On Friday a Bill to amend and clarify the GMP Conversion legislation completed its second reading in the House of Commons. This means it now has a good chance of making it onto the statue book and help streamline the process of equalising benefits for Guarantee Minimum Pensions (GMPs).
GMP Conversion has the potential to deliver simplification alongside equalisation, rather than adding the further complexity of other approaches. However, it is acknowledged that clarifications and amendments to the existing legislation would be helpful to streamline the process. Hopefully this Bill will do just that.
What’s happened?
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, in the so called “first reading”, Margaret Ferrier, member for Rutherglen and Hamilton West, announced her bill would cover GMP conversion but little further was said.
On Friday 26 November 2021 the “second reading” reading of the bill took place. With Guy Opperman, Minister of State for Pensions sat opposite her it quickly became apparent that the Bill has full government support.
Private members bills often fail to make it through Parliament, but having completed its second reading and with Government support the Bill should have a good chance of becoming law.
What’s in the Bill?
In writing the PASA guidance on using conversion to equalise for GMPs I highlighted a number of areas where, from practical experience, we were aware the existing conversion legislation has some wrinkles. The Bill contains amendments to allow regulations to clarify and streamline the process. These include:
- 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
Does this mean everything is sorted?
The Bill is an excellent start but it isn’t the end of the journey. It will need to work its way through both Houses of Parliament. Then the detail of the changes will need to be set out in regulations, a consultation completed and the regulations laid before Parliament. It will be a while yet before I need to publish an update to the PASA guidance. Pensions tax is also a separate matter.
In the meantime it will continue to be the case that GMP conversion will be right for some schemes and not others. Our six step plan helps trustees and employers get through the equalisation process and choose the approach that’s right for them.
But for now I’m just taking in the fact that in the debate on the Bill I was quoted[1] and all the hard work that we and the DWP have been doing on this topic was recognised in the House.
[1] 12:35 pm – Column 622