The GMP Equalisation Working Group, a cross party body, has issued its latest guidance for pension schemes.
This new guidance relates relates to making corrections as a result of GMP reconciliation, known as GMP rectification. The guidance recommends four steps for trustees to undertake to ensure they make the right decision for their scheme:
- Understand the data: the number of members requiring rectification and how this population overlaps with those in scope for GMP equalisation;
- Understand the nature and timing of the task: when to rectify benefits, the potential approaches available and how the rectification project dovetails with the work required for GMP equalisation;
- Consider the impact on members: who are in scope for GMP rectification of any delay whilst finalising the equalisation project;
- Document and consider the scheme’s position: This focusses on the factors that will influence the decision about when to undertake rectification for those also impacted by equalisation.
The GMPEWG is chaired by the Pensions Administration Standards Association through Geraldine Brassett, who leads PASA’s own GMP Working Group.
It was formed following a high court case that rules DB schemes have to equalise GMP benefits between men and women.
Brassett says: “In the past, schemes would have undertaken GMP rectification once the GMP reconciliation was complete or nearly complete.
“However, the need to also undertake a project to equalise benefits for the effects of GMP may result in schemes questioning whether to undertake their GMP rectification exercise once reconciliation is complete or defer this and combine it with the GMP equalisation project
“There isn’t a ‘one size fits all’ answer to this question, it’s a scheme specific decision. The starting position should be that GMP rectification should be progressed in a reasonable timeframe. In cases where GMP rectification is delayed in order to combine it with GMP equalisation, the evaluation of the impact of doing so and the rationale for deferral should be clearly documented.
“This new guidance will help trustees ensure they can be fully satisfied all members in scope are rectified and, where necessary, equalised at the right time.”
This ‘When to Rectify’ guidance is available online. Further important information on GMP rectification and reconciliation is contained in the existing PASA guidance which can be found at: https://www.pasa-uk.com/guidance/gmp/
The post New guidance on GMP rectification appeared first on Corporate Adviser.
