Although you may welcome the end of contracting-out, trustees will have a great deal of work to do in advance of this, as they will be expected to ensure the guaranteed minimum pension (GMP) data they hold is accurate before contracting-out ends. This is no mean feat and considering the goal posts have been moved in regards to timescales, time is not on the side of trustees of contracted-out DB schemes.
If your company has been subject to a number of mergers and acquisitions, this could create quite a complicated picture of your organisation
The pros of GMP reconciliation
Carrying out the GMP reconciliation process is advantageous as it enables a scheme to:
• comply with the regulator’s data quality checking requirements
• ensure members’ benefits are accurate
• provide far more accurate actuarial valuations
• access more favourable buy-out terms
• accurately record the scheme’s liabilities
• increase administration efficiencies
• ensure payment or recovery of missed or overpaid State Scheme Premiums (SSPs)
• avoid incorrect benefits being paid out from the scheme
• conduct any future GMP equalisation exercises from accurate records.