Trustees must not ignore past underpayments to members in relation to guaranteed minimum pensions (GMP) according to an Allen & Overy lawyer.
Counsel Helen Powell (pictured above) was speaking at a Pensions Management Institute (PMI) seminar on administration, which saw the launch of the Pensions Administration Standards Association's (PASA) second round of guidance on GMP reconciliation.
The guidance looks at what trustees and schemes should do after they have reconciled GMPs - a process called ‘GMP rectification' which involves rectifying overpaid and underpaid pensions.
Powell said: "There is no legal authority [for trustees] to turn a blind eye to underpayments. Not worrying about the past [underpayments] is not going to wash."
Member complaints could start to rise if they knew they were being underpaid and the trustees were not doing anything to correct it, she warned.
Trustees had to get good advice and ensure they produced a solid audit trail about what they had done to meet members' needs on GMP so that HM Revenue and Customs would be satisfied.
Schemes would also have to take a different approach to underpayments and overpayments.
Yet the underlying message was that trustees had to be decisive. "Prompt action is going to be required once the error is identified," Powell continued.
PASA launched the first part of its guidance in January.
PMI president Lesley Alexander and the institute's immediate past-president Lesley Carline talk about the challenges of Covid-19 and the opportunities and challenges the industry faces in the future.
The Pensions Administration Standards Association (PASA) has announced global consultant Deloitte as its expert knowledge provider for data.
This week’s top stories included further support for an overhaul of the pension tax regime, while the Treasury confirmed the Retail Prices Index will be reformed by 2030.
XPS Pensions posted a 9% increase in revenues during the six months to 30 September – a rise driven by a number of large client wins.
Here they are - the winners of the 3rd annual Women in Pensions Awards...