Client feedback

Ann and her team are very knowledgeable and proactive, liaise well with our other advisers and provide the Trustees with an invaluable secretarial service.
Ian Edwards,
Chair of Trustees, Comet
In any major corporate transaction, time is of the essence. PSGS's pragmatic commercial approach helped us manage the pensions aspects of our group re-structure to ensure a positive outcome for all parties.
David Wilman,
CFO at Survitec Group
We chose PSGS because of the experience of the team and the feel of the relationship seemed the right fit.
Paul Staniland,
Chair of Governance Committee, Kier Group Pension Trustees
It’s a pleasure working with key members of the PSGS team: their experience and leadership means that they know how to get the job done, working in partnership with fellow trustees, employers and advisers to achieve the best result for members.
Mark Smith,
Partner at Taylor Wessing
Appointing Kevin as KBC professional trustee was one of the best decisions the bank took. He complements the other two trustees and also appreciates the position of the employer too. The experience a professional trustee adds is invaluable and they can share their knowledge and market practice within the KBC plan. Kevin manages the budget in consultation with the bank, fully debriefs all parties and maintains a constant dialogue with myself (as HR Manager) and trustees. Since we have worked together for a number of years, Kevin also appreciates some of the limitations we face ie budgets, and always comes up with a proactive approach and solution. His input is particularly valued by the bank trustee who is an actuary in our pensions department in Belgium Head Office.
Sharron King,
KBC Bank
Great communication and practical help.

Trivial commutations - back on the agenda?

My colleague asked recently if any of the pension schemes we work with are currently allowing trivial commutations where a member has GMP accrued after 17 May 1990. Co-incidentally, I’d just asked a scheme administrator to let me know when they expected to be able to do these again.

Down but not out

Offering trivial commutations had been put on hold due to uncertainty around tax and the danger there may need to be a further top up following GMP equalisation that might be an unauthorised payment. Most pension trustees wanted to wait for HMRC guidance. It means quite a few cases may have built up over the last few years.

HMRC tax guidance actually came out a while ago. Along with other guidance, principally from the Pensions Administration Standards Association (PASA) and pension lawyers, the situation is now a bit clearer.

What’s the situation now?

Sackers useful GMP equalisation essential planning guidance explains lump sums paid in the past will not stop being authorised simply because further benefit is identified that could not reasonably have been known about at the time of the original payment. This reflects the exceptional circumstances of GMP equalisation and applies once the scheme has chosen its equalisation method.

For trivial commutation – where the monetary limit applies to the value of a member’s benefits across all registered pension schemes - if GMP equalisation takes the value above the monetary limit, any adjustment cannot count as trivial commutation and a small lump sum might be an alternative.

However, paying out a second, even smaller, lump sum later to honour the member’s equalisation rights will be fiddly and could be disproportionately expensive, so trustees may still prefer to hold back on small lump sums where a later equalisation uplift seems likely.

Next steps

Once this has been resolved and factors are available again, it’s worth checking your pension scheme administrators have a proper process in place to check whether members and spouses are eligible for trivial commutation. In my experience, the administrator often overlooks this and is part of the reason why there are so many in scope for doing a bulk exercise!

This is usually a popular option for members - for one of my larger clients, the scheme actuary has advised there’s potential to reduce liabilities by £13m by running a trivial commutations exercise. So, it’s definitely worthwhile but with GMP equalisation grinding on, it may not be back on the agenda for a while yet.



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