In a written statement to Parliament on 28 January, Angela Eagle (Minister for Pensions), outlined the Government's basic position on the equalisation of guaranteed minimum pensions (GMPs) in the context of schemes which are transferring into the Financial Assistance Scheme (FAS). However, the Minister's comments are not necessarily limited to (and were not expressed to be purely in relation to) FAS issues. They can be viewed as having wider application.
Pending amending legislation, the Minister confirmed that "it is the Government's opinion that, in order to ensure full compliance with European law, trustees and others should act as if existing domestic legislation required equalisation in respect of differences resulting from GMPs whether or not real comparators exist." The Minister did not elaborate further on the scope, form or effect of this amending legislation (and it is also worth noting that reference to bringing forward amending legislation is subject to enough Parliamentary time being available). However, this is the clearest statement so far to indicate that the equalisation of GMPs is necessary, even where there are no comparators.
From a practical point of view, this gives rise to many problems for trustees, as there is no consensus on how best to equalise GMPs. Trustees who operate schemes containing unequal GMPs should take professional advice, especially where those schemes are currently undergoing actuarial valuations.