There will be no legislation on guaranteed minimum pension (GMP) equalisation until 2014, according to Pensions Minister Steve Webb. In a recent speech he said that the Government will not make any announcements on GMP equalisation until spring 2014, when a package of legislative changes will be proposed.
The DWP’s January 2012 consultation (see that month’s Pensions Update) included a draft method for equalising GMPs, which met with widespread criticism by the industry on the grounds that it would be complex and expensive for schemes. We understand that the DWP is trying to find a simpler solution and that it may revisit the legislation on converting GMPs into normal scheme benefits.
The delay will give ongoing schemes more time to get their data in order ready for equalisation, as most schemes will want to wait until next year in the hope that any new method is indeed simpler. However, many schemes which are currently in wind-up will need to decide for themselves how to equalise if they are to meet the Pensions Regulator’s two-year deadline for completing the winding-up process – although they could consider approaching the Regulator to enquire whether there is any scope for waiting until the legislation has been clarified. However, even if the Regulator is amenable to this, it is likely to require that all steps other than GMP equalisation are completed within the usual timescale.
