Week ending 17 July 2020
HMRC has published guidance in its latest GMP equalisation newsletter to clarify the treatment of previously paid lump sum benefits and the future payment of lump sums required as a result of GMP equalisation. There is a requirement to extinguish a member’s rights under the scheme which applies to certain lump sum payments. If a further entitlement to benefits is identified, solely due to GMP equalisation, this will not stop the initial lump sum from being an authorised payment. However, for past trivial commutation payments that were close to the limit of what was allowed, this may not be enough to save the initial payment from becoming unauthorised if a GMP top-up payment takes the combined payment above that limit. As with the previous HMRC GMP equalisation newsletter, GMP conversion is excluded from this guidance.
The GMP Equalisation Working Group has published guidance on the data required for GMP equalisation. The guidance sets out the range of data which trustees should consider obtaining, so that the calculations can be carried out. It acknowledges that not all such data will be available or practical to obtain and puts forward ways to resolve these issues. A range of different calculation solutions are given, with different levels of data precision required.
The Pensions Ombudsman has published its Corporate Plan for 2020-2023. It reports that issues are being resolved at earlier stages, with only 5% of complaints requiring an Ombudsman’s Determination now, as compared with 95% five years ago. 2,000 issues were resolved without the need to approach the pension arrangements and another 2,300 were resolved early before any internal dispute resolution procedure was completed. The Ombudsman is expecting an increase in complaints next year related to the Covid-19 pandemic.
In the news this week, pensions tax relief is back in the spotlight, the Treasury publishes draft legislation for CDC schemes and a big 4 accountant looks to temporarily reduce its DC contributions.
This quarter’s Arena has a summary of our recent Pensions Perspective, “Emerging from lockdown”, which looked at how best to tackle the most common pension issues which companies are currently facing. It also shows all the usual financial and investment analysis for the quarter ending 30 June 2020.
As we keep hearing, we are living in unprecedented times. However, as we turn our attention to the future, what does the “new normal” mean for defined benefit pension schemes? In this Pensions Perspective, Leonard Bowman considers the most common pension issues that companies are facing and how best to ensure that the company approaches these on the front foot.
Covid-19 has created many challenges for DB schemes but, for those ready to transact in 2020, it may have created even more favourable market conditions for a buyout. The problem is that most schemes are not there yet. In this Briefing we look at what being “deal ready” actually means and what work it will involve.
Given the very company/scheme-specific impact of the Covid-19 pandemic, in this quarter’s Arena we simply show all the usual financial and investment analysis for what was a very turbulent first three months of 2020, plus a summary of key pension developments and Company pensions news over the quarter.
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