Hard-pressed schemes to flout data deadline

There is widespread concern that schemes with weak governance and sponsors in financial difficulty are those least likely to meet the target of 95 per cent accuracy in membership records that were last checked prior to 2010.

And action by well-governed schemes to meet the deadline has only served to magnify the difference between the better-resourced schemes and those most in trouble.

Trustees at schemes that have not taken action could face sanctions such as naming and shaming, disbarment or fines, if they end up in recovery period negotiations with the regulator in 2013.

Robert Branagh, managing director for administration at RPMI, said: “There is surprising amounts of anecdotal feedback that many small employers just don’t care about complying and many schemes are waiting to see if the regulator does anything after the December deadline for common data.

“They are almost saying they will not do anything on core data compliance that involves any more time and money to their schemes, unless and until forced to do so by the regulator.”

Girish Menezes, principal at data services firm Xerox, said there were a minority of probably underfunded schemes that were guilty of non-compliance.

“It is the schemes that really need to do it who are not doing it,” he said. “If you have a funding issue and you go to the regulator because you need more time to clear your deficit, then that is exactly the time they are going to ask you what the quality of your data is.”

Menezes added the schemes with least risk of entering into negotiations with the regulator were often those who had done most to ensure they met the regulator’s targets.

Louise Hallard, policy lead for defined contribution, governance and administration at the regulator, said the organisation recognised the difficulties faced by smaller schemes, but would use available measures to encourage compliance.

She said: “If we find issues of poor behaviours and internal controls that pose a risk to members’ benefits, we will look to use our powers where necessary unless schemes can demonstrate that plans for action and process improvements are in place to rectify any problems.”

Elsewhere Geraldine Brassett, client relationship manager, pensions administration at Aon Hewitt, reported a “flurry of activity” among trustees to comply with the published benchmarks for the 11 common data items for record keeping.

She said: “The key seems to be a desire to evidence that some action has been taken, even if it is only to benchmark the data at this stage, with any associated data-cleansing being carried out over the next few months.”

Margaret Snowdon, chairman of the Pensions Administration Standards Association, said that having accurate member data was not a luxury.

“It is a false economy to ignore the state of scheme data,” she said. “If you have the liability it is better to know sooner rather than later when you can fund it over time rather than when it comes into payment.”

Many pension schemes are concerned by the time and resources required by data cleansing exercises, she said.

But she added: “Data is a scheme asset and should have been invested in as such, and not neglected.”