- The Pensions Regulator (TPR) is asking trustees to start reporting on ‘record-keeping’ in their scheme return, in order to help improve standards.
- TPR is disappointed that many schemes do not appear to be taking their duty to keep proper records more seriously, despite the Regulator making its expectations clear in guidance issued in 2010.
- The new reporting requirement is not the only reason that schemes should be doing more to resolve incomplete and / or inaccurate data:
- Clean data is a pre-requisite for the success of the new ‘Pensions Dashboard’ system and its objective of allowing people to see all of their pension savings online and in one place. The dashboard is expected to be available from 2019.
- The EU General Data Protection Regulation (GDPR), effective from May 2018, will introduce far reaching obligations over and above those required by the UK Data Protection Act 1998. The potential penalties for breaching GDPR obligations are significantly higher than under the current regime and, as with current data protection laws, data must be accurate, adequate and relevant.
WHY GOOD DATA MATTERS
TPR intends to ask trustees to report on record-keeping in their 2018 scheme return to help improve standards. Trustees begin completing 2018 scheme returns for DB schemes in January and for DC schemes from May.
TPR’s decision follows a 2016 survey of more than 530 trust-based occupational schemes which revealed little recent improvement in record-keeping. The survey showed that:
- 30% of members are in schemes where conditional data is not measured.
- Larger schemes are significantly more likely to have measured their data – 87% of large schemes (1,000+ members) had measured common data versus 18% of micro schemes (2-11 members).
- Administrators’ understanding of the terms ‘common data’ (used to identify members) and ‘conditional data’ (data used to calculate benefits) is not universal.
- Administrators and trustees perceive conditional data as secondary to common data – 39% of administrators felt the measurement of conditional data was not a priority for their scheme.
- Record-keeping is not always seen as a priority by trustees, and they do not engage with their administrators accordingly – 23% of administrators felt that trustees treated recordkeeping and administration as a low to middling priority. This went up to 32% for micro schemes, while trustees of auto-enrolment schemes were perceived to be more engaged with record-keeping than trustees of non-auto-enrolment schemes.
TPR has published a quick guide to record-keeping and will be providing further educational products in 2017, including videos and bite-sized learning.
TPR has made clear that it expects all schemes to measure the presence and accuracy of their data and put plans in place to resolve issues where they find them; otherwise it will take action against trustees.
Also, tackling inaccurate and/or incomplete data is crucial for the Pensions Dashboard to succeed. However, schemes and providers are missing member information that will be essential for the probity of the system.
Last, but by no means least, statutory record-keeping requirements are already set out in the Data Protection Act 1998. This will be replaced next year when the GDPR comes into effect. The GDPR places increased data protection obligations on both controllers (trustees) and processors (administrators) over and above those of the 1998 Act, strengthened through enhanced enforcement measures.
Trustees are responsible for the management and oversight of their pension schemes, even though day to day administration may be delegated to a service provider. They are also ultimately responsible for ensuring the correct benefits are paid to the right members on time. Where data is incorrect or incomplete, pension scheme governance will suffer as a result.
The next couple of years will be a pivotal time for data. Trustees, working with their administrators, need to ensure, therefore, that their scheme records are in good shape.
- Trustees of both defined benefit (DB) and defined contribution (DC) schemes will need to report on recordkeeping in scheme returns from next year.
- All schemes should measure the presence and accuracy of their data, and put improvement plans in place to resolve issues where they find them. Trustees should engage with their administrators to drive this data management work forward.
- Schemes should carry out a data review exercise at least annually.
For further information, or if you have any questions on the content of this article, please contact your usual JLT Consultant or John Wilson, Head of Technical at firstname.lastname@example.org