Pensions is a long term business. When I entered the pensions industry I worked for a long since forgotten firm of actuaries, administrators and trustees that had started out in business in 1951.
In the late 1980’s and 1990’s it was not unusual for someone to have to dig a file out of a packed filing room containing records dating back to the 1950’s or 1960’s. The time horizon of a pension scheme goes beyond that of most businesses. Life insurance companies recognise that. But by the late 1980’s not much had really changed from the 1950’s. Computers were being used to carry out administration calculations and to store the core data but paper files were still important and almost all correspondence ended up in paper form.
We have now had twenty years of transition. The whole history of a pension fund and all its records can be held on a memory stick. 95% of communications from our office as a busy firm of administrators and actuaries is now in electronic format. This should represent great progress but there is a problem.
In the 1980’s and 1990’s the principle of recording full information in a consistent format to allow calculations to be performed from the digital database was not adhered to. Spence & Partners started out in business in 2000 and we have assumed administration records for well over 100 pension schemes over the last 10 years. These range from large schemes run by in-house pensions departments to insurance companies to leading consulting firms and the scheme data we were provided with was always poor. There hasn’t really been one exception out of all those schemes. Sometimes the quality is much worse than others but NEVER fit for purpose i.e. suitable for administering the scheme without the paper records.
Most smaller pension schemes are now closed to accrual. Spence & Partners are specialists in Pensions Endgame work, winding-up, PPF assessment periods, schemes transferring to the Financial Assistance Scheme. The hardest thing about this work is that it is the time of reckoning for all those years of bad record keeping. You get one shot at calculating all the benefits and they have to be right. Nothing else for it at this stage but to digitise much of the information hitherto held on paper and it can be a laborious process.
For schemes with some years before the endgame the same should be true. The digital data held in disparate places needs to be combined with information on paper that is needed to at last achieve the elusive goal of having a complete dataset to administer the scheme going forward. It has to be done sometime and it will not be easier with the elapse of time.