We have some legal clarity.
We have some clever minds working on it.
We even have some early examples of completed projects.
In reality though, what a journey it is to implement GMP equalisation!
It is a welcome dream to finally be sorting this out, more than 30 years since the Barber ruling: to finally think about what data is needed, what quirky calculation scenarios might pop up, what equalisation method is best and what implementation date seems eminently reasonable. Once you put both feet in that rabbit hole, however, be sure you stay focused or else you’ll miss the tea party!
It gets curiouser and curiouser as you travel: the strange world of HMRC’s Online GMP Checker, the confounding requirements of anti-franking, the upsetting inconsistencies in data and the ‘simple’ A, B, C (and D) of which method to choose. But the well you are falling down is also full of cupboards that may hold some tricky riddles for us all.
At Buck we have been down there a few times, and can help guide you through the twists and turns – as well as advise which rabbit holes are so deep they may be best left alone until later in the project. For example, we know that implementing a phased approach to membership can allow tricky scenarios that impact only a minority of members – such as those with special early retirement terms – to be left until after the majority have had their benefits equalised.
I don’t imagine Alice would have dreamt of ‘operational readiness,’ but there is a big cupboard labelled just this, that we all need to open and have a rummage around in. Member records and the administration of member benefits are the reason we have jumped into this rabbit hole, so we must follow that white rabbit all the way and keep our wits about us as we implement the changes. Some of these are well known even if they are potentially challenging, such as adapting the administration platforms to track dual records or updating records to show amended future benefits for schemes choosing a conversion methodology. Others are not so obvious: will there be any post-equalisation lack of opportunity cases, where a member may have restrictions based on their true sex but not on the comparator sex?
The administrators hold the keys to this wonderland, so we must explain how equalisation will change members’ benefits and engage with them as partners about the changes to future processes for all schemes. We all need to be clear on how the administration systems will be updated and the data output from the project must be as agreed and in the right format. There are no magic potions here, to make it grow or shrink, so we need to get it right first time. Future processes, both pre- and post-retirement, as well as deaths, transfers etc, must be understood so nobody loses their head in a month, a year or even ten years from implementation.
Other significant projects must be either avoided or embraced – examples we have seen include annual pension increases, wider data cleanse work, buy-in/out, Pension Increase Exchange exercises and ‘Barber window’ changes.
Communication to members needs to be clear and the timings thought through, so any letters and associated payments align with normal payroll schedules. All standard member communication, such as retirement quotation packs and annual benefit statements, should be reviewed and an effort made to keep all messaging and language consistent. And within the administration teams, clear notes and audit trails will be essential to help with any member queries or future calculations.
GMP equalisation is a project that will fundamentally change the administration of many schemes for years to come, so the implementation work cannot and should not be underestimated. Many things will be consistent across equalisation projects for different schemes and can be planned without looking at individual scheme characteristics. But not everything. Different schemes have their own idiosyncrasies, receive different steers from advisers and have their own processes for stakeholder agreement, so do allow time for this.
We look forward to seeing you soon down the GMP equalisation rabbit hole. If you’re perplexed, don’t worry – we’re all mad down here!