New guidance for joint GMP rectification and equalisation

The document published on Tuesday stated that it is a scheme decision to combine the two tasks, but highlights four steps for trustees to undertake to ensure they make the right decision.

First, schemes need to understand the data and consider the number of members requiring rectification and how this population overlaps with those in scope for GMP equalisation.

Second, they need to understand the nature and timing of the task:when to rectify benefits, the potential approaches available and how the rectification project dovetails with the work required for GMP equalisation.

Third, the working group is recommending trustees consider the impact on members – which ones are in scope for GMP rectification and could face a delay while finalising the equalisation project.

Finally, trustees need to document and consider the scheme’s position, which will focus on factors that will influence the decision about when to undertake rectification for those also impacted by equalisation.

Pensions Expert reported in January that the majority of pension funds are set to bundle the two projects, as experts said this can simplify member communications and increase efficiencies for trustees.

According to Matt Davis, head of GMP equalisation at Hymans Robertson, this guidance will help schemes consider whether to combine rectification and equalisation pension changes for members in different circumstances. 

“Ultimately this is depends on circumstances rather than there being a blanket approach for the industry. The guidance also highlights that for many schemes GMP equalisation will take a few years. 

“Many schemes still need data from HM Revenue & Customs in order to reconcile GMP records against scheme records. These schemes then need to decide what to do if there are differences between scheme records and HMRC records, before rectification can be undertaken and the guidance can help with this.”