Mercer urges government and HMRC to clarify GMP equalisation guidance

Jonathan Stapleton
clock • 2 min read
Hartshorn: The government and HMRC need to work together to find a solution to this issue
Image:

Hartshorn: The government and HMRC need to work together to find a solution to this issue

The government must work with HM Revenue and Customs (HMRC) and the wider industry to clarify GMP equalisation uncertainties, Mercer says.

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.

Mercer said one example of an area where clarification was needed was with regards to GMP conversion, where trustees needed assurance the work they had done was valid and without unexpected tax consequences for members.

Additionally, the consultant is asking the government to step in and provide a streamlined approach to providing the transfer top-up payments required following a further decision on equalisation from the High Court which was handed down on 20 November 2020.

Mercer GMP equalisation steering committee chairman Adrian Hartshorn said: "Despite it being two years since the High Court decision in October 2018 which confirmed that GMPs must be equalised, there are still areas of uncertainty, particularly but not exclusively in terms of GMP conversion

"There is a real opportunity here for trustees to simplify benefits, help members to understand their benefits better, speed up processing times and manage admin costs. However, until trustees know their equalisation approach is achievable it can be difficult to take more than a few steps in that journey. And while the position remains unresolved, members could be missing out on payments from their pension scheme - in some cases, a member can be owed in excess of £25,000."

Hartshorn continued: "Inefficient and burdensome administration requirements can be expensive, as is each trustee taking separate legal advice on tax questions which may be similar across thousands of other schemes. Ultimately these expenses draw on funds that could otherwise be used to pay member benefits. Delays in completing GMP equalisation also result in delays to pension scheme members receiving their due benefits."

He concluded: "The government and HMRC need to work together to find a solution to this issue."

More on Regulation

PensionBee warned of “a concentrated burst of postal packs”

Fears that 'statement season' exposes millions to fraud

PensionBee warns of the risk of mail fraud amid increased scam cases

Hope William-Smith
clock 25 November 2021 • 2 min read

Industry Voice Video: Using nature to offset emissions

Robeco
clock 17 November 2021 • 1 min read

Industry Voice Video: Toughening up on carbon disclosure

Robeco
clock 17 November 2021 • 1 min read