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23.1.      The Board considered a report on the progress of the Guaranteed Minimum Pension (GMP) Reconciliation programme and a presentation from Steve Jones (SJ), Senior Manager, and Jane Garton (JG), Project Manager – Data Assurance Services, of JLT.

23.2.      Michael Mann (MM) clarified that the contract for the final phase of GMP reconciliation was awarded to JLT in April but contracts were not signed until August. This was due to delays caused by General Data Protection Regulations (GDPR) issues around sharing sensitive data with third parties. JG acknowledged that JLT started the process late but is putting all available resources into resolving the queries, which comprised 12-15 staff who were working on weekends.

23.3.      MM clarified that the 31 October deadline for submission of queries to HMRC was for queries that would be reviewed manually by an HMRC employee and that automatic queries would be accepted up to 21 December. MM advised that the actual number of over and underpayments of ESPF members’ pensions and the total liability to the Fund would not be known until all queries had been processed by HMRC, which is unlikely to be before Quarter 1 of the 19/20 financial year.  

23.4.      The Chair said the four-month delay in agreeing the contract with JLT could prove costly and observed that other administering authorities had not suffered delays in commencing the final phase due to GDPR issues. The Chair said it was likely that HMRC would end up delaying responses to administering authorities due to the volume of work they are facing. This was not a concern for the Board, however, but the timely submission of all queries by 21 December was, especially given the concerns raised about the process over the past three years by the Board and Committee, and the delay in signing contracts with JLT until August. Cllr Brian Redman (BR) added that it was disappointing that the Board still did not know about the Fund’s potential liabilities despite asking for them for 3 years.

23.5.      JG explained that in order to remove a liability from the Fund’s balance sheet where records do not match those held by HMRC, JLT must provide evidence to HMRC that an individual transferred out of the East Sussex pension scheme and moved on to a different scheme, e.g., that of a London Borough council. If evidence of this transfer cannot be provided by JLT then HMRC will not move the liability and it will remain with the ESPF, even if the ESPF records show the scheme member moved on. JLT will spend the remaining period from now and 21 December reviewing, matching and querying with HMRC either membership queries (where either HMRC has a record that the Fund should be holding GMP benefits and the fund doesn’t, or HMRC doesn’t have a record of GMP benefits that the fund is holding), or queries where both have a record of a GMP liability but the differences in the value of GMP between the records held by HMRC and the Fund are greater than the £2 tolerance level.  The presentation quoted 18,383 outstanding queries with 8,926 having been submitted to HMRC by 31 October and 9,459 remaining to be investigated by JLT and submitted to HMRC before the deadline of 21 December. As at the time of the meeting the number had come down to 17,552.

23.6.      SM asked whether the automated process could result in any controversial queries not being resolved by the end of the process. MM said that it would not be known if a query had failed the automatic process until the very end when JLT hears back from HMRC, but the automated process has been continuously improved over the past three years. Nevertheless, he expected that there will be a small cohort of cases that will not be resolved for each administering authority.  HMRC is likely to need to consider whether dedicating clerical resource to them, or administering authorities will need to decide whether to bear the cost of the liability of these individuals. JG added that some queries will not be submitted to HMRC by December as there will not be enough detail about the individual to do so. Administering authorities will need to make a decision whether to accept the liability for these individuals as well.

23.7.      AE asked whether ESPF members are aware of the potential impact the process could have on their state pension. MM said that until the process is complete and all discrepancies are reconciled with HMRC it will not be clear who will be effected and by how much. This will determine what needs to be communicated to Members. DP said that most people do not realise the relationship between their public and private pension resulting from contracting out until they look at the HMRC website to see their eligibility for the full flat-rate state pension; she did not believe it worthwhile to confuse the situation until more is known. JG confirmed that HMRC has not done any advertising about potential liabilities. JLT will advise the Board about its own communications plans once it has a clear idea from HMRC about the extent of the Fund’s liabilities in the new year.

23.8.      The Board RESOLVED to:

1) note the report;

2) request that the report on GMP going to Pension Committee is circulated to the Board; and

3) request a further update following the end of the December deadline for submissions to HMRC.