Implementation of dual records

How we helped the trustees of the Telefonica UK Pension Plan implement GMP equalisation Method B.

The background

We had already helped the trustees of the £1bn Telefonica UK Pension Plan, working closely with the sponsor, to choose the year-on-year 'Method B' to equalise for GMPs.

Implementation involved calculating and uploading the 'dual records' required on our pensions administration system to administer this method going forward for around 4,000 members, as well as updating retirement and death processes, paying lump sums to members underpaid in the past and uplifting pensions in payment for previously disadvantaged members.

The trustees were keen to ensure members received proportionate communications, given that the impact for many members, if any, was small.

Our solution

We took a structured approach to the implementation using our six-step plan, first updating records for deferred members, so transfer value calculations could quickly be updated. It also enabled us to start testing equalised retirement calculations and modelling on the member website to ensure everything was working as expected.

We used our GMP equaliser tool to calculate past underpayments to members and pensions uplifts robustly but with minimal data requirements. We then used the results to segment the membership into groups with similar outcomes so we could tailor communications for each group.

The results

We were able to go live with equalised retirement calculations and member website modelling simultaneously, closely followed by making payments to existing pensioners.

Segmenting the membership enabled communications to be focused on what mattered most to individual members. In some cases equalisation has no impact or it is very small. In other cases the sums were more significant with the potential for pensions tax implications. We were able to help the trustees target communications, ensuring members were informed but not sent unnecessary information.