We mentioned in our November 2011 UK Pensions Update that the Pension Protection Fund (the "PPF") believes there is a legal requirement to equalise Guaranteed Minimum Pensions ("GMPs") in relation to pension schemes that are being assessed for PPF entry.
A recent newsletter published by the PPF confirms they have now undertaken a pilot with a number of schemes under assessment to calculate compensation in line with the method detailed in the PPF's November 2011 statement. The PPF is now satisfied that this methodology is fit for purpose.
The PPF will write to affected schemes to detail how the PPF expects the GMP method to be taken into account in the future. However, schemes should not change their approach until they have received this written confirmation from the PPF.
Whilst this is of particular interest to schemes under PPF assessment, the position for schemes outside PPF assessment remains under review, with further Government consultation on GMP equalisation expected in 2013.
The newsletter can be viewed by clicking here.