Trustees should aim to:
- Maximise the number of members passing through bulk calculation tools
- Minimise unanticipated delays caused by gaps in member data or other complexities
- Make informed decisions, balancing risk and accuracy, in a clear and documented way
For most schemes, getting the data in the right shape to support GMP equalisation is a journey. It starts with an audit, an assessment of the data you’ll need for calculations and where you might need to consider cleanse or alternative approaches to deal with gaps or complexity.
More value is gained from an audit by agreeing on what you’re trying to achieve. Do you want to concentrate solely on GMP equalisation and making cleanse decisions that will only impact that exercise? If so, you may agree to leave other issues unresolved until a later date. Or are you trying to expand the focus so that you can also improve your Scheme Return data scores? If that’s the case, it will be important that everyone understands the distinction between those aims. The focus of your audit will also be dictated by your scheme design and the tools being used to carry out your calculations.
When it comes to cleanse work, it’s key not to assume that every issue needs to be fully cleansed before progress can be made on calculation work. If the aim of your audit is to maximise the number of members going through bulk calculations, you may find that you can overcome issues through strategic filtering and calculation design without having to update the member record. Cleanse work, in this case, should be targeted on the data fields that will make a difference. This will be different for each scheme and so it’s useful to consider whether it will make a material difference to the equalisation result, ensuring that interaction between the audit and cleanse with the calculation tools that will follow.
The next step in the journey is benefit construction; the first calculation step. This involves creating those fields you’ve likely never needed before: the 17 May 1990 - 5 April 1997 element of your Post 5 April 1988 GMP, the corresponding excess amount and the opposite sex equivalents at date of leaving. Flexibility in approach is going to be very important at this stage, as different members may require different solutions depending on the state of each member’s own data and benefit calculation. Fundamentally, it’s important to start with a preferred approach, typically a desire to be as accurate as possible, and understand the situations where that is not going to work.
In our early experience, if we jump too quickly into a single approach in an attempt to be pragmatic, it will mean that you know some of your members will have results which are inaccurate but you won’t know how inaccurate and for whom.
Recent PASA guidance set out 4 possible approaches to benefit construction which sets out a spectrum of options from which principles can be taken. Our solution combines the desire for accuracy achieved under PASA’s “reconstruction” approach with the flexibility of alternative approaches, to fit scheme design and data quality.