For some time, those working on GMP reconciliation have most likely been running additional checks on data areas where there were known weaknesses in HMRC data. A little while ago we identified some more anomalies in GMP values between the final SRS data cut from HMRC and the online Checker – happening across a number of projects. We’ve been liaising with HMRC to get to the bottom of the issues.

In the next bulletin from HMRC there will be some additional guidance around using the Checker for the most up-to-date calculations in a small number of defined areas of weakness. This is a change in guidance as the Checker wasn’t supposed to be used for reconciliation – now what every scheme wants to know is how these differences might affect them.

There are four areas of confirmed discrepancy (some of which were already known):

1. Deferred Revaluation Cases

This affects individuals that reached their state pension age (SPA) after 5^th April 2016. HMRC only reconciled the position at 5 April 2016 and therefore the final data cut will have output at this date (not actual SPA).

Example

It would be reasonable to expect the latest SRS file to provide figures at SPA for this case because

• the member reached SPA in the past (before the latest run date) and
• HMRC status is (2).

In this example the GMP values provided in the final SRS file are not as at SPA but as at 05/04/2016

Schemes should therefore be careful in using GMP figures for Status (2) members who reached SPA after 05/04/2016.

We’ve carried out some quick analysis and this issue isn’t isolated to the most recent SRS files from HMRC. So if you are using a cut of data last received in e.g. 2018 then this issue will be seen.

If you require the HMRC figure as at SPA, The GMP Checker however will provide a calculation up to actual SPA where this is later than 5 April 2016.

2. Widow Cases

Cases where both the individual and their surviving spouse are over SPA the SRS GMP provided is half of the GMP at SPA (not Date of Death).

The online GMP Checker does provide the correct calculation = GMP value immediately following death.

3. Transfer in cases & Zero GMP

Transfer In Cases: Most commonly we have seen the scheme accrued GMP showing on the SRS file but the total has not included any transferred in GMP.

Zero GMP: Cases where SRS has provided a total GMP = 0.00 but where the Checker provides a GMP

If both HMRC and admin show nil GMP then you should validate this using the Checker. If you now get a GMP using the checker this should be used.

Both scenarios need attention as it may be that scheme data holds zero GMP in error. If SRS also shows zero GMP then it wrongly appears both parties agree there is no GMP where there is in fact one.

HMRC have carried out numerous checks of examples provided to them and confirm the online GMP Checker provides the correct calculation in all cases.

4. Why the difference in outputs?

Differences between final data cuts and the online GMP Checker output can occur as they are produced through different processes – for example the GMP data provided in final data cuts is a ‘lift’ of GMP held at a point in time, whereas the online GMP Checker service provides a real time GMP amount calculated at the point of request.

So, what should you do now?

Well, the good news is there will definitely not be another cut of data to come from HMRC. So if you have already completed corrections from GMP reconciliation this work will not be wasted. There is an option to re-validate calculations for members already rectified who fall into the affected groups above, but adopting a practical approach is key to ensure efficiency, for example focusing on members where benefits have been reduced.  However some of the weaknesses in SRS data would have been picked up in existing processes, so you should discuss this with your GMP reconciliation provider.

If you have already reconciled but haven’t rectified benefits yet, we would still recommend that you re-check your data against the final SRS data cuts to ensure you capture the most up-to-date data prior to commencing rectification. Does this mean you need to also re-run all your data through the Checker? No, we don’t believe this is the best option – but for data areas where there is known weakness you should run a cross check with the Checker.

To support with this, we have developed seven tests that can be applied to your data which confirm whether to use either SRS or Checker values on a member by member basis.

Understanding how many members may be impacted is the first step, this will allow decisions to be made quickly and help close GMP rectification projects and subsequently GMP equalisation – where that is relevant.