1. www.itmlimited.com John Broker & Darran Blount | 9th December 2014 GMP Reconciliation for the South East Counties Superannuation Officers Group

2. www.itmlimited.com Ceasing of Contracting Out and GMP Reconciliation

3. About us Business Founded 2003 with 3 staff, currently 125 employees All team members have pensions data / systems / administration background Services Leading independent data & systems provider Unique technology solutions for GMP reconciliation Experience Strong track record in delivering major data and systems projects for the UK’s largest schemes, TPAs, tPR, PPF and leading insurance companies Work on / off site / provide resources for in-house teams Data | Systems | Consultancy

4. Our clients Data | Systems | Consultancy

5. ITM services Data Risk Audit (DAaRT) GMP Reconciliation & Pension Rectification Data Cleanse On-site resources to support in-house admin’ Benefit Risk Audit Data Digitisation & Extraction Services Data | Systems | Consultancy

6. So….what is all the hype about GMPs? Data | Systems | Consultancy

7. The GMP countdown has begun Are you ready? Data | Systems | Consultancy

8. HMRC launch new reconciliation service for contracted out schemes – giving schemes 2 years to reconcile ahead of April 2016 2014… Contracting out will cease, after which HMRC will offer only limited support for further reconciliation HMRC will contact all contracted out members with details of their contracted out history 2016… 2018… Data | Systems | Consultancy

9. So, what are the key risks & impacts? Data | Systems | Consultancy

10. ? ? ? ? ? ? ? ? ! Incorrect pension being paid to members. ! Materially incorrect valuation of scheme liabilities. ! After 2018 potential member complaints and loss of reputation. ! Unknown members requesting their GMP entitlement Data | Systems | Consultancy

11. In July 2009 the National Audit Office published: ‘Review of Errors in GMP Entitlement in Public Sector Schemes’. 85,509 members were being overpaid Total overpayment - £90million! Largest single overpayment - £38,881 5,000 members were underpaid Total underpayment - £191,155 Ominous? Data | Systems | Consultancy

12. The ITM Approach Data | Systems | Consultancy

13. Common approaches may be agreed across LGAs but some suggestions: Don’t investigate immaterial discrepancies Only challenge HMRC when really necessary Don’t hold the project up for the 90% because of the 10% There’s no agreed end point - do what is right for your Fund Controlling costs and timescales Data | Systems | Consultancy

14. A typical GMP reconciliation cycle 6 months to reconciliation Baseline report HMRC engagement Admin data extract SCON / ECON review Bulk automated resolution Individual extraction & resolution Member comms Under/over payments Update GMP values Population reconciliation GMP reconciliation Analyse data Collate CompareReconcileRectify NOW Progress reporting dashboard Agree approaches for tolerance, rectification, comms etc. Project management Data | Systems | Consultancy

15. Key stage to understand the degree of anomalies in the population scope and mismatched GMP values Enables sensible evaluation and forward planning – Timescales – Resources – Materiality – Rectification impact and cost – Communication Collate & compare (analysis) stage Data | Systems | Consultancy

16. Example analysis output Data | Systems | Consultancy

17. Example analysis output Data | Systems | Consultancy

18. Left the scheme – 1997 Total pen £6,000 pa at DOL GMP should be £4,000 pa Excess pen should be £2,000 pa Scheme gives fixed increases on GMP and revaluation orders on excess But excess and GMP wrong way round ! Paying the wrong pension Data | Systems | Consultancy

19. Correct pen at 60 should be £15,700 pa Incorrect pen worked out as £12,500 pa Member underpaid by £3,200 pa at 60 Member underpaid by £16,000 + from 60 to 65, if error not spotted Future scheme liabilities might be understated by £90,000* * Using assumed annuity factor of 28 Paying the wrong pension..cont’d Data | Systems | Consultancy

20. Method for correction? Go back to DOL? Go back to retirement? From current date only? Complex calculations Be practical Need good software Rectification - pensioners Data | Systems | Consultancy

21. How will you undertake the analytics / comparison? How will you assess materiality relative to tolerance values and will any tolerance be permitted? How long might the project take (time is short) and how will you resource it? What about budgets? What policy will you adopt on under and over payments? Centralised approaches and guidance v local decisions? Issues to consider and discuss Data | Systems | Consultancy

22. For more information about ITM and how we undertake complex GMP reconciliation exercises, please call John Broker on 07912 943 366 or email johnbroker@itmlimited.com www.itmlimited.com/gmp