GMP rectification

Reconciliation of both the scheme membership and GMP values is the foundation of your GMP journey.

Data preparation

Kick off your GMP equalisation project by getting your data in good shape. Given the length of time since benefits have accrued this may well be a challenge – especially as the data required is generally more detailed than that needed for ongoing scheme administration.

GMP reconciliation

Before equalising benefits for unequal GMPs, you will need to ensure GMP records are accurate. Completing your GMP reconciliation is therefore essential. It is important to reconcile both the scheme membership and the level of GMP entitlement for each member. Only then can benefits be correctly equalised.

GMP rectification

Any errors identified in member benefits as part of your GMP reconciliation must be rectified, considering how this will interact with your GMP equalisation project. It may be appropriate to hold off taking action on reconciliation and to instead dovetail this with future work on GMP equalisation. For example, you may not want to start recovering overpayments only to increase benefits again some months down the line. However where you are underpaying a member it’s likely to be more difficult to argue that you should delay rectification.

Data readiness

Equalisation calculations are complex and require many data components to ensure accuracy. Our targeted analysis identifies inaccurate or missing data essential for these calculations. With these issues addressed more members can be equalised more efficiently.

Additional data requirements

In order to carry out GMP equalisation, you are likely to need more detailed data than is typically used for your day-to-day administration. Examples include full contracted-out earnings data to calculate GMP accrued specifically over the equalisation period 17 May 1990 to 5 April 1997, the cash taken by a member at retirement along with the commutation factor used to calculate the cash entitlement.

Scheme level data

Detailed scheme level data will be required including historic factors like those used for early retirement, late retirement and commutation – going all the way back to 17 May 1990, alongside information on administrative practices such as anti-franking.

Opposite sex GMPs

These will need to be calculated alongside the corresponding excess benefit elements.

Member tracing

It is important to have current addresses for all members so that you can communicate with your membership through the GMP equalisation process.

How can ITM help?

GMP equalisation ready assessment

We can work with your in-house team or third party administrator to carry out an independent assessment to determine whether your data is GMP equalisation ready. This will give you:

  • An independent assessment of your data readiness including a data ready score.
  • Materiality calculations to identify those members likely to be most affected by GMP equalisation enabling data work to be focussed on these members thereby increasing efficiency and reducing costs.
  • A comprehensive data cleanse plan to identify what cleansing/additional data would be required to accurately calculate GMP equalisation corrections.
  • Data work to implement the data cleanse plan including the calculation of the additional GMP equalisation data elements.
  • Data re-run through our assessment tool to monitor progress against the data cleanse plan.

Tracing

Our specialist tracing team can help you locate your members, update your records and provide ongoing monitoring to keep your data clean.

“High-quality data is essential and will have a real impact on the benefits individuals receive.”

Historic rectification

Once the data preparation has been carried out, the next step is to calculate equalised pension payments and determine which members and dependants have been underpaid using the method agreed by the trustees. These underpayments will then need to be rectified. The process broadly falls into the following steps:

  1. Roll back pension to date of retirement / date of death
  2. Unwind cash commutation and early/late retirement factors
  3. Roll back pension to date of exit
  4. Comparison of rolled back pension to pension at exit held on admin system
  5. Calculate additional tranches at Date of Exit including Opposite Sex tranches
  6. Roll forward to current date calculating equalised pension payments due
  7. Calculate any equalisation uplift / reduction to pension at date of rectification
  8. Calculate any arrears due to members
  9. Communications exercise and operation of member contact centres

How can ITM help?

Our GMPe application is built on our core data management platform – eDAaRT.

This means we can work on pensions system data irrespective of the source of that data, and build core applications that are “system agnostic”. The GMPe application can carry out all your GMP equalisation calculations including the calculation of equalised benefits and rectification.

“…we can work on pensions system data irrespective of the source of that data…”