The UK’s Pensions Regulator (TPR) is backing an industry working group set up to help deal with the burden of equalising legacy pension payments following a ruling last year.
The Pensions Administration Standards Association (PASA) has convened the group, which will discuss issues arising from October’s High Court ruling on guaranteed minimum pension (GMP) payments.
According to a statement issued by the regulator this morning, PASA’s group aimed to “develop and promote best practice on issues arising from the ruling”, including dealing with missing member data, responding to pension transfer requests, and addressing underpayments.
David Fairs, executive director of regulatory policy, analysis and advice at TPR, said: “Delivering GMP equalisation will be challenging and we welcome this initiative to bring clarity to the market.
“It will take some time to work through all the issues. Establishing best practice will help industry do this as efficiently as possible, and minimise disruption to routine scheme business.”
PASA’s Geraldine Brassett, chair of the new working group, added: “GMP equalisation projects are likely to be complex so it is important that advisers, administrators, trustees and employers work collaboratively to ensure cost-effective delivery and clarity for scheme members impacted.”
The UK High Court ruled in October that GMP payments accrued between 1990 and 1997 must apply equally to men and women, meaning schemes faced having to revisit 30 years’ worth of records and potentially pay billions to members who missed out.
GMP payments were introduced as a way of ensuring that DB scheme members were no worse off if their scheme decided to opt out of the state second pension, an earnings-related addition to the UK’s basic state pension that was scrapped in 2016.
Since October, nine UK listed companies with combined pension liabilities of more than £15bn (€16.6bn) have reported the estimated impact of GMP “equalisation” on their schemes. The companies have estimated that the landmark ruling would raise liabilities by between 0.2% and 1.9%.
The figures are preliminary and will be confirmed later this year once full calculations have been completed.