Seven industry bodies have written to Steve Webb strongly criticising the government's proposals on Guaranteed Minimum Pension equalisation and calling for equalisation guidance put forward in January to be scrapped.
The letter from the Occupational Pension Schemes Joint Working Group, which works closely with the Department for Work and Pensions, warned that proposals in a consultation on the issue that closed this week are largely unnecessary and would increase scheme liabilities by £13bn with implementation costs of £300m.
It claimed the changes put forward go far beyond what is required by European law and argued there is no need for additional legislation.
The letter continued: "If nevertheless the government wishes to introduce changes to implement Allonby [the case in relation to comparators] the JWG members strongly urge the government to pare back the draft regulations so that they do not introduce other additional requirements in relation to GMPs that are not currently in law."
It is signed by JWG and Association of Consulting Actuaries chairman Stuart Southall (pictured) and co-signed by representatives of the Association of British Insurers, the Association of Pension Lawyers, the Institute of Chartered Accountants in England & Wales, the National Association of Pension Funds, the Pensions Management Institute and the Society of Pension Consultants.
They argue that the Department for Work and Pensions was wrong to take the Allonby case and legal advice it received on the need for a comparator as a catalyst to promote the view there was a clear need for all schemes to equalise for the effects of GMP.
"Our members who are pensions lawyers believe that doubts remain about the need for equalisation, which would need a court case to clarify," states the letter.
The group also raised concerns over the method for equalising suggested in the consultation saying it is probably the most expensive option and calling for it to be scrapped.
"As our analysis suggests that there will be a number of scheme specific issues and cases that cannot sensibly be covered in a standard piece of DWP guidance, our view is that guidance is unlikely to turn out to be helpful. We strongly recommend removing equalisation guidance."
The signatories also voiced concern that future developments could change the way GMPs are equalised or remove the need to do so and that the DWP has overlooked the effect of GMP equalisation on public sector schemes.
The letter concluded: "Overall, we recommend that the government does not push pension schemes into a GMP equalisation review while major changes are proposed for State pension provision, which may have significant knock-on consequences for GMPs.
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