Sackers welcomes new PASA guidance on tax issues, despite the fact that a key piece of the jigsaw is still missing
Sacker & Partners LLP (Sackers), the UK’s leading specialist law firm for pensions and retirement savings, today welcomes the new guidance from PASA on the tax issues arising from GMP equalisation.
Sackers partner and Head of Know-how, Claire Carey commented: “We welcome this very comprehensive and much anticipated guidance from PASA. There are multiple tax issues that need to be resolved in any GMP equalisation project. Building on HMRC’s GMP equalisation tax guidance to date, PASA’s guidance offers some practical approaches for addressing the groundwork already laid. This will hopefully enable schemes to move forward on a more informed basis.”
“Crucially, like HMRC’s guidance before it, PASA’s guidance stops short of providing a much-needed steer on the tax implications of GMP conversion. It also notes that ‘no further guidance is expected from HMRC at this time’. However, there is hope on the horizon, with separate PASA GMP conversion guidance expected to be published by the end of April.”
“GMP conversion, which was the subject of a 2016 consultation and guidance in April 2019 in response to the Lloyds No.1 case, has long been on the DWP’s radar as a possible option for helping to crack the GMP equalisation conundrum. Provided specific procedural steps are taken and certain conditions met, this legislative facility enables GMPs to be converted into ordinary DB benefits.”
“In response to our recent survey (conducted as part of our quarterly webinar), the majority of respondents, just under 60%, were still in the starting blocks on their GMP equalisation journey, with just 2% saying they were nearing the finish line. Whilst data issues, ongoing reconciliation and general complexity were all cited as reasons for this, lack of clear tax guidance on conversion was also a common thread.”
Carey concluded: “I do not underestimate the challenges that lie ahead for those undertaking GMP equalisation projects and this new PASA guidance will undoubtedly help some schemes press ahead. But, for others, an essential ingredient is still missing.”