OK so there’s been a big and boring legal stoush going on in the UK… the upshot of which is that UK pension schemes trustees are now in a quandary and stopping lots of pension transfers. That can suck if you, through no fault of your own, are caught in the cross-fire.
Basically the case is about a £15bn sexism allegation (well its not really, but it is kind of). It appears some women’s benefits (called a guaranteed minimum pension – GMP) have been accruing quicker than men’s, because back in the old days their retirement age was set at 60 and men’s at 65. Can you imagine that retirement at 60…
Now people are arguing that this is unfair for men, because pensions should be equalised, but they are not (and there are a few side arguments as well).
Obviously, this whole notion of retirement at 60 is a fairly dated concept in fact it stopped being relevant in 1997 when the GMP accrual was abolished.
But the problem is that heaps of pensions have members that might have benefits that accrued under this olden day policy. So even if you are a decent god fearing citizen who joined your pension after 1997 you could be snookered. Why because the people that run your pension, the trustees, could suddenly find that the pension scheme is not as funded as they thought it was (because they owe the older men more – collectively it is thought to be £15bn that needs to be funded). If the scheme isn’t fully funded as first thought, your pension might not be as funded as you thought as well, ouch!
Most of the schemes haven’t even started to work out the consequences, neither for them or their members and so everything has simply ground to a halt. That means that many schemes have put active transfers on hold, have stopped issuing transfer valuations, and their front line staff are ducking for cover under their desks every time someone calls for an update.
We’re guessing that means that there are going to be plenty of busy UK trustees over the Xmas break. If you are thinking about a pension transfer or find yourself unable to transfer contact us to see how we can help. Because if this carries on much longer there could be plenty of trustees facing legal claims from members whose tax bills might go up on a pension transfer, who lose out on investment gains, or simply cannot transfer out in a timely fashion.
If you are interested in the boring legal bits, here is a good summary https://www.sackers.com/publication/the-high-court-decides-how-to-solve-a-problem-like-gmp-equalisation/
NZ’s new highest tax rate increases the attractiveness of an early UK pension transfer for high income earners
The New Zealand tax regime taxes a pension transfer as personal income depending on how long you have been in