With the December 2018 deadline for reconciling GMPs looming, HMRC are seeing a massive increase in the number of SRS queries.
Given that HMRC are receiving so many queries it is understandable that there may be a squeeze on their resources; we have recently seen HMRC’s timescales increasing, with the most recent queries having a target response date of June 2017. What impact will this have on the pensions industry, and what can we do to help reduce the resource pressure on HMRC?
"So far HMRC haven’t provided any comment on whether they intend to extend the deadline but it is difficult to see how every scheme is going to be able to reconcile every GMP in the next two years given the current position."
Managing client expectations
The first issue is client expectations; like other third party administrators we have provided reports to our clients stating when we expect to complete their Guaranteed Minimum Pension (GMP) reconciliation exercise. These timescales have been based on the assumption that we will receive responses to our queries in a three month timescale and therefore we will need to make clients aware that their expectations may not be met.
The impact of delays
A delay in the completion of the GMP reconciliation exercise can also have knock-on effects for other activities that trustees may be considering – how many schemes are waiting for confirmation that their GMPs have been reconciled to carry out a buy-out or a trivial commutation exercise? What happens if the current trend of deteriorating funding positions continues and a scheme can’t afford to buy out due to a delay with the GMP reconciliation?
We are currently two years away from HMRC’s deadline for completing all GMP reconciliations. In our experience it can take a couple of queries to HMRC to clear up a discrepancy on a member’s record. Our concern would be that with HMRC’s current timescales we are not going to be able to get responses to all of our queries before the December 2018 deadline. So far HMRC haven’t provided any comment on whether they intend to extend the deadline but it is difficult to see how every scheme is going to be able to reconcile every GMP in the next two years given the current position.
GMP checker tool
So, what can we do as an industry to help HMRC? The main thing is make use of the GMP checker tool where possible and make sure that we are only sending them queries that we cannot resolve without their input. The vast majority of cases which are submitted to HMRC need to be queried but the fewer 'phoney' queries they receive the more time they have to work on genuine issues.
Addressing industry concerns
Without significant increases in HMRC’s resources it is difficult to see the turnaround times improving in the near future. In addition HMRC will shortly provide data for members who were active as at April 2016, which is only going to result in more queries. Furthermore, you would naturally expect the number of queries HMRC are receiving to increase over the next year, as GMP reconciliations take a higher priority as the deadline approaches. We will be watching for HMRC’s next countdown bulletin with interest to see what their plans are for addressing the industries concerns.
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