.”

Just over a third (34 per cent) of respondents said they had data gaps, but Sackers recommended that schemes compare their data requirements against the data they hold and working out how best to fill these voids.

Almost a quarter (24 per cent) of the schemes surveyed found tax uncertainty to be an issue, leading the law firm to point out that there remain “ways to get round tax concerns or simply lift out from the conversion exercise those members affected”.

Additionally, January saw the cross-industry GMP Equalisation Working Group (GMPEWG) issue further 'good practice' guidance for UK pension schemes, highlighting potential tax issues that may arise around GMP equalisation.

Brown concluded: “With people on the whole being optimistic about equalisation, it was interesting to see that in the survey responses of those considering GMP conversion, there was a clear majority for keeping the converted benefit as near to the existing structure as possible. Minimal interference in benefit design is the route to be taken by over 40 per cent of those considering conversion.

“With apologies to Kirsty and Phil’s Channel 4 Programme Love it or List It, whether you Love your GMPs (dual records) or List (convert) them, they are still a part of our pensions lives for the foreseeable future as GMP projects continue apace.”

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