The Association of Consulting Actuaries (ACA) has voiced its support of proposed reforms to guaranteed minimum pension (GMP) conversion rules and called for their swift implementation.

In response to the government's consultation on GMP conversion regulations, the association welcomed the proposals to make it easier for defined benefit (DB) pension schemes to resolve historic inequalities in GMPs between men’s and women’s pensions.

The ACA praised the clearer rules on survivors’ pensions and simpler actuarial certification requirements in particular.

“DWP has clearly listened to industry concerns and put forward meaningful reforms to rules that have complicated GMP conversion for years,” said ACA Pension Schemes Committee chair, Peter Williams.

“We particularly welcome the clearer rules on survivors’ pensions and the new option for actuaries to certify a calculation model, to process individual conversions more efficiently.

“These changes should make it considerably easier for schemes to resolve historic inequalities between men's and women's pensions, reducing unnecessary administration while maintaining important safeguards for members.

“We hope the government can bring these reforms into force promptly and give schemes the clarity they have been waiting for.”

The ACA said it supported proposals to clarify the minimum pension benefits payable to survivors following GMP conversion, stating that these changes would resolve longstanding uncertainties in the existing legislation, while simplifying the circumstances in which survivors’ pensions must be paid and allowing schemes to continue providing more generous benefits.

However, the association highlighted a potential issue for schemes that typically reduce a survivor’s pension when the survivor is significantly younger than the member.

It warned that the proposed rules could prevent this adjustment being applied to part of the converted pension.

The proposal to allow actuaries to certify a calculation model for up to 12 months, rather than having to certify each individual GMP conversion, was also supported by the ACA.

However, it argued that there was no need for an additional statutory requirement for trustees to review the model during that period, as scheme actuaries would already be expected to flag any changes that invalidate the certification.

The ACA warned that the efforts to clarify which employers needed to consent to GMP conversion could still leave some difficulties for schemes with multiple participating employers.

It also called for a subset of employers to be allowed to authorise conversion, consistent with the existing flexibilities for certain scheme funding decision.

“We would like to see greater flexibility for multi-employer schemes, allowing a subset of employers to take the conversion decision, as is already possible for certain scheme-funding matters,” Williams added.

“We also note that, as drafted, the rules risk allowing a single employer's failure to engage to hold up an entire conversion exercise.”

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