It is now over twelve months since the Pensions Regulator (tPR) published its Guidance on Record Keeping. The guidance emphasises the importance that tPR places on scheme data quality. For many in the industry, this publication merely confirmed what they already knew – that the member records for most schemes were in poor health, but very little was being done to tackle the problem.
With this guidance tPR did more than just mention the elephant in the room, they shouted about it for all to hear and addressed a warning to those who thought that they could continue to ignore that pesky pachyderm. The message was clear: scheme member data needs to be audited and brought up to a prescribed standard before December 2012.
TPR was particularly concerned about the quality of Common Data which includes items such as the members’ names and dates of birth. They stated that Common Data for all current member records created after June 2010 must be 100% complete and 95% complete for all records created prior to this date. Trustees and administrators that fail to get a grip on their data issues by the end of 2012 may face censure.
Spence & Partners had made a pre-emptive strike against poor data with the development of a data audit tool towards the end of 2009. After tPR’s announcement in June last year, updates were made to the audit tool to ensure that it met the criteria that had been laid out in the guidance. Since then, we have audited the Common Data for all the schemes that we administer and have also offered our services to the trustees of schemes outwith our own roster. For most trustees and administrators, an audit report showing that their Common Data is at the desired level of completeness will suffice, but why stop there?
Our experiences over the past 18 months have shown that the power of an in-depth and objective audit tool can transform many of the administration processes that we carry out on a daily basis. No better place has this been demonstrated than with the development of an audit tool tailored to schemes entering the Pension Protection Fund (PPF).
We have taken our already comprehensive data audit tool and enhanced it with a range of tests designed specifically for the processes and data requirements faced by schemes moving through the PPF Assessment Period. We drew upon our extensive knowledge and experience in this area to ensure that the audit tests we developed closely matched the extremely fastidious data requirements of the S143 valuation and the Data Interface Layout (DIL).
The focus that the PPF specific data audit has provided is enormous. The results of the tests quickly and clearly highlight if there are any areas in the data that need to be improved. It can reveal errors in the data that may otherwise have been missed until the PPF provides its DIL feedback. When you consider the complexity and cost involved in producing each DIL, this early insight can prove invaluable.
In recent months the PPF has placed greater importance on commencing the S143 valuation as early as possible in the Assessment Period. By conducting a PPF specific data audit at the start of the Assessment Period, trustees can get an instant overview of the data improvements and timescales that need to be put in place in order to meet the impending valuation requirements, but the use of the audit doesn’t expire here. The audit tests can then be used as a guide to whether the data has reached a point where it is fit for purpose.
Typically, we use the audit to measure the data quality at several points throughout the Assessment Period. Our aim is to reach a 100% pass in both the S143 and DIL test scores prior to completing these processes. Combined with the other technology based solutions that we have implemented in this area, we have been able to reach new levels of excellence in our management and administration of PPF schemes.
The heart of tPR’s motivation for encouraging improved data standards within the pensions industry was to make sure that scheme members receive the benefits that they are entitled to at retirement. The PPF specific data audit has helped us to steer four schemes to transfer over to the PPF this year, with half a dozen more schemes in the pipeline, ensuring that tPR’s aims are realised for thousands more members .