New Bill covers areas where 'clarification' of GMP conversion legislation is needed

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Draft legislation has been published in Parliament to amend and clarify existing GMP conversion legislation.  It takes the form of a private member’s bill tabled by Margaret Ferrier MP, but the Department for Work and Pensions also appear to be involved. 

Many pension trustees and sponsors are keen to use GMP conversion to achieve GMP equalisation.  It has the potential to deliver simplification rather than adding further complexity.  However, it is acknowledged that clarifications and amendments to the existing legislation would be helpful to streamline the process. 

Each parliamentary session there is a ballot of MPs, with the winning 20 given the opportunity to bring forward legislation on a topic of their choosing.  In June Margaret Ferrier, member for Rutherglen and Hamilton West, announced her bill would cover GMP conversion but little further was said. 

On 27 October 2021 Margaret Ferrier’s bill was published in parliament.  This enables us to see what changes she proposes.  These appear to be a number of technical adjustments to clarify and streamline the process, including: 

  • Clarifying that conversion applies to both earners and survivors
  • Clarifying which employers need to give consent
  • Enabling clarification of the minimum survivor’s pension required
  • Removing the need to notify HMRC

The explanatory notes state they have been drafted by the Department for Work and Pensions.  The second reading of the bill is due to take place on 26 November 2021. 

Alasdair Mayes, Partner and Head of GMP Equalisation at Lane Clark & Peacock LLP said: “It is great that this bill covers the key areas where clarification and streamlining of the primary legislation on GMP conversion is required.  It is no secret that the GMP conversion legislation has some rough edges that need to be smoothed.  

"Industry survey after survey has shown that GMP conversion, in some shape and form, is preferred by many as a means to equalise benefits for GMPs over the administratively complex ‘dual record’ approaches. This bill will make the whole process of equalising benefits using GMP conversion easier.” 

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