Veratta's Tom Nimmo introduces an individually tailored GMP reconciliation service for pension schemes.
The end of contracting-out on the 6th April got me thinking about a checklist of data management considerations for pension schemes engaged in GMP reconciliation exercises.
In addressing a scheme wide project of this nature, most pension schemes will want to streamline the amount of manual work involved in order to minimise the costs and timescales.
Therefore, this checklist is designed to complimentcomplement the established pensions guidance on completing a GMP reconciliation exercise, so that pension schemes can do just that.
ANALYSIS & INVESTIGATION
There is not a one-size-fits-all approach to GMP reconciliation. Therefore, each exercise requires the right information, to make the right choices.
The technical team engaged in the process should know about the history and rules of the pension scheme. This knowledge will make creating bulk routines to deal with root cause analysis or the calculation of benefits more targeted and efficient.
Much of the subsequent work in the exercise will hinge upon considerations relating to the quality and availability of the data in the pension scheme's administration records.
Unchecked data errors in the initial stages can snowball into significant issues later in the process. Therefore, automated data validation checks are vital to inform cost benefit analysis and to help monitor process assurance.
Part of the analysis is likely to involve the testing of variables, such as reviewing the effect of tolerances when matching GMP figures, sampling subgroup of members or scenario testing.
Testing can rapidly reduce the number of outstanding queries in the data, but it typically requires flexible systems and the right mix of pensions administration knowledge and bulk data analysis skills.
RECTIFICATION
The analysis should provide a clear picture of the remaining work involved in the project, but unless the remedial work is focussedfocused in a pragmatic and organised way, the costs and timescales involved could easily spiral out of control.
However, this is also where well-managed projects will bear fruit as the organisation and efforts of earlier work enable efficient bulk processes to be completed.
It may be necessary to review historical sources of data such as paper member files.
Reviewing these data sources can be time-consuming and the information that they provide can be unclear, inaccurate, or open to interpretation. Again, automated validation checks on the main dataset can help to determine what missing data is required, enabling the historical data source review to be better targeted.
An audit trail is a requirement for all data processes in the exercise, but where bulk benefit updates or calculations are concerned they are of particular importance.
GMP reconciliations can be large and complex exercises and so if something goes wrong, or there are queries about the work, a full record of every change in the data needs to be available.
Whilst this might seem like an administrative nightmare, good processes and systems can make this requirement a formality.
Ensuring that members receive clear and accurate information is crucial to reduce member queries and to provide clarity in situations where a financial change is occurring.
Bulk communication, can achieve this in a low cost and efficient way, but it requires the source data to be consistent and accurate.
A best practice approach, tailored to the individual circumstances of each pension scheme is at the heart of the GMP reconciliation service that we have developed at Veratta.
We cut through the complexity, control the costs and deal with the data, providing peace of mind with a quality assured service.
Written by Tom Nimmo, Senior Business Analyst, Veratta.
