The proportion of professionals – ranging from pension scheme trustees to administrators and pension managers – who said that GMP Equalisation would be a priority increased from 15% in 2018 to 58% this year, a rise of 43 percentage points.
The figures for most other projects remained constant, however the significance of GMP was re-enforced by 45% of respondents stating that GMP Rectification is a priority, the second most common response. Nearly a quarter (23%) also said that working towards either a buy-out a buy-in would be on their to-do list as that market continues to expand rapidly.
Despite the increased focus on GMPs, a fifth (19%) of professionals confessed that they had low knowledge of the current GMP legislation. Also, despite the value of robust data and processes for GMP and buy-ins/outs, just 42% said that they did not intend to embark on a project to improve their scheme’s TPR score.
Chris Connelly, Propositions & Solutions Director at Equiniti’s pension business, warned firms that the clock is ticking and that the time for decision-making was fast approaching a critical stage, commenting:
“Pension schemes have had GMP Equalisation looming over them for years now. Wednesday’s news that a second hearing on past pension transfers in the Lloyds case will be scheduled in 2020 is likely to extend the saga. However, it is no excuse for firms to continue postponing the problem – they must start assessing their data and getting on with the corrections that they will inevitably have to carry out.
“In its business plan, The Pensions Regulator stressed the importance of record keeping and how it intends to focus on those schemes who are not taking data quality seriously. We can infer that it will not be long before the Regulator includes schemes who are not making significant progress on their GMP equalisation.
“The GMP Equalisation Working Group is doing a great job of providing guidance to schemes and more is expected this year. I understand that schemes need to take stock and see which equalisation method would best apply to their own circumstances, but action is needed before the regulator feels intervention is required.
“Good data is absolutely critical, yet it remains an undervalued aspect of scheme management. Given the timescales involved, many schemes may have changed platforms or administrators, and may not have easy access to some of this data if they have not already gone through their rectification cases.
“Some schemes may encounter huge problems causing major time delays and financial outlay if they don’t work on these fundamentals. It will also carry a significant impact on their ability to achieve a long-term goal of buyout which remains a major focus for trustees, as these figures reveal.”
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