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McCloud – How To Protect Ongoing Administration

05 February 2021

By Andrew Lowe, Change and Solutions Director, EQ Paymaster

Regardless of how well you understand the impact of McCloud on your scheme, and how much effort has already gone into preparation, there’s still going to be a lot of work to do. At a minimum, this will include:

Andrew Lowe 800X600px Andrew Lowe Change and Solutions Director, EQ Paymaster
  • Revisiting the majority of crystallisation calculations for the best part of a decade
  • Allowing reconsideration/recalculation of certain member choices/events
  • Ensuring payrolls accurately reflect updated benefits, and that any back payments are paid
  • Informing all types members of updated benefits and tax implications
  • Bulk generic communication to different member cohorts

Of course, you may well decide that there’s even more you wish to do in terms of value add for your members. This could be engagement or support campaigns using digital tools like videos and modellers for example.

In isolation, the above is challenging, but certainly achievable for all schemes. However, it’s a big ask when put on top of fulfilling your business as usual needs and maintaining quality member service.

Segregate bulk remediation activity

A lot of the activity above can be grouped in two main areas that can be ringfenced from ongoing administration. The first and possibly most daunting is that of bulk remediation.

As we all know, change in the pensions industry is nothing new, and bulk recalculation of member benefits is often the result.  These exercises require clean and complete data and a flexible toolset.

At first glance remediation looks like re-working previous business as usual cases. Although it’s almost always more complicated as a result of contributions and taxation issues as well as the unpicking of events/decisions made since the original calculation was completed.

By ringfencing bulk remediation activity from your ongoing admin team and systems, you provide increased flexibility over timing of communications and implementation of benefit changes that will protect your resources. 

Minimise your risk

Treating remediation separately allows you to minimise risks such as

  • Amending data in a ‘live’ environment before it’s been properly validated
  • Implementation of updated benefits not being aligned to payroll dates
  • Extra effort expended where bulk functionality in key areas is not available
  • Having to develop ‘throw-away’ calculations and functionality within administration systems that are not required for future activity (thus overcomplicating administration systems forever)

This approach has been used successfully in many high-profile remediation activities – notably GMP rectification/ equalisation - over the last few years.

Cross public sector solutions

Although each public sector scheme has its own benefit structure and will have unique considerations for remedying McCloud benefits, there is a clear crossover when it comes to benefit recalculation/remediation.

This is a problem facing the whole sector at broadly the same time. It’s absolutely possible to envisage a solution (or multiple solutions) with standardised data rules that could support a consistent output for members whilst allowing schemes to maintain their current levels of service. 

Of course, this could possibly lead to reduced overall costs for schemes that use a bulk solution, benefitting schemes and the public purse overall.

In this case sharing the problem might just be close to halving it.

Talk to us today

If you have any questions on McCloud or would like to discuss our approach to bulk remediation and how it could benefit you then please get in touch.

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