Issue - meetings

51.1.      The Board considered a report providing an update on activities undertaken by the Business Operations team, including an update on the progress of Guaranteed Minimum Pension (GMP) Reconciliation.

51.2.      JB explained that phase 2 (B) of the GMP Reconciliation will take approximately five months to complete and will involve conducting a mini tender. The winning bidder will be expected to look in detail at the 15,004 unreconciled cases of pension liabilities between HM Revenue & Customs’ (HMRC) records and those of ESPF. Treasury guidance recommends that pension funds accept cases where the variation of GMP amount between HMRC and ESCC records is £2 or less per week; the tender document will therefore include a requirement for any potential provider to highlight the potential costs in pension administration and pension fund liability of agreeing varying tolerance levels outside of the £2 recommendation.

51.3.      JB clarified that Part (A) of phase 2  of the GMP reconciliation project had involved HMRC providing data to ITM and ITM carrying out an accelerated ‘bulk querying’ leading to the identification of the 15,004 unreconciled cases. Part (B) of Phase 2 will involve a more detailed investigation of these unreconciled cases and further correspondence with HMRC regarding the cases already queried under Part (A).

51.4.      BR expressed concern that the Board did not have in front of it a breakdown of the number of unreconciled cases within various tolerance ranges, .e.g., £2-£4, £4-£6, etc., so that a sense of the potential costs of varying tolerance levels could be made available. This meant that the Board did not know the potential liabilities that the ESPF faced, nor could it make an informed judgement of where the tolerance level could be set. RS added that the Pension Committee had also not seen the data broken down in this way, and he expressed concern regarding the manner and quality of presentation of information regarding the administration function.

51.5.      JB said that a breakdown of the number of unreconciled cases for each tolerance range could be identified as a result of ITM’s recent work, but the project was not yet at the stage where potential liabilities could be estimated. This meant that it was not yet possible to provide an accurate cost implication to the ESPF of GMP Reconciliation until after phase 2 was completed. Ian Gutsell (IG), Chief Finance Officer, said that the Board would be sent these initial tolerance ranges.

51.6.      JB added that he was only aware of a couple of funds who had reached rectification and these had accepted the £2 tolerance level with HMRC without more detailed exploration ; Phase 2 work needs to be completed in order to identify the potential cost to the ESPF of varying tolerance levels before rectification 

51.7.      BR asked for confirmation of the cost of the GMP reconciliation exercise, and the Chair asked for assurance that there would be no additional costs beyond the end of phase 2. JB said that the most recent accelerated two month project by ITM  ...  view the full minutes text for item 53