Published by Julie Walker on
Estimated reading time: 3 minutes
Julie Walker, Associate, considers the problems trustees face after the Lloyds ruling.
GMP equalisation was always going to be hard to relate to, it doesn’t really grab the imagination or lend itself particularly well to convenient metaphors - we’re calling it the ‘elephant in the room’ because, basically, it’s a large, poorly defined grey area and, sooner or later, the appeals and head scratching about where it came from is going to stop, and the real, practical, nuts and bolts discussions about how to deal with it will need to start.
The whole equalisation piece isn’t happening in a vacuum – on a scale of one to ‘a lot’, there was already A LOT of work to do around GMP. Closing in on the end of 2018, the entire administration industry, whether TPA, in-house, public or private sector, is working flat out to wrap up GMP reconciliation (7.5 million GMP members to reconcile, let’s remember) before HMRC largely shuts up shop on GMP support. Looking forward to 2019, when the equally challenging GMP rectification piece really kicks in, and slowing down already wasn’t an option.
There was already a fine line between GMP reconciliation and rectification, a line so fine that many schemes struggled to see the difference. Reconciliation, the detailed forensic comparison of almost four decades worth of scheme and HMRC records to establish every member’s precise GMP entitlement at a given point in time, is the theory side of contracting out. Rectification, the next and final step in the process, is the practical.
Trying to put this in a more relatable context, let’s imagine you upgrade your bank account –
Can we do it? Well, yes we can.
We need to be realistic about where trustees are coming from. Ultimately, as the industry has tried hard to reassure schemes, GMP equalisation is completely ‘doable’, but the timing could certainly be better and the ‘GMP fatigue’ factor is real.
Back in 2015, when the reconciliation ball really started rolling, trustees could buy into the idea that something probably needed to be done about their GMP. Fast forward to today, and trustees are tired of GMP – exhausted by three years of super-detailed discussions on the finer points of contracting-out regulations. Trying to engage schemes now in a second conversation around the super-niche subject of GMP equalisation is going to be a really tough sell.
This article was originally published in Professional Pensions.