When approaching the insurance market it is not a requirement to have your GMP (Guaranteed Minimum Pension) equalisation project complete. However, insurers are definitely moving it up the list in terms of importance. Having your GMP equalisation project completed and implemented could significantly improve your position in the triage list (i.e. more insurers will decide to quote). In the current insurance environment where demand is outstripping supply, every little helps as they say.
Do you have the right data?
In order to complete your GMP equalisation project it all comes back to the reason for this series of articles – data. The information required to equalise GMPs is slightly different to the information required for the day-to-day running of a pension scheme. Even if you have very good data, you may not have the data required for this project. If you haven’t done so already, it is therefore important to carry out a GMP equalisation specific data audit. This will highlight data gaps that are required to complete GMP equalisation such as historic contracted out earnings. You may also have to source historic scheme information like factors.
Trustees should have advisors in place that can easily audit the data and advise on data gaps. Administration systems should have functionality to easily implement, and administer ongoing benefits, using all of the methods for GMP equalisation that are available. Trustees should not be forced down one route due to administrative complexity. The recent budget changes around the removal of LTA may help simplify conversion style approaches for example.
Market Data
When approaching the market it is important to understand what data the insurer needs to price equalised benefits. Administration systems should then be able to flex to output the required data efficiently.
Our administration software Mantle was designed primarily to improve efficiencies in administering pension schemes by managing data in one place. It is completely flexible and managed in house and as such we can make changes and updates as requirements change. For example, we have been able to easily administer the dual record approach for GMP equalisation for a number of years now – as such, most of our ongoing schemes have already equalised their benefits. We can also match data downloads to insurer requirements easily, ensuring a more efficient process with less manual intervention and risk.
Overall, data quality and management is at the heart of everything we do. If your scheme journey plan is to buy-out benefits in the short or medium term, it is essential that you begin to look at your data to avoid delays.