The Occupational Pensions Regulatory Authority (Opra) has published update 3, aiming to clarifying its current view on some issues that can delay final salary scheme wind-up, such as:

• whether wind-up has started;
• investment issues;
• minimum funding valuations;
• scheme deficit under section 75 of the Pensions Act 1995;
• cash equivalent transfer values;
• guaranteed minimum pension equalisation;
• employer insolvency; and
• appointing a statutory independent trustee.

Opra is attempting to demonstrate a pragmatic approach. On the question of MFR valuations, for example, Opra says it will not normally insist on continued preparation of the regular 3-yearly valuations, provided the trustees and the scheme actuary give appropriate assurances about progress and actions being taken to secure the benefits.

A further example involves schemes believed to be underfunded. Before asking the scheme actuary to quantify and certify the amount, trustees are encouraged by update 3 to consider the likelihood of securing payment of the debt from the employer, and if the employer is insolvent, whether the likely recovery of any debt from the employer’s insolvency outweighs the costs involved in its calculation.

On the thorny issue of cash equivalent transfer values (CETVs), Opra will not penalise trustees for failing to issue guaranteed statements of entitlement within the absolute maximum 6 month period prescribed by law (SI 1996/1847 Reg 6). Neither, however, can Opra absolve trustees of their legal duty to issue guaranteed CETVs on request, and it expects trustees to comply at the earliest possible moment.

The question of GMP equalisation is arguably even more difficult. Here, while unable to give a definitive ruling, in update 3 Opra goes as far as it can and states its view (reflecting the DWP's opinion): "there is no clear obligation on trustees to equalise benefits where inequalities arise only from the impact of contracting-out legislation." Update 3 sets out nine different approaches which some trustees have taken to this issue. Opra urges trustees to adopt a pragmatic stance, noting that "the cost and time involved in devising and implementing a methodology for equalisation may well outweigh the value in terms of benefit to members."