Contracting-out Reconciliations: A view from the front line

Workplace Pensions Live, 11 May 2016Stewart Winter, Operations Director – Data Solutions

Agenda

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Equiniti’s Portfolio

The “classic” 3-phase approach

The COLR Project

HMRC and the industry

The correct tolerance to apply

Doors closed?

Q&A

The question is; is it too late to start the reconciliation project?

Doors closed?

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If you have completed your Expression of Interest with HMRC by 5 April 2016 However the clock is ticking to complete reconciliation And more and more schemes are actively engaged with their reconciliation projects

If you did not complete or chose not to submit your Expression of Interest with HMRCYES

NO

Equiniti’s Portfolio

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Contracted-out Liabilities

Reconciliation (COLR)

Programme• C7.3 million contracted-out members• C36.5% of total HMRC records or 1 in 3

contracted-out members.

• Public Sector (funded and non-funded)• Private Sector (live and ceased

schemes).

The “classic” 3-phase approach

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Phase 3

RECTIFICATION (PUTTING RIGHT

OF DATA ANOMALIES & PENSIONS IN

PAYMENT)

Phase 2

RECONCILIATION (ENSURING ADMIN

& NICO AGREE)

Phase 1b

“SURING-UP” ON DATA ANOMALIES

Phase 1

ANALYSIS

Scheme Averages within Equiniti’s ProgrammeThe COLR Project

End of Phase 1b

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End of Phase 1

• Based on 34 schemes completed to date• Equating to 2,535,736 amount of members

• Based on 18 schemes completed to date• Equating to 497,758 amount of members

Matched; 48.23%

Not on NICO; 20.27%

Not on Ad-min; 10.13%

Issues; 21.37%

Matched Not on NICO Not on Admin Issues

Matched; 59.03%

Not on NICO; 8.30%

Not on Admin; 8.69%

Issues; 23.98%

Matched Not on NICO Not on Admin Issues

IssuesHMRC and the industry – working together

• Shutting their doors end of 2018• Under 3 years left to reconcile• Conservative estimation that c10,000 queries per day

will need to be answered• C4,500 live / c2,000 ceased schemes• Public sector to flood HMRC queries from Easter /

Summer 2016• Resource constraints and re-deployment.

HMRC

• Not joined up• Differing methodologies• Inefficient and ineffective working practices• No clear guidance.

INDUSTRY

Solutions

HMRC and the industry – working together

Working together Escalation point with Client Relationship Manager Sharing of ideas through working groups Align comments on queries to HMRC, ultimately to ensure HMRC work as a ‘factory’

Frequent HMRC conferences

tPR, PASA etc. To issue guidance on a regular basis Clear and concise Informative yet pragmatic

TPR’s advised £2 per week Only recommended for ceased schemes going through wind-up

Inappropriate for ‘live’ schemes

What is the correct tolerance to apply?

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Tolerance misconceptions a. Comparing the end result of two calculations

If all inputs are the same there should be no tolerance to apply

b. The reality of setting a tolerance higher than one of pure rounding

HMRC guidance is to adopt HMRC’s figures The cost on rectification calculations and system updates Potential extra trustee/scheme’s cost in relation to arrears

Q&A

Many thanks for your time tonight, please feel free to ask any questions.