On the go: Guidance from the Pensions Administration Standards Association on the tax implications of guaranteed minimum pensions equalisation is expected to be published next month, according to an update from the body’s dedicated working group.
Geraldine Brassett, chair of the GMP equalisation working group at PASA, wrote in an update that progress had been made on the guidance, which will take into account information provided by HM Revenue & Customs during 2020.
HMRC was criticised last year for failing to address a number of tax issues arising from GMP equalisation, not least whether members who see a boost to their pensions as a result of equalisation would be hit with tax charges for breaching their lifetime allowance.
She added that the GMP conversion subgroup will also be publishing guidance following work begun in November 2020, and that this should be expected by the end of April. Its format will differ from the norm, however, given “there is no single approach to GMP conversion”, Ms Brassett wrote.
PASA’s GMP equalisation working group is further committed to publishing a second set of guidance covering communications about GMP equalisation during the implementation phase, while another subgroup is preparing to update the methodology guidance to help schemes deal with “anti-franking”, she said.
Anti-franking refers to the legislative requirement to ensure a deferred member’s overall pension is not reduced by the scheme using the pension in excess of the GMP to provide the GMP revaluation.
This update can be expected in the second half of the year.
Ms Brassett added that the group has started work on a set of good practice guidance around equalising past cash equivalent transfer values, a process that “will give rise to many questions and administrative challenges”.
A further update on the timescale for this guidance can be expected during the first quarter.
