Schemes are seeking to address 'GMP equalisation' over the next 2-3 years. Subscribe to receive our latest blogs, newsletters and invitations to our events. ‘Bulk transfers’ that were made with actuarial certification, for example on a scheme merger, or following a business acquisition, are considered separately in the judgment. This follows a survey of over 90 XPS Pensions Group clients with a 31 December 2018 year-end. Stephen Richards and ... a number of important points that the industry needs to get to grips with following the most recent Lloyds decision on GMP equalisation and transfers out. You can find more guidance on GMP equalisation in the Guaranteed Minimum Pension (GMP) equalisation newsletter – February 2020. Lloyds Bank GMP equalisation case. Almost three quarters seeking to complete back payments by 2022. If an equalisation adjustment is required, it should overall be good news. The guidance builds on that issued by HMRC in February and July 2020. The most immediate considerations for many schemes will be to understand the potential scale of any impact and to consider the implications for sponsors’ accounts, particularly those reporting at the end of 2020. The judgment reconfirms that a defined benefit scheme is obliged to equalise for unequal GMPs in relation to any GMP they have received which was earned after 17 May 1990. GMP equalisation: Two years on since the Lloyds judgment. We know how companies can unlock potential through effective risk management. These percentages might change: in our experience, as schemes have explored ‘GMP equalisation’ in more detail, some schemes who started off expecting to convert have concluded that this is more difficult, and dual record keeping less difficult, than they first assumed. Chapter three of the 2020 Emerging Trends in DB Pensions Survey. This latest judgment in relation to the Lloyds banking group pension schemes follows just over two years on from the landmark Lloyds case which confirmed that schemes need to equalise pensions for the effects of unequal GMPs. Clients depend on us for specialised industry expertise. For many schemes, there will be significant difficulties in complying with this judgment – in some schemes the data may no longer exist, and in others the costs of checking the position and contacting members may exceed the benefit to members in many cases. While it addresses another unknown for schemes looking to implement GMP equalisation, it will also add to the work required to complete such exercises. High-performing institutions cultivate and grow talent, carefully balancing costs and rewards. On 20 November 2020, the High Court ruled that pension schemes will need to revisit individual transfer payments made since 17 May 1990 to check if any additional value is due as a result of GMP equalisation. Matt Davis, head of GMP equalisation at Hymans Robertson, said: “This follow up hearing could mean that schemes need to revisit historic transfer value payments going back to the 1990s. A scheme has this obligation regardless of whether or not it receives a top-up payment from the transferring scheme. The latest PP webinar – held in association with Equiniti – looks at guidance from the cross-industry GMP Equalisation Working Group on the importance of data – asking what data schemes need for GMP equalisation; the data demands, advantages and disadvantages of various calculation solutions; and assesses the challenges relating to historic data. Members who exercised their statutory right to transfer their benefits will be able to have a top-up payment made from their former scheme to the scheme to which they transferred their benefits. The cost of accounting for GMP equalisation is less than 1% of total liabilities for over half of all schemes. A court ruling was announced on 26 October 2018 to determine whether members' benefits should be adjusted to reflect gender inequalities … GMP Equalisation - Made Simple Guide 29 June 2020 By Duncan Watson, CEO, EQ Paymaster The matter of guaranteed minimum pensions (GMPS) may appear to have assumed great importance almost overnight, but in truth, it’s been a long time coming. The guidance recommends four steps for trustees to undertake to ensure they make the right decision for their scheme: All rights reserved. The uncertainty could be removed later this year by the Lloyds court judgement. In this Alert Key points GMPs – a brief history Equalisation of benefits Equalising for the effect of GMPs Further work Tidying up contracting-out […] All respondents who answered either a start or end date are included. The latest Lloyds decision was about transfers. On 20 November 2020, the High Court ruled that pension schemes will need to revisit individual transfer payments made since 17 May 1990 to check if any additional value is due as a result of In these cases, trustees will need to agree with the member how to compensate them for the original shortfall. The top-up payment should be the shortfall between the original transfer payment and what would have been paid if benefits had been equalised at the time, with interest in line with Bank base rate plus 1% each year. The High Court has handed down its ruling in the second Lloyds case on GMP equalisation. Judgment in latest Lloyds case provides some clarification of trustees' obligations in relation to transferred-out benefits. The first decision, published just over two years ago, established that trustees of defined benefit occupational pension schemes had a duty to equalise benefits for male and female members in relation to the unequal effect of guaranteed minimum pensions. High-performing institutions cultivate and grow talent, carefully balancing costs and rewards. Guaranteed Minimum Pension (GMP) equalisation newsletter - … Note: Percentages may not sum to 100% due to rounding. Copyright © 2021 Willis Towers Watson. In some cases, these may prove ambitious targets, but schemes are looking to drive forward and start to draw