The Government has published its response to its 2008 consultation on the draft Occupational Pension Schemes (contracting-out) (Amendment) Regulations 2009. These draft regulations set conditions for converting member’s Guaranteed Minimum Pensions (GMPs) into scheme benefits. For background please see EPB bulletin 10 September 2008.
In its response to the consultation the Government makes a number of comments including the following:
- there are no plans to make GMP conversion a statutory requirement; and
- legislation will not restrict onwards transfers for scheme benefits derived from GMPs. The Government comments that “When a scheme has converted GMPs, it will be for the trustees to decide whether they are willing to accept a GMP transfer into the scheme or alternatively whether they seek to convert the GMP on entry into the scheme”.
In our response to the consultation we commented that a key concern was that conversion will force schemes to equalise benefits as a result of unequal GMPs, crystallising the cost.
The Government in response to such concerns about equalisation has said that in the Government’s view the Barber judgement requires schemes to ensure overall benefits that arise from rights accrued from 17 May 1990 are the same for men and women. It further comments that “It is the Government’s position that the GMP is not a separate pension but a calculation factor in determining overall benefits and this does not have to be separately equalised.”