Govt to form GMP working group five months after ruling

The government is forming a working group to consider the pensions tax issues arising from guaranteed minimum pensions (GMP) equalisation, almost five months after the High Court ruling.

In its March pensions scheme newsletter published today, is said that the group, chaired by HMRC, will work to address the “wider issues” arising from the equalisation of GMP.

In October 2018, the High Court ruled that Lloyds must start the process of equalising benefits in relation to GMP, a decision which had far reaching consequences across the industry.

Since then, many schemes have been waiting on the government to issue guidance on the bet method of equalising and a number of issues have arisen as a result.

Commenting on the update, Royal London director of policy, Steve Webb, said: “HMRC are proceeding at a snail’s pace when it comes to resolving the uncertainties created by the Lloyds Bank ruling on GMPs before Christmas.”

Last month, a freedom of information request by Royal London revealed that the equalisation process could leave over 100,000 workers who secured 'fixed protection' schemes with unexpected six-figure tax bills.

“There are savers at risk today of facing huge tax bills because a GMP adjustment invalidates their protection against lifetime allowance tax charges.

“Yet all we are promised is a new working group which has not yet started to meet. HMRC needs to appreciate that savers need to know where they stand and treat it with far greater urgency.”

The first meeting, which will include selected industry representatives and industry groups, is set to take place in April.

In light of the decision, some defined benefit pension schemes put a temporary block on transfers while they assessed the effects it would have, however some schemes are now able to include GMP in their transfer valuations.

In January, Pensions Administration Standards Association formed a new industry group to help schemes navigate the ruling.

The group will focus on promoting “best practice” on issues arising from the ruling on issues including missing data, transfer requests and rectifying underpayments.

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