This new guidance relates relates to making corrections as a result of GMP reconciliation, known as GMP rectification. On 20 February 2020, HMRC released long-awaited guidance (“the Guidance”) on some of the pensions tax issues arising when equalising benefits for the effect of GMPs. The GMP Equalisation Working Group has published further good practice guidance covering the tax issues relating to the equalisation of GMPs. 1, Lloyds Bank Pension Scheme No.2 and the HBOS Final Salary Pension Watch on … During an assessment period, when calculations are completed, trustees and/or advisers need to complete and submit the GMP equalisation and underpin calculation template to their Scheme Delivery Associate. This includes the treatment of lump sum and death benefit payments, and HMRC aims to give more guidance on these "as soon as possible", as well as continuing to explore the tax implications for schemes choosing to use the conversion legislation. The guidance draws on the experience and thought leadership of a group of advisers from various professions across the pensions industry. GMP Equalisation 2 The guidance suggests that schemes try to automate the opposite sex GMP calculation process as much as possible to help with calculation efficiencies. This guidance follows that issued by HMRC in February on the implications of GMP equalisation for the annual allowance and the lifetime allowance. Watch now on-demand. This guidance has been published to explain to schemes how they can handle lump sum payments aligned with changes to GMP, after many schemes were left unclear based on the Lloyds case in 2018, where … The HMRC Guidance supplements the existing guidance in the Pensions Tax Manual and we have set out a brief summary of the key points below. 2. GMP equalisation: Two years on since the Lloyds judgment. This guidance combines commentary and analysis with good practice guidance, to help enable schemes to make informed decisions." Guidance from HMRC - As explained, there are some pensions tax issues that could arise as a result of GMP equalisation. Company number: 6597097. Jonathan Stapleton; @jonstapleton 21 January 2021 Tweet . Updates … Lloyds Banking Group ordered to equalise pensions for men and women. Further detail is available in the Guidance itself which can be accessed here . GMP equalisation adjustments should not stop an individual from falling within the "deferred member carve out" for annual allowance purposes. PASA is a Community Interest Company and our full name is Pensions Administration Standards Association CIC. 0 Comments. Changing the form of benefit using GMP conversion legislation can give rise to tax issues. For enhanced protection purposes, a GMP equalisation benefit adjustment for a member who became a deferred member before A-day should not result in "relevant benefit accrual" causing enhanced protection to be lost. Share; On 26 October 2018 the High Court handed down judgment in a case about guaranteed minimum pension (“GMP”) equalization brought by the Lloyds Banking Group and three of its defined benefit schemes, Lloyds Banking Group Pensions Trustees Limited and Lloyds Bank Plc et al. Kate Payne: GMP equalisation is needed, but it will not be straightforward. GMP equalisation template. The Guidance draws on the experience and thought leadership of a group of advisers from various professions across the pensions industry. This guide, sponsored by Equiniti, covers the history you need to know, the methods you need to understand and the roadmap for the future. Discussions: CIPFA annual report guidance, GAD 2020 data collection, Statutory guidance for survivor benefits, AVCs, GMP reconciliation and equalisation. However, when carrying out relevant accrual calculations for individuals who have not been deferred members throughout the period since A-day, the value of a member's rights as at 5 April 2006 needs to include the adjustment for GMP equalisation valued at that date. Given the complexity and cost of going to Court, coupled with the modest financial gain for most members, the Guidance rightly acknowledges that “many ancillary issues may never be subject to judicial scrutiny” and could “remain unanswered by the Courts”. The HMRC GMP Equalisation Working Group was formed to consider the issues arising in light of the Lloyds decision and HMRC published the first part of the GMP Equalisation Guidance on 20 February in its GMP Equalisation Newsletter ("the Guidance"). 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. Guidance from HMRC - As explained, there are some pensions tax issues that could arise as a result of GMP equalisation. Early in 2019, the Pensions Regulator announced the formation of an industry working group to help pension schemes following the High Court’s ruling on the equalisation of GMPs in October 2018. The pension payer is required to operate PAYE on the lump sum. LinkedIn . The Guidance confirms that GMP equalisation will not affect individuals covered by the carve-out, as benefit adjustments “are attributable solely” to the application of legislation (namely, the equal treatment requirements under the Equality Act 2010), and therefore fall within the statutory increases permitted under the carve-out. More significantly, the guidance fails to discuss whether an actual opposite sex comparator is required for GMP equalisation purposes, proceeding on the basis that if no actual comparator can be found (something which according to the guidance is highly likely to happen), then a hypothetical comparator should be used. 2 The guidance suggests that schemes try to automate the . Guidance Guaranteed Minimum Pension (GMP) conversion and equalisation Find out how to convert GMPs into other scheme benefits and equalise pensions to remove inequalities. The primary objective of the group is to produce good practice industry guidance to support