As schemes are now working through the high level decisions needed to plan and implement GMP Equalisation projects, it’s becoming apparent there are challenges to be addressed and decisions to be made on a more detailed level. Those challenges and decisions are ones typically impacting on the day to day administration of a scheme. More specifically, the ability to equalise member benefits and administer the scheme on an equalised basis going forward. In response to industry requests, the GMPEWG has set up a further sub-group to look at these points of detail and provide help, support and, where appropriate guidance, to those involved in GMP Equalisation projects.
The Terms of Reference and consequently the output from the group will be different. The objective of the group is to discuss (and hopefully resolve) individual points as they arise and so the administration sub-group will act more like a forum, meet more frequently and provide help and support in the form of a Q&A document which will be updated on a regular basis.
Examples of the sort of questions we’ll be looking at include calculating retirement benefits on an equalised basis, including:
- Cash commutation and early retirement options for a member where the comparator would not be able to retire
- Preferred approaches to assessing transition between member and comparator pensions
- The GMP Equalisations implications on death benefits and what this might mean for data requirements
- Potential issues for GMP step ups
The group is comprised of representatives from a number of the third party administration providers along with some in-house schemes and other advisers. The skill sets of the members of the group include member and client services, systems, operations, technical and training. If anyone reading this update would like to get involved with the work of the group, then please email PASA at firstname.lastname@example.org.
The inaugural meeting on the administration sub-group has taken place and we have now commenced our regular meetings so expect to hear more from us soon. We’ve agreed, for now, the focus will be on projects covering active, deferred and pensioner members and we’ll bring historic transfer values in scope once the GMPEWG guidance has been published, expected in the third quarter of 2021.
The most important point coming out of our meeting was the need for schemes to ensure their administrator is an integral part of the project from the beginning. Their input is vital in delivering workable, pragmatic solutions.
The sub-group identified some other key points which are important as schemes undertake the initiation phase of the GMP Equalisation project:
- Identifying complexities and issues in the ongoing administration of GMP equalisation. Adopting a broadly compatible approach across administrators. This could be particularly important where schemes may choose to change providers including going to buy-out
- Getting commonality of view on where default approaches might apply. What these may look like has the potential to be valuable to all schemes, but especially smaller schemes
- Implementing the changes needed to administer a scheme on an equalised basis. This can have significant cost implications so the focus will be on pragmatic and cost-effective solutions with acceptable levels of risk
- Mitigating the impact of a likely ‘capacity crunch’. This will impact on delivery to members, cost and other scheme initiatives
If there are any questions you’d like the administration sub-group to consider, please send these to any member of the group and we’ll add them to our log. Please note we are only able to look at questions with implications for all schemes and not those relating to an individual scheme’s benefit structure.
We expect to be in a position to issue our first update of the Q&A document by the end of July 2021.
The current members of the group are listed below:
Geraldine Brassett – Capita Pension Solutions
Mark Riordan – Capita Pensions Solutions
Ellie Ingamells – , Capita Pensions Solutions
Malcolm Reynolds – JLT
Stephen Blakesley – Mercer
Karla Bradstock – THPA
Ian Wort – Premier Pensions
Lucy Cresswell – Barnett Waddingham
Jan Manning – Equiniti
Julia Wyatt – Equiniti
Brian Docherty – Hymans
Iain Wilson – XPS
Sarah Allard – Barnett Waddingham
John Doherty – XPS
Kathy Cruse – Willis Towers Watson
Suzanne Dosell – Hymans
Christian Macnab – LCP
Marcus Hines – Equiniti
Elyot Rush – Willis Towers Watson