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GMP reconciliation and rectification

GMP reconciliation and rectification. PMI Administration seminar, 29 February 2016. Geraldine Brassett, PASA and Helen Powell, Allen & Overy LLP. On the agenda for this session:. The big picture: from reconciliation to rectification. 1. Getting started. 3. Correcting benefits. 2.

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GMP reconciliation and rectification

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  1. GMP reconciliation and rectification PMI Administration seminar, 29 February 2016 Geraldine Brassett, PASA and Helen Powell, Allen & Overy LLP

  2. On the agenda for this session:

  3. The big picture: from reconciliation to rectification 1. Gettingstarted 3. Correcting benefits 2. Reconciling data Why do schemes need to reconcile GMPs at all? What does GMP reconciliation look like in practice? What do schemes do about any errors identified?

  4. Moving from reconciliation to rectification Administrator’s closure report – initial analysis vs post-reconciliation position 1. Split by membership status? Split members pre- and post-GMP payment age? Consider scope of potential rectification work – e.g. deferreds/benefits in payment 2. Set strategy for rectification 3.

  5. Developing an approach to rectification Trustee duties Relevant factors Scheme impact • Administer the trust according to its terms • Pay the correct benefits • Safeguard the assets of the scheme for the benefit of the members • Impact on funding? e.g. multiple trivial underpayments • Can appropriate tolerances be applied? • Rounding • Corrective • Type of error (underpayment/ overpayment) • Proportionality (e.g. GMP only pensions?) • Type of member (e.g. transfer/commutation)?

  6. Practical issues: underpayments Remedy underpayment Pension arrears Underpaid PCLS Interest Difficult cases? • Transfers • Commutation • Pension sharing orders • Deaths • 2006 regulations • Can be paid as lump sum (NB tax implications) • Scheme administration member payment • Currently no mechanism • Continuing breach

  7. Practical issues: overpayments Scheme perspective: Amend rules, or augment individual member benefits? If augmenting, impose special terms? Futurepayments Past payments Write off? Reduce to correct level Reduce to correct level; offset past overpayments? Seek recovery? If unsuccessful Tax perspective: Communications; practical and administrative issues Eliminates overpayment, but formalises increase in liabilities Overpaid pension/PCLS – see 2009 regulations Other amounts written off or not recovered – UAP rules/£250 easement Consider reporting requirements (TPR/HMRC)

  8. Dealing with difficult cases Deaths Transfers Commutation Pension sharing orders • Will any data be provided by HMRC? • Spouse pension? • Pre-death payments? • Issues with PRs? • Historic transfers out not normally included • Errors identifiable only by receiving scheme? • Bulk transfers? • Underpayment – relevant accretion rules? • Overpayment – augment or UAP? • Pension value is a factor in overall divorce settlement • Overpayment – recovery unlikely • Underpayment – rectify member only? • HMRC may not be able to identify commutation • What data is available? • Underpayment – complex issues re correction • Overpayment – augment or UAP?

  9. Questions? Geraldine BrassettPASA Board Member Contact: Mob: +44 (0) 7912 977721 Geraldine.Brassett@capita.co.uk Helen PowellPSL Counsel,Allen & Overy LLP Contact: Tel: + 44 (0)20 3088 4827Mob: +44 (0)7920 271006 helen.powell@allenovery.com These are presentation slides only. The information within these slides does not constitute definitive advice and should not be used as the basis for giving definitive advice without checking the primary sources. Allen & Overy means Allen & Overy LLP and/or its affiliated undertakings. The term partner is used to refer to a member of Allen & Overy LLP or an employee or consultant with equivalent standing and qualifications or an individual with equivalent status in one of Allen & Overy LLP’s affiliated undertakings. CO:25970256.1

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