On the go: HM Revenue & Customs has set July 31 as the final deadline for defined benefit schemes to request their final guaranteed minimum pensions reconciliation data cuts.
For several years, scheme administrators have been trying to ensure that their records on GMPs — the minimum payments they provide members who contracted out of the state earnings-related pension scheme — are correct, by comparing their data with that provided by HMRC and querying the taxman when the data does not match.
All schemes that have queried HMRC through the scheme reconciliation service were in the process of receiving a final data cut from the government, previously slated for December 2019.
In May 2020, HMRC stated that it had assessed the processes needed to issue the final data cuts, and these would be completed by the end of July 2020.
In its Countdown Bulletin 54, published on Friday, the taxman stated that there were no significant delays to the proposed timeline, and that all output received from the final data cut scans were issued to pension scheme administrators.
HMRC noted that it was unable to issue data cuts to those schemes with nil output, or where it has been unable to trace the scheme administrator.
The taxman has now set a final deadline for July 31 for schemes that did not receive its final data cut, noting that it will only release information for schemes that engaged with HMRC’s scheme reconciliation service, or for pension funds with an ongoing file in the scheme cessation area in April 2018.
Alan Casey, senior consultant at LCP, noted that trustees should check with their administrator that they have received their final listing.
“Even if they are not intending on doing anything with the listing, it might prove to be a useful reference point down the line; for example, for buyout exercises or in case of future membership discrepancies,” he said.
Casey pointed out that the well-documented issues with the data within the final listings — with HMRC admitting last year that some of this information might be out of date and unreliable for use in rectifying incorrect payments — “will continue to cause additional work for administrators and extra costs for trustees”.
Nevertheless, it is “pleasing that HMRC has released this statement as it hopefully pulls the curtain down on GMP reconciliation”, he noted.
“A line does need to be drawn, and HMRC also needs to stop amending its records, so this is a welcome development.”
Sue Fountain, senior consultant at Aon, stressed that GMP reconciliation is “a significant exercise and an important precursor for GMP equalisation”.
“It will take some time for all schemes to get through the GMP rectification process given the number of schemes going through it at the same time and the complexity involved,” she said.
“In particular, trustees will need to consider how to implement the results and communicate the outcomes to members.”
