What have we learnt about data requirements for GMP conversion?

They saw it as a way to simplify their benefit structure, making their scheme easier to administer and improving saver flexibility. 

While many schemes now favour the dual records approach, for some, GMP conversion is a credible option and their preferred equalisation approach. As we gain more experience , we can reflect on some of the industry’s learnings on the requirements for conversion, as well as ways in which the associated data challenges can be overcome. Some of the key data considerations for implementing GMP conversion are:

1. Scope of the membership

GMP conversion exercises typically involve a wider target membership group compared with the  dual records approach.  Conversion often includes all savers with a GMP benefit, not just those with contracted-out service between 17 May 1990 and 5 April 1997. It’s important the criteria defining the in-scope membership for conversion is agreed early in the process. The data analysis and improvement work should also cover the complete group from the outset to enable an effective data preparation.

2. Contingent spouse’s pension (CSP) conversion 

There are nuances around the requirements for CSP. The approach taken could give rise to additional data requirements and early tactical thinking on the design and calculation approach is required. There are a range of views in the industry as to the approach to take to allow for CSPs,  and it’s important schemes design and implement an approach appropriate for their needs, supported by their advisers.

3. Benefit tranches 

Benefit tranches will be needed which allow for GMP benefits, equalisation periods and the scheme benefit structure. These should reference the scope of the benefit conversion exercise being undertaken. The scope of the exercise and the data requirements should be established in the early planning stages so required data can be sourced or calculated. Where there are complex saver records or data gaps, pragmatic solutions may be required to obtain the required record and extract the benefit tranches to enable conversion calculations. 

4. Complex communication to savers

The underlying issue may be complex but it’s critical schemes communicate clearly with savers to ensure they fully understand the benefits they’ll receive. Schemes should create and implement an effective communication plan to ensure savers receive correct and concise information. They should also have access to FAQs. Early consideration should be given to the data items which will be required to fulfil the communication plan, such as contact details.

5. Approach for deferred savers

Many schemes are taking the ‘conversion at retirement’ approach, but schemes should consider the timing of conversion on their deferred records. Running a separate bulk exercise for these deferred savers may be an alternative.  The data required to undertake ‘conversion at retirement’ should be planned and stored to enable a timely and effective retirement process.

6. Impact of other ongoing GMP exercises

While also relevant to a dual records approach, the order of performing data and benefit rectification is important to enable an effective GMP equalisation and conversion exercise. Reconciliation, rectification and equalisation work should be completed ahead of embarking on conversion activities. While it’s not uncommon to implement rectification, equalisation and  conversion benefit changes at the same time, it’s important to undertake the calculations in chronological order. Careful planning to ensure effective calculations and implementation is critical to ensuring savers receive the benefits they’re due.

Conclusion: Historic data needs

Data quality is one of the key factors influencing the decision to convert. However, by carrying out effective planning and analysis at the outset, the amount of additional work can be reduced and a smoother conversion journey can follow which will meet the wider scheme objectives. 

If conversion is undertaken, the amount of data needed post-conversion for ongoing administration may be reduced, which could in turn reduce ongoing scheme management costs and provide wider benefits.

However, historic data should be retained so schemes can support future queries in the event historic data needs arise. UK pension requirements are complex and historic saver data may well be needed for reference at some future date. 

Kristy Cotton and Julie Beadle: Pension Administration Standards Association's data working group