Pension schemes are well accustomed to dealing with complex regulation, and GMP equalisation or guaranteed minimum pensions certainly fall into that category. It is now over two years since the landmark High Court ruling that confirmed that trustees need to act on GMPs, but many schemes are yet to make a start.
Read why the team of the Hays Pension Scheme made a decision to approach the project early, and how they went about it.
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Hays set itself the challenge of future proofing its Scheme in preparation for a buy-out by moving forward with a GMP equalisation project. This would be no easy feat. There is a reason why only a handful of schemes have been proactive in beginning the mandated GMP equalisation evaluations.
Having completed GMP rectification and reconciliation, the scheme is currently blazing a trail towards completing GMP equalisation, enabling the Scheme to be fully prepared for the next stage of its development.
As a specialist administrator, EQ's knowledge of the Scheme put them in the driving seat. Their GMP reconciliation work with Hays made EQ aware of the Scheme's peculiarities, and they knew the condition of the data, having previously been through a data cleanse.”
Kath Bedford, Pensions Manager, Hays
After working closely on other projects, the Hays Pension Scheme met with EQ to discuss their approach and to understand the help that they could bring to this complicated subject. Hays quickly discovered that EQ’s expertise in this area was already well established and the two companies formed what would become a formidable partnership.
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scheme members in scope for equalisation
of members identified that need equalising
of transfers identified
EQ have supported the Hays team with several key GMP equalisation project tasks:
• Identifying what might require further data cleansing to allow the Scheme access to 'clean' admin records for GMP conversion;
• Interrogating the data and enabling the team to identify member groupings to prioritise the work; and
• Segmenting members who require their record to be data cleansed and have complex features requiring further work.
You cannot underestimate the importance of accurate data because the process requires tools to be built. EQ builds their tools to individual specification. We don't just want to make them effective, we also want to mitigate any risk of things being wrong."
Stewart Winter, Operations Director of EQ Data Solutions
The term "Vanilla member" is used to describe those who met specific criteria that meant GMP equalisation calculations could be completed via automation, with minimal risk of incorrect calculations being performed. Identifying this core group of vanilla members can make the GMP process much quicker and more cost effective to implement using EQ’s/Hays’ automated systems.
Those who are outside that scope required a little more thought. However, the project has now greatly reduced the number of members where further work or a manual review was required. Non-vanilla criteria – anything that might be considered non-standard – was captured by EQ’s data cleansing and analytics process.
• members with dual rate for GMP revaluation who previously transferred-in or have section 148 revaluation transfers;
• anything not handled within the GMP reconciliation project, such as historic markers on the internal database that required double-checking; and
• divorce cases, because like pension schemes, it is very rare for two divorces to be the same.
It is still early days – equalisation has yet to happen – but throughout, the working party has been testing and retesting the methodology. Due to this ongoing evaluation and culture of open communication within the team, they were able to identify and correct a problem early in the process. While this resulted in delays to the equalisation exercise, it has prevented bigger problems further down the line.
Stewart Winter, Operations Director of EQ Data Solutions says, “There is only one way to make this work, and that is to bring everybody together. It’s essential that there is a joined-up thought process with every party involved. We have a good relationship across the group, results in trust and cooperation and that they're all working together in a joined-up fashion."
We recognise that GMP is hard to get to grips with. But it has to be dealt with, so we offer this Made Simple Guide as an introduction to this highly complex subject. Contact us below to kick start your GMP equalisation project.
For more information on this case study, or to talk through GMP equalisation challenges facing your organisation, please contact us.