The National Insurance Services to Pensions Industry (or NISPI to its friends) publish a regular guide to the industry about the end of contracting-out. Here, I highlight some of the interesting topics up for discussion in their latest issue.
Hints and tips
For some time, individual third party administration firms, on behalf of their clients, have been formulating their own approach to 'quick wins' as part of Guaranteed Minimum Pensions (GMP) reconciliation work. HMRC have now published a list of queries they would not expect trustees to investigate, including start / end dates in the same tax year and, ignoring any tolerance level the trustees may have agreed, GMP differences of 1p (which are due to rounding). However, the most interesting highlight is the reminder that commuted GMPs remain on HMRC records, but don’t need to be queried.
GMP Micro Service replacing CA1629s
Future requests for GMP calculations will have to be sent electronically via this new service. HMRC are currently looking for organisations to help them test the development of this system and are hoping to have something available for testing towards the end of 2015.
The introduction of this new service means HMRC will no longer issue GMP notices to administrators, when a member is approaching State Pension Age. If a scheme is yet to agree GMP figures for these members, they will need to request a GMP calculation using the GMP Micro Service.
"HMRC will no longer issue GMP notices to administrators, when a member is approaching State Pension Age."
Is the new State Pension going viral?
With no cute cats in sight, HMRC has created a YouTube channel. They are using their account to promote and explain the changes to the State Pension, together with a State Pension Toolkit, to educate and engage with younger people about their entitlement.
Clarification still required on communication with contracted-out members
HMRC have responded to an article on the Actuarial Post website, suggesting that HMRC would confirm individual member’s contracted-out deductions from 2019 onwards, by saying this is still under consideration. It is our view that Trustees should proceed on the assumption that members will be told what the deduction to their new State Pension will be, in relation to contracting-out, and plan their own communications accordingly.
The industry continues to find HMRC’s countdown bulletins a useful insight into HMRC’s views on and approach to the end of contracting-out and we will highlight further developments from future bulletins as appropriate.