Geraldine Brassett, Chair of the PASA GMP Working Party, commented: “Our aim, when putting together the working party and coming up with our guidance, was to bring trustees quickly up to speed with all the issues involved. The intention was to empower them to implement the relevant strategy, make the relevant decisions for their members and to provide a framework within which they can consider all relevant issues in an informed way.
“This latest phase of guidance starts with the link between reconciliation and rectification, and what support and information trustees should expect from their administrator. It is likely that, for many schemes, the reconciliation process will reveal cases where benefits have been overpaid or underpaid and it will be difficult for trustees to know how to approach the correction of errors. This considers whether there is a role for tolerance for example and how this differs between underpayments and overpayments, as well as possible member defences to recovery.
“In establishing and implementing a strategy for correcting benefits, trustees will have to consider the impact on the scheme and on individual members, legislation on unauthorised payments, and other scheme-specific factors including available resources. The Guidance will help them establish an informed, proportionate and pragmatic approach to navigating this complex web of issues. There is no ‘one-size-fits-all’ solution, as each scheme’s approach is likely to be unique, reflecting scheme-specific factors - so trustees must determine an appropriate rectification strategy for their scheme.”
Helen Powell, Working Party member and PSL Counsel at Allen & Overy LLP said: “Importantly, the PASA guidance does not seek to direct trustees as to appropriate strategies. Trustees have limited time and budgets; this guidance will instead help them make the best use of those resources as they move towards the final stages of this complex process.”
Helen Forrest Hall, DB lead at PLSA, added: “The Pensions and Lifetime Savings Association welcomes the publication of this second tranche of guidance on GMP reconciliation. It is an impressive piece of work and will save schemes an immense amount of time in trying to figure out what are the questions and issues they have to focus on and then helping them piece together the answers and solutions, which are not always obvious or easy.”
A separate guidance note covers complex cases – for example where a member has died, transferred out or commuted their benefits, or where a pension sharing order applies.
The full Guidance, phase one and two, is available on the PASA website. Slides from the summit will be available exclusively to members on the premium section of the site www.pasa-uk.com.
The Working Party will continue to monitor issues in relation to GMP reconciliation and rectification and will publish further guidance on new developments or specific issues when relevant.
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