The Pensions Administration Standards Association (PASA) has released its second set of guidance on GMP reconciliation for pension schemes.
From April 2016, the new Single Tier State Pension will come into force and schemes have until then to request a Guaranteed Minimum Pension (GMP) reconciliation.
GMP reconciliation enables them to compare HMRC records against scheme records.
The guidance was launched at the Pensions Management Administration Summit in London, attended by more the 100 industry experts.
Chair of the PASA GMP working party Geraldine Brasset, said the group's aim was to bring trustees up to speed quickly with all the issues involved.
She said: "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 reconsider all relevant issues in an informed way."
The 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.
Brasset said: "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."
Working party member Helen Power, PSL counsel at Allen & Overy LLP, said the guidance was not there to direct trustees.
She said: "Trustees have limited time and budgets and this guidance will instead help them make the best use of those resources as they move towards the final stages of this complex process."
The full guidance, phase one and two, is available on the PASA website.
First published 03.03.2016
Lindsay.sharman@wilmingtonplc.com
