Following a successful pilot project, the Pension Protection Fund (PPF) has stated that its method of calculating compensation for men and women to ensure they are treated equally will apply to all pension schemes in its assessment period.
In 2008, the PPF confirmed that it has to take account of guaranteed minimum pensions (GMPs) to ensure the equal treatment of men and woman, as required by law.
Men and woman can receive different levels of compensation because of differences in the calculation of GMPs – primarily brought about by different retirement ages.
The PPF confirmed its GMP calculation method about a year ago, but decided to undertake a pilot project with selected schemes first to iron out any teething problems.
PPF’s chief operating officer, David Heslop, said: "The pilot project allowed us to put the calculation method through its paces and we found that it worked as we anticipated. This means that it is fit to be rolled out to all schemes in our assessment period.
"It has been a long and complex process, involving many of our stakeholders, to come up with the most satisfactory approach for our needs and also meet our legal obligations. I would like to thank all those schemes who took part in the pilot as their efforts mean we are confident that we can apply the method to all schemes successfully."
The PPF will tell schemes which are scheduled to transfer to the PPF before 31 May 2013 that they will not have to do GMP calculations, in line with the PPF methodology. Instead, the PPF will do these calculations and adjust compensation payments accordingly. For all schemes where transfer is not expected until after 1 June 2013, GMP calculations using the PPF methodology will be completed before transfer.
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