The cross industry GMP Equalisation Working Group (GMPEWG), chaired by the Pensions administration Standards Association (Pasa), has today issued its latest GMP guidance on ‘When to Rectify’.
The new guidance, created by the Reconciliation and Rectification Sub-Group, outlines four recommendations for trustees to ensure they make the right decisions for their scheme when navigating GMP rectification alongside equalisation.
Understanding the data is a preliminary focus in the guidance, with trustees urged to understand the number of members requiring rectification and how this population overlaps with those in scope for equalisation.
The nature and timing of the task is given a similar focus, with the guide emphasising the need to understand when to rectify, the potential approaches available, and again, how this dovetails with the work required for GMP equalisation.
The group has also stressed the need to consider the impact on members, and significantly, the impact of any delay which could occur whilst finalising an equalisation project.
Finally, trustees have been urged to thoroughly document and consider the scheme’s position, focusing on factors that could influence a decision about when to undertake rectification for those also impacted by equalisation.
Commenting on the guidance, Pasa chair of the GMPEWG, Geraldine Brassett, said: “In the past, schemes would have undertaken GMP rectification once the GMP reconciliation was complete or nearly complete.
“However, the need to also undertake a project to equalise benefits for the effects of GMP may result in schemes questioning whether to undertake their GMP rectification exercise once reconciliation is complete or defer this and combine it with the GMP equalisation project
“There isn’t a ‘one size fits all’ answer to this question, it’s a scheme specific decision.
“The starting position should be that GMP rectification should be progressed in a reasonable timeframe. In cases where GMP rectification is delayed in order to combine it with GMP equalisation, the evaluation of the impact of doing so and the rationale for deferral should be clearly documented.
“This new guidance will help trustees ensure they can be fully satisfied all members in scope are rectified and, where necessary, equalised at the right time.”
The group previously published its broader guidance on how to traverse equalising benefits in July 2019, in its ‘Call to Action‘ paper.
Hymans Robertson head of GMP equalisation, Matt Davis, added: “The technical aspects of GMP reconciliation, rectification and equalisation won’t be front of mind for many in the pensions industry as business continuity plans kick into gear.
“The industry will be pleased that further practical guidance has been released, which will help schemes consider whether to combine rectification and equalisation pension changes for members in different circumstances.
“Ultimately this is depends on circumstances rather than there being a blanket approach for the industry. The guidance also highlights that for many schemes GMP equalisation will take a few years.
“Many schemes still need data from HMRC in order to reconcile GMP records against scheme records. These schemes then need to decide what to do if there are differences between scheme records and HMRC records, before rectification can be undertaken and Pasa guidance can help with this.”
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