a line under the issue. GMP Equalisation - The Story So Far O&M Pension Solutions’ Senior Pension Analyst, Peter Pearce, looks at how the recent GMP Equalisation ruling has impacted CETV statements so far and provides comment on the necessary solutions. By now, most employers have accounted for GMP equalisation. In July 2018 Lloyds bank, together with the Affinity trade union and the trustees of three Lloyds pension schemes, went before the High Court seeking clarification on GMP equalisation.. Receive the latest news straight to your inbox with our email newsletter. The PASA chaired Equalisation Working Group instigated by the Pensions Regulator has today published industry good practice guidance on the pensions tax treatment of equalising members’ benefits for Guaranteed Minimum Pensions (GMPs). From a scheme funding perspective, trustees who are undertaking actuarial valuations prior to GMP equalisation may require their Scheme Actuaries to set aside a provision for potential increases in scheme liabilities. Apply GMP conversion to deliver new benefits inclusive of any uplift through valuing the male and female income streams independently Actuarial value Dual record keeping. GMP equalisation. 15 February 2021. Introduction The Government has published its response (“the Response”) to a consultation (see our Alert) on several contracting-out issues, including GMP equalisation. Guaranteed Minimum Pension (GMP) equalisation – an update from the Trustee. Our sophisticated approach to risk helps clients free up capital. No action is required from the transferring trustees in these cases; the receiving trustees are responsible for ensuring GMP equalisation in their scheme. More than two years on from the first Lloyds judgment, we know so much more about how GMP equalisation can be implemented – yet many schemes are still struggling to get it off the ground. Matt Davis, head of GMP equalisation at Hymans Robertson, ... LATEST BUSINESS NEWS . Guaranteed Minimum Pensions (GMP) equalisation has soared up the to-do list for pension professionals in the UK following a landmark Lloyds case late last year. Bringing the issues to life, this short webinar provides an update on the latest developments and guidance; direction on where GMP equalisation may fit into your overall pension strategy; and helpful case studies. The GMP Equalisation Working Group, a cross party body, has issued its latest guidance for pension schemes. This is a major undertaking. It confirms that past transfers must be equalised, but leaves a number of practical implementation questions to be addressed by individual schemes. All rights reserved. A new ruling by the High Court means that trustees of defined benefit (DB) pension schemes must revisit and equalise guaranteed minimum pensions (GMP) for historic transfers.. Pension Board and Trustee Consulting|Retirement, Menu, current location and language selection is United Kingdom English, use this menu to select a new location and language, Financial, Executive and Professional Risks (FINEX), Preparing for the EU Shareholders’ Rights Directive, Modern Slavery Act Transparency Statements, Data Processing Protocol - Investment Consulting UK, Transactional and Advisory Services Privacy Notice, COVID-19 FCA Business Interruption Test Case. The decision is far reaching, spanning wider than just GMP equalisation and potentially affecting benefit rectification projects in general,” Scholefield said. There are no time limits on claims, so cases will need to be reviewed back to 1990. Figure 1: When do you expect your scheme to complete the following GMP issues? After 28 years of uncertainty, the Lloyds judgment on 26 October 2018 confirmed that schemes must equalise benefits between men and women where differences arise from the statutory calculation of Guaranteed Minimum Pensions (GMPs). Developed by the GMP Equalisation Working Group over the last nine months, the guidance draws on expertise from the actuarial and legal professions.. We expect that trustees will want to find pragmatic ways of addressing past cases, so that the work is as efficient as possible. Good news for GMP Equalisation - costs may be much lower than expected. Watch now on-demand. Often any top up payments will be small, and it could be expensive to work out and make payments, particularly as member details may be incomplete and details of the approach and assumptions used for calculating the original transfer value may not have been retained. The judgment does not address the position of defined contribution schemes or personal pensions, so for the time being it appears these schemes need only take action if they receive a top-up payment. Additionally, 53% of respondents said they were likely to equalise by converting GMPs into scheme benefits, with only 20% expecting to maintain dual male and female records (the remainder were unsure). What it does is to add a further category of members for whom their position needs to be resolved. The latest industry and HMRC guidance on GMP equalisation will help schemes proceed with GMP equalisation projects, though questions remain 10 August 2020 The latest industry working group guidance (on data issues) is now available, along with fairly helpful further guidance from HMRC on … This newsletter is published by HMRC in February 2020 to update stakeholders on the latest news for pension schemes. BUSINESS LIVE: Deliveroo picks London for IPO . Further consideration may, however, be required where “mirror-image” benefits were not provided. But schemes are looking to make significant progress. GMP equalisation: New year, new focus. Pension Board and Trustee Consulting|Pensions Corporate Consulting|Pensions Risk Solutions|Pensions Technology|Retirement. 