A new industry group has been formed to help pension schemes following the High Court’s landmark ruling on the equalisation of guaranteed minimum pensions (GMPs).
The group will help develop and promote best practice on issues arising from the ruling, from how to address missing data through to dealing with transfer requests and rectifying underpayments.
The Pensions Administration Standards Association (PASA) is bringing together representatives from across the industry, including from the administration, legal, advisory, actuarial, data and trustee sectors.
The group will be chaired by Geraldine Brassett of PASA who 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 advisers, administrators, trustees and employers work collaboratively to ensure cost-effective delivery and clarity for scheme members impacted.”
David Fairs, Executive Director of Regulatory Policy, Analysis and Advice at TPR, said: “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 High Court ruled in October last year in the case of Lloyds Banking Group Pension Trustees Limited versus Lloyds Bank plc (and others).
The court said pensions provided to members who had contracted-out of their scheme must be recalculated to ensure payments reflect the equalisation of normal retirement ages in the 1990s.
The ruling effectively means thousands of defined benefit (DB) schemes will now have to amend their scheme rules and equalise GMPs between men and women.
However, the court did not set a definitive method for equalisation, noting that a number of methods are available for schemes.
TPR is the regulator of work-based pension schemes in the UK. Our statutory objectives are: to protect members’ benefits; to reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of TPR’s functions under Part 3 of the Pensions Act 2004 only).