Pension schemes are facing further delays to equalising contracted-out benefits, as HM Revenue & Customs is slow to finish a data matching exercise many schemes need before they can start the process.
In a newsletter published yesterday (May 16), the taxman said it was extending its deadline for checking pension records at schemes from March to November.
This means that defined benefit plans still waiting for information on their members' guaranteed minimum pensions will only receive this by November.
The data is needed for schemes to start equalising benefits between men and women, as stipulated by the High Court last year.
The data concerns contribution payments made in error by members who contracted out of the state pension.
Back in 2016, HMRC discovered some pensioners had been paid contributions to their NI when in fact they were contracted out.
This means some pensioners were overpaid each month while, conversely, calculation errors for other individuals meant they were underpaid.
Contracting out means DB schemes were able to opt out their members' benefits of the state earnings-related pension scheme, so that individual members would not be tripling up on pension benefits by building up a basic state pension, Serps, and an earnings-related occupational pension.
Between 1978 and 1997, provided the scheme offered a pension of a guaranteed minimum level, the employer and employee would be allowed to pay a reduced rate of national insurance contributions and the worker would no longer build up rights under Serps.
FTAdviser reported in March 2018 that thousands of DB scheme members faced demands for pension cash back as a result of the reconciliation process.
Matt Davis, head of GMP equalisation at Hymans Robertson, explained that to equalise GMPs, schemes need to know what records they actually hold.
He said: "HMRC has the unenviable task of responding to queries on thousands of pension schemes with millions of records between them. The industry is not surprised to hear that HMRC needs more time here.
"Pension schemes that may have the most problems with the delay are those working on transactions, such as buy-ins, or member option exercises. Uncertainty over data increases complexity and costs to schemes."
Mr Davis said some GMP equalisation projects may be held up whilst waiting for the final data from HMRC.
He added: "The danger here, given the size of the task, is there may turn out to be further delays.
"Whilst plans will need to be flexible, schemes can be looking at the quality of the other data they hold and building understanding to help make the right strategic call around the overall choice of method."
An HMRC spokesperson said the deadline was extended "to help pension schemes who have found previous runs useful and requested more".
He said: "It will ensure any schemes who have not completed a clerical query get the chance to have it dealt with automatically."
Steve Webb, director of policy at Royal London, said: "Whilst it is welcome that deadlines for resolving GMP issues have been extended it is truly astonishing that HMRC stubbornly refused to accept that there was a problem until May 2019.