10 ... (Equalisation not required) Excess over GMP No GMP GMP 17 May 1990 5 April 1997 Total pensionable service For a PDF version of this Alert click here. Perhaps for a variety of reasons – the immediate demands of the pandemic, the scale of the task, the wait for government guidance and legal clarity – 55% now expect to complete the bulk of ‘GMP equalisation’ later than they did 12 months ago. “Following the 2018 judgment, many trustees and employers will have begun their GMP equalisation journey and will now need to factor these latest changes into those projects. Currently, this judgment is the final guidance we are expecting from the Courts on GMP equalisation. We know how companies can unlock potential through effective risk management. 1 Oct 2019. The third judgment in the Lloyds court proceedings on Guaranteed Minimum Pension (GMP) equalisation has now been handed down (Lloyds Banking Group Pensions Trustees Ltd v Lloyds Bank PLC & Ors [2020] EWCh 3135 (Ch)) (Lloyds 3).This covers the duty of pension scheme trustees to equalise past transfers out of the scheme. That is according to a recent poll of pension experts by outsourcing firm Equiniti, which found that 58% see GMP equalisation as a priority project over the next six to 12 months. The judgment is significant as it will impact the vast majority of UK defined benefit pension schemes which provide GMPs accrued between 17 May 1990 and 5 April 1997. The judgment does not directly impact any work that schemes may have already been doing in relation to implementing GMP equalisation, although it does help to clarify the position for members who transferred in GMPs from other schemes. This concise half-day event will explore a variety of different issues affecting scheme managers, through a combination of informative presentations and interactive panel debates, including GMP equalisation, the pensions dashboard, the accuracy and quality of members data and the latest trends in scheme administration. Menu, current location and language selection is United Kingdom English, use this menu to select a new location and language, Open this Infographic in a larger lightbox modal, Financial, Executive and Professional Risks (FINEX), Preparing for the EU Shareholders’ Rights Directive, Key trends facing defined benefit (DB) schemes, Emerging Trends in DB Pensions Survey 2020, Modern Slavery Act Transparency Statements, Data Processing Protocol - Investment Consulting UK, Transactional and Advisory Services Privacy Notice, COVID-19 FCA Business Interruption Test Case. Budget gives housebuilder Vistry optimism . It puts forward good practice recommendations, and suggests how schemes should deal with common issues that arise when implementing an equalisation … Admin & Data Forum 2021. Copyright © 2021 Willis Towers Watson. This new guidance relates relates to making corrections as a result of GMP reconciliation, known as GMP rectification. Latest ruling on GMP equalisation 27 November 2020, Susan Dalton This judgment has confirmed that trustees of defined benefit (DB) schemes must revisit historic transfers from their schemes and top up cash equivalent transfer value (CETV) payments that were not adjusted for the unequal effect of GMP. This article is authored by Neil Bowden, Andy … Judgment in the supplementary Lloyds Bank case was handed down on 20 November 2020, providing some clarification as to the actions which must be taken by trustees of defined benefit pension schemes to address unequal guaranteed minimum pensions (GMP) where that GMP … As we saw in Figure 1 on our Key trends facing defined benefit (DB) schemes page, more respondents named ‘GMP equalisation’ as their top priority for the next 12 months than cited any other issue. But you remain at the forefront of decision making – your consent is needed for most equalisation methods.Some methods may suit employers’ objectives better than others, for example methods that are lower cost or facilitate new member options.However, the liability cost may not be that different between methods – our research shows very small difference… In practice, we believe trustees will be looking for scope within the judgment to take a pragmatic approach. In the Lloyds Bank judgment, the court approved a method based on providing the Clients depend on us for specialised industry expertise. In Figure 1 we can see that the majority are looking for the bulk of the preparatory work to be completed by 2021 and almost three quarters expect back payments to pensioners to have been completed by 2022. Home / News and Insights / News / Breaking news: High Court rules on GMP equalisation. There may also be practical problems in making a top-up payment, for example where the receiving scheme no longer exists, or is unwilling to accept the transfer, or if the member no longer has benefits in that scheme. The latest piece of the GMP equalisation jigsaw was handed down by the High Court on 20 November 2020, as part of the long-standing litigation relating to Lloyds Banking Group’s pension schemes. GMP equalisation and past transfers out – the High Court decides Introduction Over two years on from its original decision, on 20 November 2020, the High Court handed down its judgment in the latest instalment of the Lloyds saga. Lloyds Bank GMP equalisation transfers judgment This morning, 20 November 2020, the High Court gave judgment in Lloyds Banking Group Pensions Trustees Limited v Lloyds Bank plc on the issue of transferring schemes' liability to make up shortfalls in transfer values calculated on the basis of unequalised GMPs. Our sophisticated approach to risk helps clients free up capital. This guidance covers: annual … There has been recent coverage in newspapers of the problem of GMP equalisation, resulting from a court case involving the Lloyds Bank pension schemes and the need for schemes to equalise benefits to remove gender inequalities in the GMP calculation. After 28 years of uncertainty, the Lloyds judgment on 26 October 2018 confirmed that schemes must equalise benefits between men and women where differences arise from the statutory calculation of Guaranteed Minimum Pensions (GMPs).
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