TPR's record-keeping push welcomed but stresses remain for small schemes
The Pensions Regulator is demanding that trustees report on record-keeping in the scheme return and has issued new guidance, after conducting a survey which found that too many are not measuring members’ data.
Pension schemes are obliged to keep records not only of members’ names and dates of birth – so-called common data – but also of ‘conditional data’, such as how much a member earned in which year, or whether they worked part time at some point. It is the latter that determines a member’s pension entitlement, and, if incorrect, can lead to schemes miscalculating payments.
You can have great schemes that are doing great with investments, but if the quality of their records is poor, you will still be paying people the wrong benefits
The regulator’s recently released survey on record-keeping found that most pension scheme members are in schemes where common data has been measured (90 per cent), but that this score dropped to 69 per cent for conditional data.
The survey also showed that larger and defined benefit schemes performed better on record-keeping than smaller or defined contribution schemes.
Of administrators that had not measured their scheme’s data, around 40 per cent did not do so because it was ‘not a priority’, according to the survey.
In the background for too long
Chris Roberts, professional trustee at Dalriada Trustees, said a greater push from the regulator on record-keeping had been expected for some time.
“Any move towards enforcing what’s always been expected but not really pushed I think would be extremely positive,” he said.
Roberts said the day-to-day administration of schemes has been a lesser priority for too long. “Involvement and regulator guidance made clear the fact that this can’t sit in the background forever,” he said.
He also noted that trustees should consider no longer working with businesses that fail to invest and upgrade systems to keep data safe.
'Schemes have themselves to blame'
Ian McQuade, director at governance specialist Muse Advisory, also welcomed the guidance, noting that some schemes may not like the more active intervention from the regulator.
"But I think it’s something that schemes have only themselves to blame [for]. If they had taken it more seriously, the regulator wouldn’t have had to be quite such a bully about things,” he said.
McQuade said the reason some schemes do not measure data is that there are few trustees with an operational background, meaning there is less focus on administration.
“You can have great schemes that are doing great with investments, but… if the quality of their records is poor, you will still be paying people the wrong benefits.”
Challenge for small schemes will not go away
A spokesperson for the Association of Member Nominated Trustees committee said receiving a direction of travel from the regulator is positive as long as support is provided.
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The spokesperson said it was no surprise that smaller schemes came out worse in the survey, as they face extra challenges.
"One of the messages that comes across to us loud and clear is that there are additional stresses on smaller schemes," the spokesperson said.
“The challenges [for small schemes] won’t go away, but it’ll bring them into sharper focus.”