schemes in preparing for and then implementing GMP equalisation and … DON’T wait for a solution to de minimis cases. The guidance highlights tax issues which schemes may face when adjusting benefits to correct for the inequalities of GMPs and it identifies possible approaches for dealing with those issues. Guidance from the GMP Equalisation Working Group in September 2019 tries to fill some of the gaps. The guidance provides a useful summary of the steps which need to be followed when using the conversion legislation to effect GMP equalisation. GMP Equalisation Working Group publishes methodology guidance Introduction Following the publication of a “ Call to Action ” back in July, the cross industry GMP Equalisation Working Group (“the Group”) has published guidance (“the Guidance”) outlining methods that schemes could use to equalise for the effect of GM Ps. We are still hoping for guidance on conversion of GMPs but this current newsletter says that the position is complex and more work needs to be done on wider issues. This means that schemes only need to pay advisers to consider whether these recommendations are suitable for their schemes, and to consider the more difficult issues. If the reason for the increase is a mixture of GMP equalisation and other adjustments, this could be a new entitlement for tax purposes. [In parallel, the GMP equalisation working group is preparing guidance on GMP conversion, which it expects to publish by the end of April 2021.] Duncan Watson CEO, EQ Paymaster. Hartshorn: The government and HMRC need to work together to find a solution to this issue. Defined Contribution arrangements – Under current legislation it is not possible to convert GMP into Defined Contribution benefits. Duncan Buchanan, Hogan Lovells Wendy Handcock, First Actuarial Chair: Rohit Siqueira, First Actuarial1990 “Barber judgment” on … Does the Lloyds judgment mean that GMP equalisation and any additional scheme liabilities as a result need to be taken into account in s179 valuations? It is also notable that further developments are still to come, with guidance yet to be issued by HMRC and the DWP considering changes to the GMP conversion legislation. The GMP Equalisation Working Group intends to publish separate guidance on GMP conversion, including tax considerations, in due course. news Pensions. ©2021 Addleshaw Goddard LLP (SRA ID 440721) - all rights reserved. Interbank offered rates (IBOR) Transition, EBA Ready – Outsourcing Compliance made quick & easy, Healthcare Infrastructure and Public Sector, Private Health Providers, Operators and Insurers, Impact Funds, Asset Management and Impact Investing, Financial Services Investigations and Enforcement, Asset Based Lending, Trade and Supply Chain Finance, Pension and Life Assurance Trustee Services, Pension Products: SIPP, SSAS, EFRBS and QROPS, Charities and Not for Profit Organisations, Modern Slavery Act Transparency Statement. GMP equalisation The guidance demonstrates the complexity of GMP equalisation and that there are difficult issues on which legal and actuarial advice will be needed. This new guidance relates relates to making corrections as a result of GMP reconciliation, known as GMP rectification. HMRC has published guidance on guaranteed minimum pension (GMP) equalisation, providing clarity into how schemes should distribute lump sum benefits when looking to equalise payments.. Master Trust Transitions Working Group (MTTWG), DB Transfer Code of Good Practice – Consultation, August 2020 – GMPE Communications Guidance – Early Planning Stages. Certain types of lump sum require that the … It's a simple explanation of a complex and long-term project with significant implications for many defined benefit schemes. GMP Equalisation . It is also notable that further developments are still to come, with guidance yet to be issued by HMRC and the DWP considering changes to the GMP conversion legislation. Previous lump sum payments . Maureen Burns and Laura Townsend, Brodies LLP, discuss the new Data and Communications Guidance published by the GMP Equalisation Working Group As noted in our most recent blog on Guaranteed Minimum Pension (GMP) equalisation, the third hearing in the Lloyds Banking Group Pensions Trustees Ltd v Lloyds Bank PLC & Others (HC-2017-001399) (“Lloyds case“) took … 29th October 2018 11:43 am 29th October 2018 11:43 am. First, the good news. GMP equalisation has been implemented for a scheme, the s179 valuation should of course reflect the equalised liabilities and no interim allowance will be needed. accuracy is likely to come with additional costs : We expect that most schemes will find … In its pre-Budget representation to HM Treasury, the consultancy said there was an urgent need for the government and HMRC to work together to provide trustees with better clarity and the certainty they need to move forward in equalising GMPs. The GMP Equalisation Working Group, a cross party body, has issued its latest guidance for pension schemes. HMRC have also stated that they are unable to provide further guidance on using GMP conversion to equalise for GMPs. The guidance says that HMRC continues to explore GMP equalisation tax issues not covered in the guidance with the GMP industry working group. HMRC will consider late claims for lifetime allowance protections where GMP equalisation benefit adjustments mean an individual would now qualify for protection from the lifetime allowance charge. A benefit increase solely for GMP equalisation will not be benefit accrual and so should not result in loss of fixed protection, but if the reason for the increase is a mixture of GMP equalisation and other adjustments, then fixed protection could be lost. Interest Company and gmp equalisation guidance own thoughts limited in scope as it only relates to adjustments where reason. 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