On the go: The Pensions Regulator is urging schemes to engage with their administrators and complete guaranteed minimum pensions equalisation, as there is a sense of urgency for older members.
Speaking at a Pensions Administration Standards Association webinar on Monday, Lucy Stone, policy lead at TPR, explained that the watchdog’s message to schemes has changed since the first Lloyds judgment in 2018.
She said: “It's been three years, and while at first our messaging was around 'this is going to be hard, complicated'… now we have moved on a bit.
“By now, trustees really need to have a clear path to GMP equalisation and absolutely critically be talking to their administrators.”
While acknowledging that there is a “capacity issue in the administration industry”, which means it will take time for schemes to complete this work, Stone argued that it “is really important to be talking to the administrators or the parties which will be delivering the work” to make sure that anything schemes can do has been done.
She pointed out that by now, trustees should have chosen a methodology to equalise GMPs, “working with the employer if required, talking to administrators about what will be required and when it is a reasonable time to do it”.
Schemes should also take into account any other project work they have in the pipeline and if there are any synergies with GMP equalisation, analyse their data and try to fill any existing gaps, and embark on a communication exercise with members, she added.
Despite admitting that the regulator does not have a clear timeline for schemes to complete this work, she noted that it is an issue that “needs resolving” as it has “been ongoing for too long”.
Stone suggested schemes should try to target those members who “may be advanced in age, so if they are entitled to more money they should get it as soon as possible”.
In the webinar, the cross industry GMP Equalisation Working Group, chaired by PASA, introduced its new guidance on member communication, updating its latest document on this area, which was issued in August 2020.
The new document has a step-by-step guide schemes can follow when implementing their communications to members, with examples of sentences trustees can use to explain the issue to individuals, and includes checklists for data needed for the exercise.
Louise Harris, chair of the communications sub-group and senior director communications & change management at Willis Towers Watson, noted that “communicating the complex subject of GMP equalisation to individuals in a clear and transparent way is a vital element in a scheme’s equalisation project”.
She said: “This second instalment of communications guidance places the individual at the centre of our thinking and simplifies a technical subject to support trustees and administrators where they’re starting to communicate with members and deliver equalisation.”
Harris noted that while many schemes “have suffered setbacks in the progression of their GMP equalisation projects due to the impact of Covid-19”, the message from TPR and from PASA “is clear: let’s get this done for the members”.
“GMP equalisation may be very complicated, but your communications don’t have to be,” she concluded.
