GMP reconciliation

We have been actively working in the field of Guaranteed Minimum Pension reconciliation (GMP) since 2002.

Over the last decade, we have worked closely with HMRC to develop the processes that now underpin GMP exercises, and have successfully completed over 150 reconciliations on behalf of clients.

Our methodology and process fully address the complicated cessation of the contracted-out benefits and the impact on both historical and future benefit payments.

The benefits of reconciled data

Completing the GMP reconciliation ensures that your scheme is better positioned to take advantage of a number of exercises beyond simply having correct benefits.

These could include de-risking exercises such as buy-ins, buy-outs and longevity swaps and would be a pre-requisite if considering wind-up. In addition to this, GMP equalisation can also be managed effectively when the regulations are finalised.

Once the reconciliation process has been completed, trustees can feel reassured that discrepancies have been eliminated, contracted-out membership has been agreed and the correct benefits are being paid to pensioners.

Transfer values will correctly reflect the benefits due and asset/liability modelling will be as accurate as possible.

71% of pension managers see the GMP reconciliation as a key administration challenge for 2016.

85% of large schemes (above £500 million) see the GMP reconciliation as a key administration challenge for 2016.

Reconciling scheme data

We follow a three stage approach to reconciling scheme data, which allows for better project management and greater clarity of cost.

Analysis to establish areas of data mismatch between scheme records and the data held on behalf of the scheme by HMRC
Reporting to provide a complete breakdown of gaps and mismatching data around the GMP liabilities, and identify any trends in data inaccuracies
Recommendation on where reconciliation activity should be focussed
Plan of action for the reconciliation project and to fulfil trustee objectives

Draw up a plan of action to reconcile all the mismatched and missing data
Match resources to the level of technical knowledge required
Agree milestones with the aid of a detailed project management plan, to help navigate the process
Report regularly to show progress
Control cost throughout the process

Specifications developed and agreed with you
Data extraction requirements identified and agreed
Extraction of missing data
Members run through calculation tools
Sample reviews carried out
Output files produced
Results uploaded onto the pension administration system
Member communications issued

Client testimonial

As independent chair of a number of pension schemes administered by Capita, I was relieved to know that the burden of GMP reconciliation was lifted from my shoulders with a tried and tested solution that offered the best combination of price and performance. I am happy to commend Capita for their excellent, friendly, effective and cost efficient service.