GMP issue still needs more input from government

Some high-profile challenges have continued to raise administration up the trustee agenda over this year. The Pensions Administration Standards Association is taking action to rise to these challenges, and is calling on the sector as a whole to support it.

These issues are not going to simply disappear, and it is crucial that we as an industry work together to combat these challenges

DB transfers are just one area that has caused the industry to sit up and pay closer heed to their administrative standards. In July, we launched part one of our ‘Defined Benefit Transfers: A Guide to Good Practice’, with the objective of driving up standards and improving transfer communication.

This guidance, aimed at standard cases, sets out to create faster, well-communicated, efficient and cost-effective strategies that administrators and the industry as a whole can execute. 

This will soon be followed by part two, dealing with more complex transfers. These issues are not going to simply disappear, and it is crucial that we as an industry work together to combat these challenges. 

GMP case has revealed answers and questions

Guaranteed minimum pension equalisation is yet another space that has bought administration into the spotlight this year, and while last year’s Lloyds case has helped to crystallise the issue, it also served to highlight a number of open questions around the methodology that should be used, as well as the impact and treatment of certain membership categories. These need to be resolved before schemes can move forward, and efforts by the industry and schemes to proceed have been limited by the lack of formal guidance.

The complexities within GMP equalisation urgently need to be resolved following last year’s court case, and it is important that any potential solutions consult those across the industry.

At the end of September, the cross-industry working group launched by PASA published its methodology guidance, which is split into sections covering correcting past underpayments, approaches for equalising future benefit payments and common unanswered questions.

Further guidance will follow in the coming months covering data, impacted transactions and tax. It is hoped that each element of this guidance will contribute to schemes realising appropriate solutions to this complex subject.

PASA success needs cross-industry support

PASA has a huge amount of support from the industry on a number of levels – by people from within our industry volunteering both their time and expertise, whether as part of the board, committees or working groups. Without this support, the governance and structure that is in place would simply not function.

It is crucial that we have cross-industry insight in order to create genuinely practical and helpful guidance for the schemes facing these challenges, and we are always looking for further support to continue our work. 

It is encouraging to see the industry actively engaging with their administrators and proactively seeking out best practice guidance and providers to ensure their members receive the highest standards.

Issues such as GMP equalisation and DB transfers not only raise administration up the agenda, but also place the member at the heart of the scheme. Administration is so much more than the sum of its parts, and ensuring schemes understand the importance of high administration standards in relation to member outcomes is crucial.   

While admin may have had a boost in attention this year, and it is encouraging to see the industry working together through groups such as PASA’s cross-industry GMP equalisation working group.

PASA will continue to provide industry comment and guidance on a range of topics, with a key focus on GMP equalisation.

We have also established a working group to focus on the pensions dashboard, providing guidance and recommendations on the administrative requirements and, in particular, the data inputs that will be needed for the project to be effective.

David Pharo is a board director at PASA