HM Revenue and Customs (HMRC) has announced it is delaying the provision of data that will enable pension schemes to confirm the guaranteed minimum pension (GMP) benefits to pay to members until the end of the year.
In its May Countdown Bulletin (45), the tax office revealed it is extending its ‘phase 7' automation and scheme financial reconciliation in response to industry concerns about the complexity and cost of data issues.
During the extension period, which is due to last until November this year, HMRC will be re-running a number of automated exercises - including those on scheme financial allocations - as well as running those which had been deferred from its original plan.
Hymans Robertson head of GMP equalisation Matt Davis commented: "To equalise GMPs, schemes need to know what records they actually hold. HMRC has the unenviable task of responding to queries on thousands of pension schemes with millions of records between them. The industry is not surprised to hear that HMRC needs more time here."
He added: "Pension schemes that may have the most problems with the delay are those working on transactions, such as buy-ins, or member option exercises."
If a scheme does not receive a refund or a bill, HMRC stated it can assume its financial account is in balance.
Davis continued: "Some GMP equalisation projects may be held up whilst waiting for the final list of GMP reconciliation data from HMRC. The danger here, given the size of the task, is there may turn out to be further delays.
"Whilst plans will need to be flexible, schemes can be looking at the quality of the other data they hold and building understanding to help make the right strategic call around the overall choice of method."
Defined benefit (DB) schemes that provide GMPs must revisit and, where necessary, top-up historic cash equivalent transfer values (CETVs) that have been calculated on an unequal basis, a landmark court judgment said last week.
Technology platform PensionSync has partnered with quantum employment pioneer My Digital to help contractors and employers manage pensions as more workers do temporary work for multiple firms.
Capita Pensions has partnered with data technology solutions firm Intellica to tackle the GMP equalisation challenges facing pension schemes.
The Hewlett Packard Retirement Benefit Plan has reappointed EQ Paymaster as its third-party administrator (TPA) for five years.
Schemes and their administrators have rightly received much praise for ensuring that pensions have continued to be paid in full and on time during an unprecedented period of disruption.