GMP reconciliation: some war stories…

I’m sure you know this already, but 5 April 2016 is the last possible day to register for HMRC’s Guaranteed Minimum Pension (GMP) reconciliation service. If you haven’t done so already – and your pension scheme has GMPs – do so now.

Here are a few reasons why, courtesy of a few real life examples…

Scheme A: HMRC had three additional pensioners on their records.

After further investigation it transpired the three members had transferred their benefits out of the scheme back in the 1990s but scheme records had not been correctly updated. The members had, therefore, been receiving a pension they were not entitled to for many years. After appropriate prior warning, pension payments were ceased and the overpayments were written off.

Scheme B: HMRC records showed five additional members with a GMP entitlement.

The pension scheme records indicated the members had transferred out, but had no details of a receiving scheme. By tracing the original members, we were able to provide evidence of transfers to HMRC that saved £200,000 on the final buy out premium.

Scheme C: 15 GMP cases on HMRC records but not on scheme records.

All 15 cases were pension members who reached normal retirement date in 1980s and 1990s. The scheme’s administrator has had to search old records to prove annuities were purchased for these members at the time of their retirement.

Scheme D: member with significant difference of over £50 per week between the scheme records and HMRC’s.

This is a curious case as HMRC did not hold a record for the member (stating she was E rate National Insurance) but the pension scheme records do show a GMP entitlement. Various theories have been put forward regarding the GMP recorded on the member’s record, including that it may be the result of her late husband’s membership of the same scheme, or simply an error as she had been a member for less than two years and took a refund. No final decision has been made on the GMP yet, it is still under discussion.

All these cases are good examples of individual discrepancies taking a great deal of time and effort to sort. We have had 20 years to reconcile GMPs, and some schemes have been trying to do so for nearly that length of time. Others have been fortunate and managed to do it in a couple of years. With HMRC stopping replying to GMP queries altogether in October 2018, time really is running out.

For more information about GMP reconciliation, take a look at our briefing note.

 

 

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