A couple of months post-Lloyds and we’re taking the finer points of the ruling as read; lots to do, or not do, legal advice to take, or not take, transfer values to suspend, or not suspend; a catalogue of unknowns that are raising trustee frustration levels up and down the country.
Equalisation in context
On a scale of one to ‘a lot’, there was already A LOT of work to do around GMP. The entire administration industry is currently working flat out to wrap up GMP reconciliation before HMRC shuts up shop on GMP support. With the equally challenging GMP rectification piece now kicking in, slowing down already wasn’t an option.
Reconciliation vs rectification vs equalisation
Reconciliation, the detailed forensic comparison of almost four decades worth of scheme and HMRC records to establish precise GMP entitlements at a given point in time, is the theory side of contracting out. Rectification, the next and final step in the process, is the practical. Trying to put this in a more relatable context, imagine you upgrade your bank account…
Your new bank charges £10 for making the switch, gathers up all your direct debit and standing order details, makes sure your mortgage and car payments all still get processed on time, income and outgoings all add up and overdraft charges are reasonable. Let’s call that reconciliation.
Now imagine you tell your new bank you want them to review every payment through your current account for the last forty years or so, and you also want them to check the details on all those direct debits and standing orders, and also just confirm whether you could have been getting a better deal elsewhere on utilities and insurance etc. Then tell them to put you and every other party you ever transacted with (or should have) in exactly the position you would have been in if you and they had done exactly the right/best thing at exactly the right time, every time. Let’s call that reconciliation.
Now imagine that a few weeks before you were about to get moving on rectification, having spent three years getting all your records in order, a legal judgement comes down that says there was something very slightly not right with some obscure little aspect of how your interest or charges were calculated. Something may need to be done about it; most likely, the numbers involved are going to be marginal, but you won’t know until the work is done, and you don’t know if it’s even going to happen until the appeals are in. That’s GMP equalisation.
Can we do it?
Well, yes we can.
Ultimately, as the industry has tried hard to reassure schemes, GMP equalisation is completely ‘doable’, but the timing could certainly be better and the ‘GMP fatigue’ factor is real. Trying to engage schemes now in a conversation around the super-niche subject of GMP equalisation is going to be a really tough sell.
Associate – Barnett Waddingham