Faye Jarvis: A small change to the definition would make the legislation work as intended while providing greater certainty for schemes and members
The Society of Pension Professionals (SPP) has urged HMRC to amend draft legislation designed to protect pension savers from unintended annual allowance tax charges following Guaranteed Minimum Pension (GMP) conversion.
In its response to the Draft Finance Act 2004 (Registered Pension Scheme and Annual Allowance Change) Order 2026, the SPP said it supported the policy intent behind the legislation but warned the definition of GMP conversion was "too narrow and would exclude most real-world GMP conversion exercises from the proposed deferred member carve-out".
It recommended a broader definition that captures all amendments made under section 24G of the Pension Schemes Act 1993.
The SPP has worked with the GMPE Working Group to develop alternative drafting which it said it believes would better deliver the government's intended policy objective.
It also recommended that HMRC update the explanatory notes to reflect how GMP conversion operates in practice and that they should publish practical guidance with worked examples to help schemes apply the new rules consistently.
SPP Council member Faye Jarvis said: "The SPP welcome the government's intention to ensure members are not disadvantaged by annual allowance rules following GMP conversion.
"However, as drafted, the legislation is unlikely to achieve that aim for most GMP conversion exercises. A small change to the definition would make the legislation work as intended while providing greater certainty for schemes and members – a genuine win-win solution."
The full SPP response can be viewed here: https://the-spp.co.uk/document/the-spp-response-to-draft-gmp-legislation/
