Those in the pensions industry will have noticed, over the past few years, the phrase “poor record keeping” creeping into conversations and press coverage. However up until now many schemes, and their sponsors have failed to engage with this subject which was highlighted yesterday by the Pensions Regulator’s survey which has shown that only 19% of schemes measured up to the fundamental core data standards (and just over half of these had more than one data item missing) under their record keeping guidance standards that they published in Dec 2008.
Data quality is not a subject often seen on the Trustees agendas but it needs to be on there now. It should already be on the Trustee’s risk register as data quality alone constitutes ones of the greatest financial risks to the pension scheme. Poor record keeping leads to inadequate data which creates extra costs not only in administration errors and claims from members but also when the scheme winds up or buys out some or all of its benefits, significant extra time and resources are required to ensure that the data is correct. The earlier that the trustees address their data quality with their scheme administrators, the better.
The Regulator has issued a 12 week consultation on this subject and proposes that in 2012 pensions reforms will oblige trustees to maintain core data to an adequate standard and if trustees do not have adequate plans in place to resolve data issues the Regulator will force them to improve their standards. For those trustees who wish to understand more about the need for good quality data, the Pensions Regulator will be adding a module to its e-learning programme on this subject and will be running governance workshops starting very soon around the country.
Now is the time to dust down those pensions records and ensure trustees organise for a “data audit” to be carried out as a preliminary step. This audit will clearly identify where the problems lie with scheme data and an action plan can then be drawn up to resolve those data queries. Spence and Partners regularly carry out “data audits” for pension schemes and will be delighted to discuss further with you. Please contact Mike Selby, head of administration services for further information.